Can an FX Converter be Used in FX Strategies?
One of the tools of the forex market is the FX converter. This tool is often used by travellers looking to convert their currency into the currency of the country they are travelling to. However, many new forex traders wonder if this tool can be used while trading. It is important that you know what your FX converter can do and how you could possibly use it.
What is an FX Converter?
Before you can consider how to use the converter you need to know what it can offer you. An FX converter is able to give you the conversion rates of one currency to another. Some of the converters on the market are able to convert more currencies than others. Before you consider using the converter you should verify that it converts all the currencies you need.
Converters and Forex Trend Trading
One of the trading strategies that you can trade with is trend trading. As the name suggests this trading is done using the trends in the forex market. A converter can be used to track the movement of the currency pair. However, this is not a route many traders take as it is often more time consuming that chart analysis. To use an FX converter you will have to constantly check what the rate is and keep a record of previous rates.
Fundamental trading is another strategy that can be used on the forex market. With this strategy you are looking at fundamental analysis to determine what the market will do. You can use a converter to keep track of the movements on the market, but this is also easily done using charts. As most fundamental traders are range traders they need to have an overview of the market direction and this can be time consuming to gather from a converter.
Carry trading is one of the forex strategies where you cannot use a converter. With this strategy you are making a profit off the difference in interest rates in different countries. This information is not available from a converter. If you are thinking of looking at carry trading then you have to keep a close eye on the interest rates and ensure that you are holding the currency with the higher rate.
Scalping is a short-term trading strategy that many day traders use for a quick profit. The trades when using this strategy do not last more than a few minutes. The profits you can make from this strategy are small, but the number of trades that can be completed cause them to add up. While it is possible to use a converter with this strategy it is considered to be impractical. The short-term nature of the trade does not offer the time needed for converting.
Swing trading is the most commonly used medium-term trading strategies. When traders use this strategy they are looking to benefit from the swings in the market prices. While you can use a converter with this method it will not offer you much information. It is impossible to predict a market price swing with the information you get from a converter.