The FOREX exchange rate is the average market rate of a particular currency relative to another currency. Since FOREX rates are in units of dollars, they represent the prices at which currency pairs are traded. Foreign currency values are primarily expressed in USD and therefore this term is also commonly known as ‘dollarization’. This term is used in two distinct contexts: first, the FOREX exchange rate is used to describe how one currency compares to another. Second, the FOREX exchange rate is used to refer to the inter-currency correlation that exists between different currencies.
The FOREX exchange rate is very sensitive to political events, the media, investor sentiment, and other economic factors. However, for most of the last twenty years, FOREX rates have remained largely stable, with only minor fluctuations around the margins.
Currency markets are based on expectations of future economic conditions, and thus, FOREX rates can change sharply on short notice. If FOREX currencies are traded in anticipation of an upcoming announcement or financial report, for example, it may affect the market more dramatically. On the other hand, if FOREX currency trades are not sold or purchased in anticipation of a given event, there is little room for market disruption.
Commodity markets such as oil and agricultural products generally influence foreign exchange rates. As a result, the FOREX rate is largely determined by the U.S. dollar, but the pattern and type of currency trading can also have a significant impact on FOREX rates.
There are many traders who make their living by predicting where the FOREX exchange rates will go next, or by learning where the current trends are headed. Trading signals are an important part of the FOREX process, because this method provides constant reminders of the current exchange rates, even when the market is closed.
However, trading signals do not provide investors with all the data they need to decide on the best times to buy or sell foreign exchange. They are primarily focused on seeing where the trend will take them and which direction it will take them.
These Forex traders who attempt to guess the trends are called trend followers, and they are the ones who should take advantage of tools such as autopilot FOREX systems. These programs are designed to analyze the market every hour of every day, identifying major trends, and sending their findings to the trader‘s computer via an online connection.
This type of software analyzes the market using charts, price action patterns, and time frames, to identify small, consistent changes. A programmed, trend following system does not need to be programmed by the trader, so no extra computer expertise is required.
The software uses an algorithm that compares the price action patterns in the FOREX market, such as the closing price of each stock, with a long term average. The algorithm identifies the potential changes in FOREX rates and sends its findings to the trader’s computer via an online connection.
Traders can then use the system to keep track of the daily average market prices and wait for the expected change in the price action patterns. The software can also be programmed to trade only against established patterns, and not to do anything untoward.
The FOREX exchange rate is a measure of the value of a currency within a certain market and is always going to be in a fluctuating state. However, the existence of some form of trend following software can greatly help prevent the occurrence of sudden and drastic changes.
Most trend following systems are available free of charge, and they are effective at detecting and reacting to large price movements in the currency markets. Because they are automated, no special expertise is required to operate them, and since they do not require a trader to be in charge of the trading decisions, they are easy to use and to set up.