Forex for a trader
Fundamental forex trading tips

Fundamental forex trading tipsForex Tutorial: Fundamental Analysis & Fundamentals Trading Strategies. In the equities market, fundamental analysis looks to measure a company's true value and to base investments upon this type of calculation. To some extent, the same is done in the retail forex market, where forex fundamental traders evaluate currencies, and their countries, like companies and use economic announcements to gain an idea of the currency's true value. All of the news reports, economic data and political events that come out about a country are similar to news that comes out about a stock in that it is used by investors to gain an idea of value. This value changes over time due to many factors, including economic growth and financial strength. Fundamental traders look at all of this information to evaluate a country's currency. Given that there are practically unlimited forex fundamentals trading strategies based on fundamental data, one could write a book on this subject. To give you a better idea of a tangible trading opportunity, let's go over one of the most well-known situations, the forex carry trade. (To read some frequently asked questions about currency trading, see Common Questions About Currency Trading .) A Breakdown of the Forex Carry Trade The currency carry trade is a strategy in which a trader sells a currency that is offering lower interest rates and purchases a currency that offers a higher interest rate. In other words, you borrow at a low rate, and then lend at a higher rate. The trader using the strategy captures the difference between the two rates. When highly leveraging the trade, even a small difference between two rates can make the trade highly profitable. Along with capturing the rate difference, investors also will often see the value of the higher currency rise as money flows into the higher-yielding currency, which bids up its value.

Real-life examples of a yen carry trade can be found starting in 1999, when Japan decreased its interest rates to almost zero. Investors would capitalize upon these lower interest rates and borrow a large sum of Japanese yen. The borrowed yen is then converted into U. S. dollars, which are used to buy U. S. Treasury bonds with yields and coupons at around 4.5-5%. Since the Japanese interest rate was essentially zero, the investor would be paying next to nothing to borrow the Japanese yen and earn almost all the yield on his or her U. S. Treasury bonds. But with leverage, you can greatly increase the return. For example, 10 times leverage would create a return of 30% on a 3% yield. If you have $1,000 in your account and have access to 10 times leverage, you will control $10,000. If you implement the currency carry trade from the example above, you will earn 3% per year. At the end of the year, your $10,000 investment would equal $10,300, or a $300 gain. Because you only invested $1,000 of your own money, your real return would be 30% ($300$1,000). However this strategy only works if the currency pair's value remains unchanged or appreciates. Therefore, most forex carry traders look not only to earn the interest rate differential, but also capital appreciation. While we've greatly simplified this transaction, the key thing to remember here is that a small difference in interest rates can result in huge gains when leverage is applied. Most currency brokers require a minimum margin to earn interest for carry trades. However, this transaction is complicated by changes to the exchange rate between the two countries. If the lower-yielding currency appreciates against the higher-yielding currency, the gain earned between the two yields could be eliminated.

The major reason that this can happen is that the risks of the higher-yielding currency are too much for investors, so they choose to invest in the lower-yielding, safer currency. Because carry trades are longer term in nature, they are susceptible to a variety of changes over time, such as rising rates in the lower-yielding currency, which attracts more investors and can lead to currency appreciation, diminishing the returns of the carry trade. This makes the future direction of the currency pair just as important as the interest rate differential itself. (To read more about currency pairs, see Using Currency Correlations To Your Advantage , Making Sense Of The EuroSwiss Franc Relationship and Forces Behind Exchange Rates .) To clarify this further, imagine that the interest rate in the U. S. was 5%, while the same interest rate in Russia was 10%, providing a carry trade opportunity for traders to short the U. S. dollar and to long the Russian ruble. Assume the trader borrows $1,000 US at 5% for a year and converts it into Russian rubles at a rate of 25 USDRUB (25,000 rubles), investing the proceeds for a year. Assuming no currency changes, the 25,000 rubles grows to 27,500 and, if converted back to U. S. dollars, will be worth $1,100 US. But because the trader borrowed $1,000 US at 5%, he or she owes $1,050 US, making the net proceeds of the trade only $50. However, imagine that there was another crisis in Russia, such as the one that was seen in 1998 when the Russian government defaulted on its debt and there was large currency devaluation in Russia as market participants sold off their Russian currency positions. If, at the end of the year the exchange rate was 50 USDRUB, your 27,500 rubles would now convert into only $550 US (27,500 RUB x 0.02 RUBUSD). Because the trader owes $1,050 US, he or she will have lost a significant percentage of the original investment on this carry trade because of the currency's fluctuation - even though the interest rates in Russia were higher than the U. S. Another good example of forex fundamental analysis is based on commodity prices. (To read more about this, see Commodity Prices And Currency Movements .) You should now have an idea of some of the basic economic and fundamental ideas that underlie the forex and impact the movement of currencies. The most important thing that should be taken away from this section is that currencies and countries, like companies, are constantly changing in value based on fundamental factors such as economic growth and interest rates. You should also, based on the economic theories mentioned above, have an idea how certain economic factors impact a country's currency.

