Divergence Trade in Forex Trading

Using economic divergence as part of a currency trading strategy

One of the ways you can enhance your currency trading strategy is to consider incorporating economic divergence. This is the idea that you can benefit from the impact that different recovery paces in different countries can have on currencies on the FX market.

GFT’s Kathy Lien explains a bit about the divergence trade in FX360:

Economic divergence is one of those long term factors that can have a big impact on currencies, equities and bonds but usually take a long time to pan out. At the beginning of a recovery, the market pays particular attention to economic divergence as they try to figure out who will raise interest rates first. In the current recovery, economic divergence is even more important because not only are different countries growing at a different pace, but each part of the world is dealing with different issues.

If you are careful about it, you can find good forex trading success with a little help from economic divergence.

See Also

• Learn the Divergence Trade in Forex Trading
  Currency trading on the FX market