FOREX Trading
• What Is
FOREX?
• FOREX
Or Futures?
• FOREX
Or Stocks?
•
FOREX Trading for
Beginners
• FOREX
Terms To Know
•
Preparing for FOREX
Trading
• Is
FOREX Trading Risky?
•
The Philosophy of FOREX
Trading
•
FOREX and Fundamental
Analysis
•
Tools for FOREX Trading
•
Trading Strategies for
FOREX
• Trading Systems
for FOREX
•
Reading and Understanding
FOREX Quotes
•
FOREX Profits and Losses
•
FOREX Technical Analysis
Part 1
•
FOREX Technical Analysis
Part 2
•
FOREX Trading Brokers
• The
FOREX Margin
•
What Are Currency Options?
•
What Are FOREX Signals?
|
Online FOREX Trading
FOREX and Fundamental Analysis
When choosing stock investments, savvy investors rely on analysis and research
to determine how stocks will perform in the future. When trading on the FOREX
market, traders must also rely on analysis to plan trading strategies. In
the FOREX market, there are two types of analysis: Technical analysis and
Fundamental analysis.
Fundamental analysis basically comes from political and economical conditions
that may affect currency prices. This analysis may come from a variety of
sources, such as news reports, unemployment rates, policies, interest rates,
inflation, growth rates, and economic policies.
With fundamental analysis, a trader is able to see a big picture concerning
the economic conditions of a currency, and how that currency may move in
the market. Fundamental analysis are then supported with technical analysis
so that a trader is able to determine entry and exit points.
The FOREX market currencies are greatly affected by the supply and demand
of those currencies. This supply and demand also has an effect on the economic
conditions around the world. Supply and demand is affected by interest rates,
as well as how strong the economy is. The economy, in turn, is determined
by the Gross Domestic Product, Foreign Investment, and Trade Balance.
Governments and academic sources release indicators. Indicators are measures
of the health of the economy. These indicators are typically released monthly,
but there are some that are weekly. Interest rates and International trade
are the two most important indicators, although other indicators are the
Consumer Price Index (CPI), Durable Goods Orders, Purchasing Manager's Index
(PMI), Producer Price Index (PPI), and of course retail sales.
Interest rates can affect the economy in two ways: they can either make the
economy stronger, or make it weaker, and this in turn makes that currency
stronger or weaker. If the interest rates are high, there are more foreign
investments, which makes the currency stronger. However, high interest rates
can be bad as well, causing stock investors to sell their stocks, which in
turn has an impact on the stock market, and the overall national economical
condition.
The trade balance can show a positive or negative balance. If there are more
imports than exports, the trade balance will be negative. This is a good
indication that the currency value will drop, as this means that money is
leaving the country, instead of coming into the country.
The cost of living (CPI) also matters, as does the PPI, which is the cost
of producing goods. The value of services and goods in a country is measured
by the GDP, and the amount of currency available is measured by the M2 Money
Supply. In fact, in the United States, there are 28 indicators that are used.
FOREX traders must make themselves aware of these indicators if they hope
to be successful, as these indicators will help plan strategies.
|