We will now move on to technical analysis, the other school of analysis that can be used to pick trades in the forex market. The Fundamentals Of Forex Fundamentals. Those trading in the foreign-exchange market (forex) rely on the same two basic forms of analysis that are used in the stock market: fundamental analysis and technical analysis. The uses of technical analysis in forex are much the same: price is assumed to reflect all news, and the charts are the objects of analysis. But unlike companies, countries have no balance sheets, so how can fundamental analysis be conducted on a currency? Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation's currency. Here we look at some of the major fundamental factors that play a role in a currency's movement. Economic Indicators Economic indicators are reports released by the government or a private organization that detail a country's economic performance. Economic reports are the means by which a country's economic health is directly measured, but remember that a great deal of factors and policies will affect a nation's economic performance. These reports are released at scheduled times, providing the market with an indication of whether a nation's economy has improved or declined.

These reports' effects are comparable to how earnings reports, SEC filings and other releases may affect securities. In forex, as in the stock market, any deviation from the norm can cause large price and volume movements. You may recognize some of these economic reports, such as the unemployment numbers, which are well publicized. Others, like housing stats, receive less coverage. However, each indicator serves a particular purpose and can be useful. Here we outline four major reports, some of which are comparable to particular fundamental indicators used by equity investors: Gross Domestic Product (GDP) GDP is considered the broadest measure of a country's economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility. The GDP is somewhat analogous to the gross profit margin of a publicly traded company in that they are both measures of internal growth. Retail Sales The retail-sales report measures the total receipts of all retail stores in a given country. This measurement is derived from a diverse sample of retail stores throughout a nation. The report is particularly useful as a timely indicator of broad consumer spending patterns that is adjusted for seasonal variables.

It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy. Revisions to advanced reports of retail sales can cause significant volatility. The retail sales report can be compared to the sales activity of a publicly traded company. Industrial Production This report shows change in the production of factories, mines and utilities within a nation. It also reports their "capacity utilizations," the degree to which each factory's capacity is being used. It is ideal for a nation to see a production increase while being at its maximum or near maximum capacity utilization. Traders using this indicator are usually concerned with utility production, which can be extremely volatile since the utilities industry, and in turn the trading of and demand for energy, is heavily affected by changes in weather. Significant revisions between reports can be caused by weather changes, which in turn can cause volatility in the nation's currency. Consumer Price Index (CPI) The CPI measures change in the prices of consumer goods across over 200 different categories. This report, when compared to a nation's exports, can be used to see if a country is making or losing money on its products and services. Be careful, however, to monitor the exports - it is a popular focus with many traders, because the prices of exports often change relative to a currency's strength or weakness. Other major indicators include the purchasing managers index (PMI), producer price index (PPI), durable goods report, employment cost index (ECI) and housing starts. And don't forget the many privately issued reports, the most famous of which is the Michigan Consumer Confidence Survey.

All of these provide a valuable resource to traders if used properly. So, How Are These Used? Since economic indicators gauge a country's economic state, changes in the conditions reported will therefore directly affect the price and volume of a country's currency. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. Third-party reports, technical factors and many other things also can drastically affect a currency's valuation. Here are some useful tips that may help you when conducting fundamental analysis in the forex market: Keep an economic calendar on hand that lists the indicators and when they are due to be released. Also, keep an eye on the future; often markets will move in anticipation of a certain indicator or report due to be released at a later time. Be informed about the economic indicators that are capturing most of the market's attention at any given time. Such indicators are catalysts for the largest price and volume movements. For example, when the U. S. dollar is weak, inflation is often one of the most-watched indicators.

Know the market expectations for the data, and then pay attention to whether the expectations are met. That is far more important than the data itself. Occasionally, there is a drastic difference between the expectations and actual results. If so, be aware of the possible justifications for this difference. Don't react too quickly to the news. Often numbers are released and then revised, and things can change quickly. Pay attention to these revisions, as they may be a useful tool for seeing the trends and reacting more accurately to future reports. The Bottom Line There are many economic indicators, and even more private reports, that can be used to evaluate forex fundamentals. It's important to take the time to not only look at the numbers, but also understand what they mean and how they affect a nation's economy. When properly used, these indicators can be an invaluable resource for any currency trader. Forex Trading Tips – 20 things you need to know to be a successful trader. Forex has caused large losses to many inexperienced and undisciplined traders over the years. You need not be one of the losers. Here are twenty forex trading tips that you can use to avoid disasters and maximize your potential in the currency exchange market. 1. Know yourself.

