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| FOREX STRATEGIES | Published: 06/01/09 |
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A set of analyses that a forex day trader uses to determine whether to buy or sell a currency pair at any given time. Forex trading strategies can be based on technical analysis charting tools or fundamental, news-based events. The day trader's currency trading strategy is usually made up of a multitude of signals, which trigger buy or sell decisions. Forex trading strategies are available for free, for a fee or are developed by the traders themselves.
Forex trading strategies can be either manual or automated. A manual system involves a trader sitting at the computer screen, looking for signals and interpreting whether to buy or sell. An automated trading system involves the trader "teaching" the software what signals to look for and how to interpret them. It is thought that automated trading takes out the human element of psychology that is detrimental to a lot of traders.
It is important to note that there is no such thing as the "holy grail" of trading systems.
Forex Futures
An exchange-traded contract to buy or sell a specified amount of a given currency at a predetermined price on a set date in the future. All forex futures are written with a specific termination date, at which point delivery of the currency must occur unless an offsetting trade is made on the initial position.
Forex futures serve two primary purposes as financial instruments. First, they can be used by companies or sole proprietors to remove the exchange-rate risk inherent in cross-border transactions. Second, they can be used by investors to speculate and profit from currency exchange-rate fluctuations.
Forex Dealers
Any type of financial institution that has received authorization from a relevant regulatory body to act as a dealer involved with the trading of foreign currencies. Dealing with authorized forex dealers ensure that your transactions are being executed in a legal and just way.
In the United States, one regulatory body responsible for authorizing forex dealers is the National Futures Association (NFA). The NFA ensures that authorized forex dealers are subject to stringent screening upon registration and strong enforcement of regulations upon approval.
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