The 10 forex strategies to check out today

Take a look at these strategies if you are looking to trade in foreign currency or exchange your Rupees.

Foreign exchange means different things to different people. For some, it is just a way of getting foreign currency for a holiday. However, businesses also deal in forex for foreign trade. Meanwhile, many people do forex trading on behalf of others, by studying the markets.

These are the strategies to adopt in case you wish to trade in forex:

1. Assess your need. You might need too much hard cash on hand if you are exchanging your money for travel. At the same time, your requirement is completely different in case you are dabbling in forex for trade finance. Foreign trade requires you to keep a watch on the rise and fall of currencies all the time. Divide your need into a daily schedule because no two days are alike on the markets.
2. Deal with the right merchants. If you just want a little bit of forex, you can go to a merchant who deals in the same. However, choose the merchant wisely – your bank may give you a better exchange rate than a private lender. Again, if you trust the lender and have dealt with them in the past, you can negotiate a better price – you cannot do this at the bank.
3. Get information from the right source. The time you choose to deal in forex, especially for trade finance, depends largely on where you are getting your information from. Looking at trends on the Internet is not worth your while – there are many amateur traders masquerading as agents who can misguide you into trading at the wrong time. Instead, find out your bank’s forex rates for the day, or check business newspapers that print the day’s trends.
4. Test your strategy. If you are thinking of trading in forex, you must have a sound strategy in place. This strategy is bolstered by a good knowledge of the markets and the ability to work swings in your favour. Test your strategy in a number of different situations to perfect it.
5. Don’t start afresh – adopt an existing model. There is really no need to reinvent the wheel when it comes to forex. Going with a tried and tested strategy works better, especially for those dabbling in foreign trade. Instead of costing yourself a lot of money through a completely new strategy of your invention, why not go with a model that works for your requirements, for better results?
6. Analyse time frames. The day to day workings of the market must be analysed carefully to capitalise on the trends. Instead of looking at short term gains, adopt a more long term outlook. This will help you understand where the market is headed. But use different time frames to tap the trends more accurately.
7. Keep abreast of the news. The election of a new president in another country, riots in a neighbouring nation, a country pulling out of the EU…major world events have an effect on global markets and currencies. It pays to keep your ear to the ground and predict the rise and fall of the markets so that you can trade at the right time.
8. Be careful with volatile currency. Some currencies are volatile while others are pretty stable over a period of time. Get inputs from your bank or experienced traders who can give you an understanding of what to look for in different currencies.
9. Don’t trade on Friday and end of the month. Most news is rounded up on a Friday and the markets normally close on a lower note than the previous day. The same applies to the end of the month. Pick your trading day wisely.
10. Limit your exposure till the Rupee stabilises. The current demonetisation of the INR has changed its fortunes,especially vis-à-vis other currencies. It is wiser to wait for a while to see which direction the Rupee goes before dealing in forex.