Basic Strategies

Basic ForexStrategies

Technical analysisand fundamental analysis are the two basic areas of strategy to use when itcomes to the FOREX market which is the exact same as in the equity markets. Thedifference however, is that the technical analysis is by far the most commonstrategy that is used by individual FOREX traders. Here is a brief overview ofboth forms of analysis and how they directly apply to forex trading:

Fundamental Analysis
If you think it'shard enough to value one company over another, you should try valuing a wholecountry instead. Fundamental analysis in the forex market is an extremelydifficult one, and it's usually used only as a means to predict long-termtrends. But it is important to mention that some traders do trade short termstrictly on news releases. There are a lot of different indicators of thecurrency values that are released at many different times in the day. Here area few of them to get you started:

• Non-farm Payrolls
• Purchasing Managers Index (PMI)
• Consumer Price Index (CPI)
• Retail Sales
• Durable Goods

You need to knowthat these reports are not the only factors that you have to watch out foreither. There are also quite a few different meetings where you can get somequotes and commentary that can affect markets just as much as any report. Thesemeetings are often brought out to discuss any interest rates, inflation, andother issues that have the ability to affect currency values.

Even changes in howthings are worded when they are addressing certain issues such as the FederalReserve chairman's comments on interest rates; can cause the market to get veryvolatile. Two important meetings that you have to watch out for are the FederalOpen Market Committee and Humphrey Hawkins Hearings.

Just by reading thereports and examining the commentary, it can help FOREX fundamental analysts toget a better understanding of any and all long-term market trends and also toallow short-term traders to be able to profit from important happenings. If youdo decide to follow a fundamental strategy, you will want to be sure to keep aneconomic calendar around you at all times so you know when these reports arereleased. Your broker may also be able to provide you with real-time access tothis kind of information via the internet.

Technical Analysis
Technical analystsof the FOREX trading market analyze price trends. The only real differencebetween technical analysis in FOREX and technical analysis in equities is the generaltime frame that is involved in that FOREX markets are open 24 hours a day.

Because of this,some forms of technical analysis that factor in time have to be modified sothat they can work directly with the 24 hour FOREX market. Some of the mostcommon forms of technical analysis used in FOREX are:

• The Elliott Waves
• Fibonacci studies
• Parabolic SAR
• Pivot points

This is the pointwhere you will actually choose your basic strategy. Basically it is best tosimply choose whichever that you are the most comfortable with. Your broker canhelp you in making th