Forex Trading Styles - Which Forex Style is Best For You?



There are two main Forex trading styles in use by most Forex traders. Naturally there are hundreds of variations within each style.

Each Forex trading style has differences, so let's take a look at them in more depth.

Technical Forex trading.

This is based on one of two tools - charts or trading models.

Charting Forex tools use charts or graphs to display past currency movements. This allows an "at a glance" view of the direction the market is taking at any given stage. If you are skilled enough to use charts to work out when the market is turning then you should be able to make money on the Forex market. All the things you can do with graphs in programs such as Excel can be used with your charting. There are software programs out there which will import your data and display the resultant charts. As always with software programs, the results you get are only as good as the programmer and the data. When you change to a new software program you should trade for a while "on paper" until you are confident with the results you are getting. If you decide to use an online Forex software service then you can get deeper into the use of Quantitative Trading Models. If you are using day trading as your main Forex method then you will need to use an online service to make sure that your data is constantly up to date.

Fundamental Forex trading

This is based on the analysis of key economic data.

This data includes reports from various governments, news coverage of current events, interest rate fluctuations, balance of trade figures for the countries involved, inflation rates, retail and trade price indices, future orders, stock levels, company expectations and employment statistics. Other economic data can also affect the view that a fundamentalist Forex trader takes. This often includes changes in political leadership, military skirmishes, terrorist attacks as well as natural disasters.

Ultimately, your choice of trading style will depend on your own temperament and preferences. It will also be affected by whether you are a day trader or are taking a longer term view.

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