AriaS
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The phrase “buy low, sell high” originates from the stock market, where you deal with a single asset that can be bought or sold. Even there, however, it is not easy to determine what exactly counts as “low” and what counts as “high.”
In the forex market this becomes even more complex, because you are never trading just one asset — you are always dealing with two currencies at the same time.
If you try to apply the “buy low, sell high” idea in forex, traditional support and resistance levels may not give you a full picture. Instead, currency indices (for example, the US Dollar Index) can help. These indices allow you to see the relative strength and weakness of each currency, showing you where the “highs” and “lows” truly are across the market.
In other words, an index is the only way to understand the real position of a currency in the global forex market.
In the forex market this becomes even more complex, because you are never trading just one asset — you are always dealing with two currencies at the same time.
If you try to apply the “buy low, sell high” idea in forex, traditional support and resistance levels may not give you a full picture. Instead, currency indices (for example, the US Dollar Index) can help. These indices allow you to see the relative strength and weakness of each currency, showing you where the “highs” and “lows” truly are across the market.
In other words, an index is the only way to understand the real position of a currency in the global forex market.
