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A forex strategy is a method employed by traders, dealers and brokers to enhance the opportunity and possibility of generating profits from forex trading sessions. This is close to the same types of strategies used in stock and bond trades. A forex strategy is based on analysis of current information regarding the state of the economy and history of the currency—the fundamental and technical information. For example, in stock trading you would take into account the corporate governance and ethical history, as well as the company's current and historic value. You would also consider the U.S. economy, where a failing real estate market (for instance) would result in the selling of real estate stocks. The same basic theory applies to forex strategy, only it is based on a global perspective and the state of a nation rather than a corporation. Forex strategy is based on the fundamentals -- governance, economy and consumerism -- and technical details -- historic trends, price volumes, trade volumes and actual value of an entire national currency. Another similiarity between forex strategy and stock trading strategy is that is still incorporates the amount of time of the investment. In stock trading, this is called long term and short term, where long term is over five years and short term is under five years, in general. In forex strategy there are daily, short term (weekly) and long term (monthly) trading strategies.
|Jennifer Mathes, Ph.D.|