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Foreign Exchange Opportunity
When there is unrest throughout the world there is also foreign exchange opportunity. When currency traders seek to move assets from one monetary system to another there is foreign exchange opportunity. Traders take advantage of these opportunities through analysis of Forex fundamentals and market sentiment. Traders exploit foreign exchange opportunity using tools such as candlestick patterns in Forex trading. Opportunities lie in trading both minor and major Forex pairs for the trader who develops the appropriate skill sets and adheres to a well thought out trading strategy.
Fundamental analysis of Forex pairs is essential to a clear understanding of price movement in Forex and taking advantage of foreign exchange opportunity. Fundamental analysis has to do with the news of the day, politics, monetary policy, balances of trade, and both pronouncements and actions of central banks. Fundamentals are what drive currency prices over the long term.
Forex Technical Analysis
Many traders focus on technical analysis of major Forex currencies. These are the currencies that trade in high volume and liquidity. Traders can profit from small changes in currency rates using statistical programs that accurately predict short term price movements. Although traders can certainly use the same programs to track minor currencies the results are often not as good as minor currencies commonly trade in low volume and low liquidity. Although there may be substantial foreign exchange opportunity in trading minor currencies traders typically need to thoroughly understand the fundamentals involved.
Volatility Leads to Profit Potential
Traders profit from trading currencies when they correctly anticipate upcoming price changes between one currency and another. Profits depend upon accurate analysis and market fluctuations. The most accurate technical analysis of Forex pairs will result in little profit if the market is trading sideways, the common term for a very calm market. Some traders subscribe to alert services which help them spot market opportunity. This allows a trader to most efficiently invest his time and skills toward Forex profits.