As a forex trader, use a combination of trading strategies in developing your forex system. This will reduce your risk and maximize pips for you. There are a few trading strategies based on fundamental analysis and others are based on technical analysis. You can use a fundamental trading strategy that is based on keeping on top of the global events for swing trading that may last from a few weeks to a few months.

Day traders and short term forex traders try to focus on only the economic news release of the week and how it will impact their trading. This works well for most of the traders. Learn forex nitty gritty, a trading method based on only 20 minutes trading a day.

You should not lose sight of the big macroeconomic events that may be brewing in the economy or for that matter in world. Large scale macroeconomic events have the potential and ability of moving the currency markets big time for many months or even years.

The impact of big macroeconomic events have the potential to change the fundamental perception about a currency for months and even years what to talk of days. Events such as wars, political uncertainty, natural disaster and international meetings have widespread psychological and physical impact on the currency markets.

Therefore, keeping on top of the global developments, understanding the underlying market sentiments before and after these global events and anticipating them could be very profitable for you. At least it can help prevent significant losses in your trading account.

What type of big events affects the currency markets in the long term, you may ask. G-8 Finance Minister meetings, Presidential and Parliamentary elections in big countries, important world summits, major central bank meetings, potential changes to the currency regimes, possible default by large countries, possible wars, FED Chairman semiannual testimony to the Congress. These are only a few examples of big events that make the currency markets jittery and may have a long term impact.

For example, 2004 and 2008 US Presidential elections were hotly contested. Candidates had different stances on the growing budget deficit and how to deal with the recession engulfing the US economy. This resulted in the overall USD bearishness.

G-8 Finance Ministers meetings also tend to leave a long lasting impact on forex markets. Combined these eight rich countries account for 2/3rd of the world GDP. So whatever decisions that are taken during these G-8 Finance Minister meetings usually leave a short term as well as a long term impact on the global markets for a considerable time.

For example, the US Dollar collapsed after the September 2003, G-8 Finance Minister meeting in which the finance ministers wanted to see more flexibility in the exchange rates of the member countries. This meeting was also important as the US Trade Deficit was ballooning and going out of control at that time.

EUR/USD pair bore the burnt of dollar depreciation while Japan and China intervened aggressively to stabilize their currencies. US Dollar had already begun to sell even before the meeting. This trend continued with the EUR/USD pair for many months after the meeting.

Therefore, the long term impact of these macroeconomic events is much more significant than the short term impact. The event itself has the ability to change the overall market sentiments for a long time.