Money Manager · Chart Strategy · Monetary Valuation · 3 Years - 6 Years
How it works ? · Keep It Simple To Stupid !
A form is worth a thousand words.
Currency overvalued undervalued purchasing power parity form strategy: Identify potential long-term investment opportunities!
The purpose of this strategy: Exchange rate movements in the short term are news-driven. Announcements about interest rate changes, changes in perception of the growth path of economies and the like are all factors that drive exchange rates in the short run. PPP, by comparison, describes the long run behaviour of exchange rates. The economic forces behind PPP will eventually equalize the purchasing power of currencies. This can take many years, however. A time horizon of 3-6 years would be typical.
Of course, this strategy is focused on the long-term strategy of 3 to 6 years, it is necessary and worthwhile to refer to this strategy for "investors" who have spare cash and have long-term investment plans.
Conversely, if it is a short-term trader or a medium-term investor, you can ignore this strategy!
Of course, currency overvalued undervalued purchasing power parity form strategy is is a long-term strategy that focuses on 3 to 6 years, sometimes it is not necessarily the true intrinsic value of the currency.
But, have it, it's better than nothing.