Fundamentals, indicators, analysis.
Forex Fundamental Analysis
Each day, many economic and political announcements are released that can have a direct impact on the markets, including the forex market. Therefore, it is important that traders understand how to interpret this information and convert it into an educated and successful trade.
You have to understand the reasons of why and how certain events like an increase in the unemployment rate affects a country’s economy and monetary policy which ultimately, affects the level of demand for its currency.
- Deficits and Surpluses
Countries with the most influential currency in the forex market are those with fewer deficits, meaning that they are in a good position to trade and even lend to other countries.
- Economic Policies in Individual Countries
Economic policies refer to how a country govern trades, budget and currency distribution. This is why budget readings in parliaments across the world are important to individuals looking to invest in the country’s currency. If the budget is well balanced, it promotes trade and improve the economic status, then the currency’s value should increase. If for any reason the distribution of wealth and economic policies reflected in the budget is less than satisfactory, the currency suffers.
Inflation reduces the value of a currency and the rate of inflation should be reasonable since it occurs in every country.
- Trade Trends and Levels
If a country is very active in trade, then there should be a great demand for its currency, which therefore affects all the currency pairs associated with it. A high amount of trade also indicates the competitiveness in the market, not just for currency, but for commodities and stocks as well. Economic events affecting trade trends involve supply and demand in global trade.
Once you have familiarised yourself with the information and concepts, you can open a Demo Trading Account to practice what you have learnt and build on your knowledge and understanding of how to trade successfully. Treat your demo account as you would your real account.