Working of Forex Market Strength Indicator: This gives an idea of the trend line which assists in quick currency strength analysis. Percentage change in their value is linked to each of the currencies and is plotted on a single chart. There are currencies which are relatively gaining strength on account of a relatively stronger trend. The winning currency gains ground on account of stronger appreciation in its value on the other. Obviously, it’s a zero-sum game, in which one party gains while the other loses. Therefore it is important to understand the relative change of one against another. The relative change is shown as a percentage change and is indicated by different colour patterns.įorex brokers allow traders to trade with 8 major currencies part from commodities and CFDs. The indicator specializes in visualizing the relative strength of one currency against another. The strength indicator Forex directs you according to the movement of the market and prompts you to buy/sell depending on the same.
So if you are trading with EUR/USD and one among the two suffers an economic breakdown, it is sure to affect your trading behaviour. Since traders deal with two currencies at a time, they expose themselves to the behaviour of each and thus two economies are taken into consideration.
Currency traders often feel the need to understand the market trends and behave accordingly.