Define your risk tolerance carefully. Understand your needs. To profit in trading, you must make recognize the markets. To recognize the markets, you must first know and recognize yourself. The first step of gaining self-awareness is ensuring that your risk tolerance and capital allocation to forex and trading are not excessive or lacking. This means that you must carefully study and analyze your own financial goals in engaging forex trading. 2. Plan your goals. Stick to your plan. Once you know what you want from trading, you must systematically define a timeframe and a working plan for your trading career. What constitutes failure, what would be defined as success? What is the timeframe for the trial and error process that will inevitably be an important part of your learning? How much time can you devote to trading? Do you aim at financial independence, or merely aim to generate extra income? These and similar questions must be answered before you can gain the clear vision necessary for a persistent and patient approach to trading.

Also, having clear goals will make it easier to abandon the endeavor entirely in case that the risksreturn analysis precludes a profitable outcome. 3. Choose your broker carefully. While this point is often neglected by beginners, it is impossible to overemphasise the importance of the choice of broker. That a fake or unreliable broker invalidates all the gains acquired through hard work and study is obvious. But it is equally important that your expertise level, and trading goals match the details of the offer made by the broker. What kind of client profile does the forex broker aim at reaching? Does the trading software suit your expectations? How efficient is customer service? All these must be carefully scrutinised before even beginning to consider the intricacies of trading itself. Please refer to our forex broker reviews to find a reliable broker that suites your trading style. 4. Pick your account type, and leverage ratio in accordance with your needs and expectations.

In continuation of the above item, it is necessary that we choose the account package that is most suited to our expectations and knowledge level. The various types of accounts offered by brokers can be confusing at first, but the general rule is that lower leverage is better. If you have a good understanding of leverage and trading in general, you can be satisfied with a standard account. If you’re a complete beginner, it is a must that you undergo a period of study and practice by the use of a mini account. In general, the lower your risk, the higher your chances, so make your choices in the most conservative way possible, especially at the beginning of your career. 5. Begin with small sums, increase the size of your account through organic gains, not by greater deposits. One of the best tips for trading forex is to begin with small sums, and low leverage, while adding up to your account as it generates profits. There is no justification to the idea that a larger account will allow greater profits. If you can increase the size of your account through your trading choices, perfect. If not, there’s no point in keeping pumping money to an account that is burning cash like an furnace burns paper. 6. Focus on a single currency pair, expand as you better your skills. The world of currency trading is deep and complicated, due to the chaotic nature of the markets, and the diverse characters and purposes of market participants.

It is hard to master all the different kinds of financial activity that goes on in this world, so it is a great idea to restrict our trading activity to a currency pair which we understand, and with which we are familiar. Beginning with the trading of the currency of your nation can be a great idea. If that’s not your choice, sticking to the most liquid, and widely traded pairs can also be an excellent practice for both the beginner and the advanced traders. 7. Do what you understand. Simple as it is, failure to abide by this principle has been the doom of countless traders. In general, if you’re unsure that you know what you’re doing, and that you can defend your opinion with strength and vigor against critics that you value and trust, do not trade. Do not trade on the basis of hearsay or rumors. And do not act unless you’re confident that you understand both the positive consequences, and the adverse results that may result from opening a position. 8. Do not add to a losing position. While this is just common sense, ignorance of the principle, or carelessness in its employment has caused disasters to many traders in the course of history. Nobody knows where a currency pair will be heading during the next few hours, days, or even weeks. There are lots of educated guesses, but no knowledge of where the price will be a short while later. Thus, the only certain value about trading is now. Nothing much can be said about the future. Consequently, there can be no point in adding to a losing position, unless you love gambling. A position in the red can be allowed to survive on its own in accordance with the initial plan, but adding to it can never be an advisable practice.

9. Restrain your emotions. Greed, excitement, euphoria, panic or fear should have no place in traders’ calculations. Yet traders are human beings, so it is obvious that we have to find a way of living with these emotions, while at the same time controlling them and minimizing their effect on our lives. That is why traders are always advised to begin with small amounts. By reducing our risk, we can be calm enough to realize our long term goals, reducing the impact of emotions on our trading choices. A logical approach, and less emotional intensity are the best forex trading tips necessary to a successful career. 10. Take notes. Study your success and failure. An analytical approach to trading does not begin at the fundamental and technical analysis of price trends, or the formulation of trading strategies.

