When it comes to trading forex, investors have access to one of the most volatile and lucrative financial markets imaginable. The foreign exchange also boasts a high level of liquidity, which means that the high volume of trading activity does not overtly impact on individual currency prices. The challenge and potential rewards of forex trading make for a potent combination, and go some way to explaining why the foreign exchange remains the most popular investment vehicle. Along with similar derivatives such as CFD’s, this method of trading has become even more viable thanks to the presence of online brokers and experts such as Sucden Financial so there has never been a better time to make your move in the market.
The 3 Most Popular Methods of Trading Forex in the Current Climate
As befits such a diverse market, there are several unique ways of trading forex. Here are some of the most popular in the current economic climate: –
- Trend Following
Trend following is diametrically opposed to forex news trading, as it relies solely on the technical analysis of market prices rather than wider economic conditions. So rather than taking into account the impact of recession and financial crisis, traders who follow this strategy utilize technical indicators and analytical tools to study price movements. This philosophy requires a high level of determinism, as it focuses more on the underlying laws that govern change rather than the effect of external conditions.
- News Trading
Otherwise referred to as fundamental news trading, this method stands as the primary driver of the currency market. This type of trading is founded on high impact news events, as investors digest breaking information and seek to capitalise. By understanding the nature of breaking economic news and how it influences the market, it is possible to execute relevant trades and profit accordingly.
- Spread Trading
Spread trading is an extremely popular method of investment, and one that is defined as the sale of one or more futures contracts and the procurement of multiple offsetting arrangements. In simple terms, a spread covers the difference between long and short positions, so that the risk is suddenly associated with this variation rather than individual currency prices. This allows for a greater flexibility of trading, and also enables investors to profit even in a depreciating market.
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.