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Fundamental analysis forex.


      If you are new to the Forex markets then you will probably be delving into Fundamental Analysis to get a feel for how the markets work. You may even decide to stick with this method as a trader and work your way up the ladder. Or you may be a day trader and be looking for a quick way to reduce your trading risk. Whatever your reasons there are a few things that you must know about fundamental analysis.
     In simple terms it is "the study of the forces that drive prices". This study can be done by any number of different people and in different ways. It is not unique to technical analysis of the Forex markets. Many other disciplines lend themselves to fundamental analysis as well. The real study of the markets can be broken down into 3 parts.
     First, the supply side of the market. These include the supply of raw materials, energy, basic materials such as coal, and employment which include labour. All of these factors have impacts on the global economy. Obviously, the supply side will determine the overall direction of the markets but it is also important for a trader to look at the impact of the demand and supply on the currencies of various countries.
     Second, the demand side. This is where all of the major decisions on the supply and demand of the currency of a country takes place. This includes both foreign trade and internal trade. What drives a country's currency up or down is ultimately the state of their economy. A major factor affecting the value of a currency is their financial health.
     Third, and importantly, there are fundamental economic indicators of a country's economic status. The gross domestic product (GDP) of a country can tell us a lot about that country. The key indicator of economic performance is the Gross Domestic Product (GDP) - which is a measure of all of the products a country produces within its borders. In the Forex market, it is possible to use this market to determine the economic strength or weakness of a country. When you compare two countries, it is the size of their economy which can fluctuate dramatically. While there may be similarities between countries, they may also differ in certain areas such as climate, infrastructure, and healthcare availability.
     Another economic indicator of a country is the currency exchange rate. Many people will exchange one currency for another depending on whether they feel that their country has the stronger dollar and will gain money (making them more valuable). In the Forex market, you can determine the value of your currency by looking at currency rates. These rates tell you what the exchange rate should be for a particular currency pair - and if you are the savvy trader you will know when to purchase or sell.
     There are many economic indicators that use fundamental analysis to examine the market and decide where it should go next. Of course, fundamental analysis is only one part of the equation. It cannot give you the entire picture. You need to look at several indicators to make sense of the market, and decide whether it is time to make a trade.
     Fundamental analysis of currency markets can seem complicated, but with just a little bit of knowledge, you can start to understand how it works. There is a lot of technical analysis that you can use, and I suggest using all three methods in conjunction with each other. You may find that one of the methods is giving you a different view of the market than you had before you used the other two. No matter how you choose to analyze, it is important to have some knowledge of how the economic indicators work.

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