It begins at the first step taken into the career, with the first dollar placed in an open position, and the first mistakes in calculation and trading methods. The successful trader will keep a diary, a journal of his trading activity where he carefully scrutinizes his mistakes and successes to find out what works and what does not. This is one of the most importance forex trading tips that you will get from a good mentor. 11. Automate your trading as much as possible. We already noted the importance of emotional control in ensuring a successful and profitable career. In order to minimize the role of emotions, one of the best of courses of action would be the automatization of trading choices and trader behavior. This is not about using forex robots, or buying expensive technical strategies. All that you need to do is to make sure that your responses to similar situations and trading scenarios are themselves similar in nature. In other words, don’t improvise. Let your reactions to market events follow a studied and tested pattern. 12. Do not rely on forex robots, wonder methods, and other snake oil products.

Surprisingly, these unproven and untested products are extremely popular these days, generating great profits for their sellers, but little in the way of gains for their excited and hopeful buyers. The logical defense against such magical items is in fact easy. If the genius creators of these tools are so smart, let them become millionaires with the benefit of their inventions. If they have no interest in doing as much, you should have no interest in their creations either. 13. Keep it simple. Both your trade plans and analysis should be easily understood and explained. Forex trading is not rocket science. There is no expectation that you be a mathematical genius, or an economics professor to acquire wealth in currency trading. Instead, clarity of vision, and well-defined, carefully observed goals and practices offer the surest path to a respectable career in forex. To achieve this, you must resist the temptation to over explain, overanalyze, and most importantly, to rationalize your failures. A failure is a failure regardless of the conditions that led to it. 14. Don’t go against the markets, unless you have enough patience and financial resilience to stick to a long term plan. In general, a beginner is never advised to trade against trends, or to pick tops and bottoms by betting against the main forces of market momentum. Join the trends so that your mind can relax. Fight the trends, and constant stress and fear will wreck your career.

15. Understand that forex is about probabilities. Forex is all about risk analysis and probability. There is no single method or style that will generate profits all the time. The key to success is positioning ourselves in such a way that the losses are harmless, while the profits are multiplied. Such a positioning is only possible by managing our risk allocations in accordance with an understanding of probability and risk management. 16. Be humble and patient. Do not fight the markets. Recognize your failures, and try to accommodate them if they can’t be eliminated completely. Above all, resist the illusion that you somehow possess the alchemist’s stone of trading. Such an attitude will surely be ruinous on your career eventually. 17. Share your experiences.

Follow your own judgment. While it is a great idea to discuss your opinion on the markets with others, you should be the one making the decisions. Consider the opinions of others, but make your own choices. It is your money after all. 18. Study money management. Once we make profits, it is time to protect them. Money management is about the minimization of losses, and maximization of profits. To ensure that you don’t gamble away your hard-earned profits, to “cut your losses short, and let profits ride”, you should keep the bible of money management as the centerpiece of your trading library at all times. 19. Study the markets, fundamentals, and technical factors leading the price action. That we have placed this so low in the list should not surprise the experienced trader. Faulty analysis is rarely the cause of a wiped-out account. A career that fails to begin is never killed by the consequences of erronerous application or understanding of fundamental or technical studies. Other issues that are related to money management, and emotional control are far more important than analysis for the beginner, but as those issues are overcome, and steady gains are realized, the edge gained by successful analysis of the markets will be invaluable. Analysis is important, but only after a proper attitude to trading and risk taking is attained.

Finally, provided that you risk only what you can afford to lose, persistence, and a determination to succeed are great advantages. It is highly unlikely that you will become a trading genius overnight, so it is only sensible to await the ripening of your skills, and the development of your talents before giving up. As long as the learning process is painless, as long as the amounts that you risk do not derail your plans about the future and your life in general, the pains of the learning process will be harmless. Tips for Forex Traders. Many visitors are looking for good educational material about forex. This page collates the best educational articles for forex traders. It is divided into various sections and it aims to make it easy to navigate. Apart from the links below, you can download the free eBook “Trade Forex Responsibly” by signing up to the newsletter here. So, here are the best educational articles. Do subscribe or follow on Twitter for all the day to day updates.

