The currency market could be a good investment for your money. First of all, the forex market is open 24 hours a day, except for the weekends. Another factor is the large trading volumes and the large number of investors in this market make it very liquid. A intelligent investor can make good profits that are available in the foreign exchange market. With a bit of experience and some good knowledge, you too can be a profitable investor.



There are two trading strategies in the currency exchange market, that being, fundamental analysis and technical analysis. Let us have a real good look at each of the strategies.

Fundamental analysis deals with the social and political factors of a region, the employment picture of a country and it's various industries including the business cycles of that region and government policies. Using this data, the trader can predict the future of the region or country's currency. The stronger the factors of the country, the better the future the currency is. Fundamental Analysis is prominent amongst the long term traders. It can be quite difficult to predict the markets during silent times of activity when analyzing fundamentally. In this analysis two minor trading strategies are capital flows and trade flows.

Capital flows is money that flows through foreign direct investments in the form of joint ventures and third party licensing agreements that reflect the economic growth and financial stability of a region. Fixed income market investments and equity market investments are common portfolio investments. Trade Flows are the international imports and exports carried out between two different countries. It plays an important role in the currency market as the importing country needs to sell their currency in order to purchase the goods from another other country. This is a great example of currency exchange and a good way to predict the currency's future.World news and happenings as well as country specific happenings also affect the currency market. It is a good plan for the fundamental investor to keep a track of the global news and a country's relations when investing in its currency.

Another trading strategy in the forex market is technical analysis. This analysis predicts the future of the currency by having a look at its past. A technical investor studies the graphs showing the up and down past patterns of the currency.

Tools used by a fundamental investor are: Relative Strength Index (RSI):This is a ratio of up and down movements of a currency and equates on a scale of 0-100. A second tool is Fibonacci numbers theory: The Fibonacci number sequence (1,1,2,3,5,8,13,21,34...) is used by adding the first two numbers to arrive at the third. As a forex trader, one may use them to calculate profit targets and price retracement levels. The last tool is Elliot Wave Theory: It shows wave patterns and fibonacci number sequence. Ideal Elliot wave pattern shows a five-way forward advance followed by a three way recline.

We have looked at two trading strategies used in trading in the forex market. Each has its good and bad points so it's up to you to chose which one you wish to trade with. Trading strategies harm only when you apply them without the sufficient knowledge.