Forex trading using fundamental analysis
Sunday, May 13, 2012
Forex technical trading using fundamental analysis
Technical trading fundamental analysis is the method of forecasting future currency value through the analysis of all of the economic, political and social factors relevant to it. When you are involved in foreign exchange (Forex) trading, an important factor to keep in mind is that currencies and exchange rates are not uninfluenced by social, economic and environmental factors in any currency . This is essentially what fundamental analysis unlike the technical analysis which works with the result of all these forces manifested in various technical price formations; the fundamental analysis is chiefly concerned with establishing the causes of the current and future price moves. The fundamental analysis is best used to determine the likely direction of the currency pair in the long-term. The technical analysis is better used to find entry points with favorable reward / risk characteristics (i.e. to time your entries and exits) which will allow you to align yourself with the future currency direction as suggested by the fundamental analysis.
Forex technical trading strategies for beginners in this article is helping in made your own strategy and forecasting your think. So, more specifically, here are some of the sources and the factors you should consider when performing a fundamental analysis:
Key Political Figures: Speeches from key figures in the financial and economic government departments is often a reliable source of information in analyzing a currencies position and potential future movements. Also data and reports released publicly by these departments often highlight areas of strength and concern. So this is the most important think in your analysis.
Interest Rates: Increases in interest rates often reflect intentions to reinvest in one’s own economy position. Such an increase encourages investors to shift their assets to that country for higher returns.
Technical trading using fundamental analysis
Employment/Unemployment: Increases in unemployment levels is often interpreted as a sign of a weak economy as well very good employment to the good for this country. The employment level is important indicator, as this will affect the interest rates and thus the strength of the given currency.
Fundamental analysis technical trading stratigies
Trade Balance & Budgets: The level of a country’s trade deficit will impact the strength of its currency. A significant trade deficit is indicative of a weak currency as this encourages higher levels of selling then buying into the currency.
Gross Domestic Product (GDP):Reported on quarterly, the GDP is an important indicator of the strength of a currency. A high GDP often precedes a high interest rate, which is a good sign for currencies.
Retail Sales: Consumer expenditure is initially represented in retail sales levels. High retail sales and consumer expenditure can reflect a stable economy with a strengthening currency. So you can think fresh fundamental analysis. Thanks for reading.
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