The forex market is the largest financial market in the world with over $3.2 trillion in trading activity each and everyday. To give you a sense of scale, the New York Stock Exchange (NYSE) has a daily trading volume of only $153 billion.
All that to say, there is tons of room for different players to get in this market. There are many forex trading strategies that people use to make money in foreign exchange currencies. Here are just a few of those ways that those players make money here.
As an aside, let me just say that roughly 80% of currency trading is done by speculators. That means a majority of the players in this market are here for profit. A small minority are here because they actually need currencies to actually use it to buy stuff.
Forex Technical Trading
Using technical analysis is probably the most used trading method. This strategy looks at charts, prive movements and predicts where prices might go. Within technical analysis, you have concepts like support and resistance, trend trading, moving averages, fibonacci retracement and MACD. Because so many traders use these methods to predict price movements, it sometimes becomes a self-fulfilling prophecy of sorts.
Forex Arbitrage
This is a method of trading that profits off of price inefficiencies in currency prices. This is normally done across 3 currencies in which prices are not in equilibrium. You can also do this across different brokers with differing price spreads. In any case, because these are essentially non-risk trading strategies, they appear and disappear very quickly.
Forex Managed Accounts
Forex managed accounts allow you to have a professional money manager trade your capital for you on the currency market. There is a difference between managed forex investing and trading yourself. Investing allows you to plop money down and let someone else trade for you. If you decide to trade yourself, it involves tons of time and energy that you may or may not have.
There are tons of advantages to this method. First of all, you are leveraging the years of experience and skills of the currency trader that is trading your account. They have know-how that would take you years and tons of trades to pick up.
In addition, many of these brokers have proprietary trading systems that give them an edge, especially over other retail day traders. Of course, you pay for the privilege of letting them trade for you. But in the end, it might be well worth it.
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