Thinking about FA can help with TA decisions - e.g. Eur/Usd
Pres Trump has made it known that he desires a weaker USD, the market expects that he will pursue policies and make choices with that in mind, for example the recent appointment of Fed Chair.
ECB are hinting about reducing/ending QE and the need to raise rates - as usual their cycle is just a tad behind the US.
With that in mind lets say a trader enters the market in increments of 2 lots with the aim of a 10 lot exposure.
The FA as above (and some others) suggest a buy, so he enters his first 2 lots at the beginning of this week at 1.2420.
Price goes against him, he enters again at 2350 Tuesday, another 2 lots.
Price yet again goes against him today, he enters yet again 2320, now 6 lots long
He is averaging down (all the pundits say don’t do it, never add to a loser).
Now he will wait until price starts to rise before adding his remaining 4 lots - based on FA
(he will take a few other things into account including S&P but that’s another story.)