Kinds of Forex Cycle
Most of the things happening around us come to us in cyclical pattern. With day comes night, ebb and flow, if you are winning a game you will lose too and the examples can go on. We are so used to it that we almost take them for granted and seldom think that the cycles can be associated with forecasting also. Once mankind understood that a series of tools and mechanisms came into being to forecast weather, natural calamities or possible collision that can take place in space. These cycles gave way to hypotheses and in economy, the trend of studying forex cycles came into being so that possible changes in financial market could be predicted. Where future is concerned, it is unforeseen, thus cannot be said with 100% conviction. So, forex cycle is the study of statistics and make hypothesis on the basis of that. Also, these cycles help you make and design strategy of future trading too.
How to Understand Forex Cycle
To study forex cycle you need to study statistics and graphical representations of data. For example, you have taken sample information of price range of particular time range. See the graph which represents the price. It is moving up and down forming a wave like image. There are two points in a wave-crest and bottom. Peak of the wave or crest is the highest point of price of that time range. Every low point of the graph connects with a high point. The time range between two high or low points is the forex cycle. When you want to know the trend of the market, you need to have larger information graph. Reading of repeated cycles will give you the market trend and you will know what kind of market it had been in past. Studying the trend at macro level gives better understanding of the market thus forecasts or predictions are made.
Kinds of Forex Cycle
Forex Cycle can be of different types- short term, medium term, long term and so on. For long term analysis of Foreign Exchange, long term cycle and medium term cycle is used. This cycle encompasses 30-50 weeks and 20-40 days respectively. For analysis of short term Forex, the short term cycle of 100 to 400 hours is studied. In certain cases, long term Forex cycle is increased to see the wider range of market performance. In such cases, long term cycle encompasses 35 to 55 weeks while medium term cycle encompasses 25 to 45 days. If required, short term cycles are even shortened as per the requirement of the study.
Forex cycle study is required for both fundamental and technical trading analysis. This analysis is important to predictions of apt time to buy or sell. Also, when you have a prediction for the future market, you can plan your investments in accordance of that. There are software and equipment to do it for you. Thus if you are interested in forex trading, get yourself a software of forex cycle and start training yourself. In no time, you will be able to make out which is the good time to make your move.