Learn the Basics of a Forex Strategy
What is a core strategy? It’s really just a way of looking at currencies from the point of view of a trader rather than an investor.
Forex strategies are based on a currency pair. If you put money in one currency and let it change, you’ll buy or sell based on what happens to that currency pair. So the same holds true with forex strategies.
How do you determine what currency to choose? This is simple. Pick two pairs and find out which one trades better with a certain type of market. For example, the US dollar has a higher rate of appreciation when compared to the euro and the yen.
By using this approach, you could pick the best currency for both your US dollar and EUR to trade. Then you’d be ready to trade currency in two different pairs, one US dollar, one EUR, one Japanese yen, etc.
In forex trading, picking out a currency pair is important because it has the biggest impact on how much you’re going to make. So, by picking out a currency that trades better with another currency, you can almost double or triple your profit. There’s no limit on how much you can double your profit with this strategy, though.
It is important to understand the difference between an active currency and a passive currency. The reason they are called active and passive is because they have the ability to go up or down depending on the prevailing market. These are usually pairs like the UK pound (USD) or the Euro (EUR).
An active currency pair would be one that would do well in the face of a strong or weak economy. While a passive currency would have a lot less potential for growth, but would still have potential for a rapid downfall due to market forces.
When it comes to choosing a core strategy, which two are considered the best? Well, the two with the highest rate of gain would obviously be the one for the US dollar and the euro. However, many traders use the Forex Megadroid (FDM) software to help them with these kinds of decisions.
The other option is to use three different currency pairs. The FDM software can then handle all of them on your behalf. If you have a currency pair with which you are comfortable, use it.
However, if you don’t have a favorite pair, don’t worry about it. Using three different pairs for each strategy will allow you to learn more about each.
All in all, using a Forex strategy is a good decision. You can learn more about it in this video tutorial, but essentially you’re always learning new things about free with each trade. If you’re already experienced in forex trading, you can make money easily with these strategies.