Online Forex Trading
- Fundamental Analysis


Trading Forex - Fundamental Analysis


Online Forex Trading - Fundamental Analysis

Any smart trader knows that in order to be successful they must be able to analyze the market and predict price movement. This is true whether you trade in stocks, bonds, commodities, currency, or any other for of security.

Analysis can be done in two different ways:

    1. fundamental analysis and

    2. technical analysis.

Technical analysis is the study of prices. The goal is to analyze the history of price movement in an effort to predict future prices.

Fundamental analysis is the study of a nation's overall economic health. I like to think of this as "Big Picture" analysis. The idea is that the strength of a nation's economy will affect the supply and demand for its currency, which will in turn affect the price of the currency.

For example, let's assume that the US economy is in a major upswing. Since the economy is strong, the value of the dollar will be expected to rise and currency traders will invest heavily in the dollar. This bullish behavior becomes a self-fulfilling prophecy and the dollar rises in value.

That's a pretty simple concept, but judging the health of a nation's economy is no easy task. There are many factors to consider, and twotraders may look at the same figures and interpret the data differently.

Fundamental analysts look at various economic indicators for signs of an economies strength. Some of the indicators they analyze are the interest rate, unemployment rate, consumer price index, and gross domestic product (GDP).

These reports are released regularly by various government agencies and non-government entities. You should find the latest schedule of upcoming releases and put them on your calendar. Keep an eye on them for a few months and see what effect they have on currency prices.

One thing to keep in mind: it is not always the numbers contained in a report that have the greatest impact, but rather the relation of the numbers compared to what was forecasted.

In other words, a rise in interest rates may not have a significant impact if forecasters were expecting it. But if they were expecting interest rates to remain steady and there was an unexpected increase, there may be a large impact on currency prices.

A major disadvantage of fundamental analysis is that it can be a little too "big picture". It is great for predicting overall economic growth and price changes, but it doesn't offer enough details to target specific entry and exit points. This is where technical analysis comes in.


Search 123OnlineTrading.com







Browse Categories:
Stock Trading
Forex Trading
Commodity Trading
Options Trading
Day Trading
Technical Analysis
Real Estate Investing
Bonds Investing
Finance / Economics
For Your Trading Room
 
Online Forex Trading Tips
  Currency Trading  
  Introduction to Forex  
  Reading Forex Quotes  
  Understanding Pips  
  Types of Forex Orders  
  Understanding Margin and Leverage  
  Avoiding Failure in the Forex Market  
  Calculating Profit and Loss  
  Choosing a Forex Broker  
  Forex Trading vs The Stock Market  
  Forex - Fundamental Analysis  
  Technical Analysis  
  Fundamental vs Technical Analysis  
  Traits of Successful Forex Traders  
   
  More About Forex Trading...  
 
Online Commodity Trading Tips
 

Commodity Trading

 
  Intro to Commodities - Part 1  
  Intro to Commodities - Part 2  
  Commodity Exchanges  
  Financial Indexes  
  Commodity Types  
  Reading Commodity Prices  
  Commodities - Margins  
  Commodities - Leverage  
  Trading Coffee  
  Trading Silver  
  Trading Uranium  
  Trading Soybean  
  Trading Oil  
   
  More About Commodities Trading...  
 
Online Options Trading Tips
 

Online Options Trading

 
  Options 101  
  Calls and Puts  
  Options Trading 101  
  Options Trading 102  
  Options - Risk Management  
  How To Read Options Listings  
  Trading Strategies - Basic Concepts  
  Trading Strategies - Profit and Risk  
  The Greeks - Part 1  
  The Greeks - Part 2  
  Values and Prices - Part 1  
  Values and Prices - Part 2  
   
  More About Options Trading...  
 
Real Estate Investing
  Real Estate Investing  
  Getting Started in Real Estate  
  Questions To Ask Before Investing  
  Real Estate - Your First Time  
  Finding and Evaluating Property  
  Inspections Save You Money  
  Cheap Repairs, Big Profits  
  Keep Your Cash For A Rainy Day  
  Insurance and Risk Management  
  Managing Risk - Part 1  
  Managing Risk - Part 2  
     
  More About Real Estate Investing...