Deciding to trade the Forex market often brings people to the subject of – how do you trade it? Do you just blindly rush into a position if you see a currency pair’s price spike?
Perhaps diversify your portfolio and open positions in different major and exotic currency pairs to manage risk? Having a clearly outlined strategy is the minimal requirement for trading any financial market, let alone a market as volatile as Forex.
Why Fundamental Analysis?
While strategies implemented by hedge funds, professional retail investors, and majority of the average Joe traders stretch out by the hundreds, trading strategies are divided into two major categories – Technical and Fundamental. Although over the years, price action trading, which some would say combines both technical and fundamental indicators, have also become a well-accepted approach within the community.
Technical analysis brings a trader into the numbers side of the coin. The concept is that a trader can predict future price movement based on historical data, such as moving averages, daily highs and lows, and Fibonacci levels. In fact, majority of technical indicators you’ll find preconfigured in your broker’s trading platform, such as AlfaTrade, and those being sold by third-party websites use this data to calculate future price movement.