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Forex Trader

Measuring currency strength

Measuring currency strength

How strong is a currency? This question is fundamental to the forex trader. Because trading is the act of buying or selling one currency against another, traders usually think about the currency pair and not the currency itself. When a trader makes a judgment about the strength of a currency by only using a currency pair context, that judgment can be misleading. To enable an answer to the question of how strong a particular currency is on its own terms, the Trade Weighted Index (TWI) is used by economists and should