There are 4 big parts: The beginning : This sections starts from the very beginning, then has a part focusing on a demo account and then discusses forex education. Trading : This section contains many trading tips. It is then followed by technical analysis at different levels: general technical ideas and then a focus about range trading and breakouts (the most common patterns) and finally advanced technical analysis. Responsibility : For people that have already traded, making the initial analysis (technical or fundamental) is the easy part. Following the plan and controlling your emotions is the harder part and is risk management. This section contains links to articles in these very important fields. Other : Articles about software and binary options. Starting out with Forex Trading. General technical analysis. Advanced technical analysis. Risk and Money Management. That’s it! It’s quite a lot of reading. Hopefully this page will be useful for orienting yourself through the various articles. rex Crunch is a site all about the foreign exchange market, which consists of news, opinions, daily and weekly forex analysis, technical analysis, tutorials, basics of the forex market, forex software posts, insights about the forex industry and whatever is related to Forex. Foreign exchange (Forex) trading carries a high level of risk and may not be suitable for all investors.

The risk grows as the leverage is higher. Investment objectives, risk appetite and the trader's level of experience should be carefully weighed before entering the Forex market. There is always a possibility of losing some or all of your initial investment deposit, so you should not invest money which you cannot afford to lose. The high risk that is involved with currency trading must be known to you. Please ask for advice from an independent financial advisor before entering this market. Any comments made on Forex Crunch or on other sites that have received permission to republish the content originating on Forex Crunch reflect the opinions of the individual authors and do not necessarily represent the opinions of any of Forex Crunch's authorized authors. Forex Crunch has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: Omissions and errors may occur. Any news, analysis, opinion, price quote or any other information contained on Forex Crunch and permitted re-published content should be taken as general market commentary. This is by no means investment advice. Forex Crunch will not accept liability for any damage, loss, including without limitation to, any profit or loss, which may either arise directly or indirectly from use of such information. How Fundamentals Move Prices in the FX Market. by James Stanley , Currency Strategist. Price action and Macro. Your Forecast Is Headed to Your Inbox. But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with ?10,000 virtual funds , which you can use to trade over 10,000 live global markets. We'll email you login details shortly. You are subscribed to James Stanley. You can manage you subscriptions by following the link in the footer of each email you will receive. An error occurred submitting your form. Please try again later. Fundamental Analysis in the Currency markets centers around Macroeconomic data Macroeconomic analysis can be simplified by focusing on interest rates (and expectations) Traders can incorporate Price Action to make analysis even more simplistic. Fundamental Analysis in the stock market involves analyzing the inputs of a company in an effort to forecast future growth potential. For an individual company, this can be a very logical way to look for investment ideas. Fundamental Analysis of a company would involve investigating that company’s financial statements, to notice changes from one year to the next; or perhaps looking that the management of that company, and their track record in order to determine how successful they might be towards accomplishing their goals. In the Forex market, many of those statistics don’t exist, and we’re trading entire economies against one another. In each of these economies, thousands of companies exist trying to maximize their profit potential, so the analysis of a single company’s management structure or market share doesn’t really mean a whole lot. Due to the nature of the market, many traders refer to technical analysis, and we showed you how fundamental data events can be traded with technical analysis in the article The Potent Combination of Fundamentals and Price Action. In this article, we’re going to go in-depth behind how fundamentals impact prices in the FX market. Why Currency Values Matter. Currency prices matter because of cross-border trade.

We investigated this concept in-depth in The Nucleus of the FX Market . In the article, we saw how the nation of Japan was absolutely ravaged by a strong yen; as a stronger yen meant lower profits and margins for Japanese exporters. The concept of Fundamental Analysis in the Forex Market can be all boiled down to one simple data point: Interest Rates. If interest rates move higher, investors have a greater incentive to invest their capital; and if interest rates move lower, that incentive is lessened. This relationship is at the heart and soul of macroeconomics; and this is what allows Central Bankers to have tools to steward their respective economies. The decision to increase or decrease rates can bring impact to other economies as well. Let’s say, for instance, that you are an American with cash to invest. After having little incentive and extremely low rates for a long time, you notice that The United Kingdom increases rates 25 basis points. This increase in interest rates from the Bank of England can and should bring higher rates in other issues from The United Kingdom; so you may not necessarily buy Gilts or a government bond, but investors can now look to invest in England to get that higher rate of return. Additional investors thinking the same thing rush into UK bonds, and eventually – the price of the British Pound will go up to reflect this additional demand. Now it becomes slightly more difficult for the UK to export goods (similar to the problem Japan faced in The Nucleus of the FX Market ). A great example of this was in Australia from 2002 leading up to the Financial Collapse; as insatiable demand from China drove growth throughout Australia, unemployment got very low and inflation moved very high.

The Reserve Bank of Australia (RBA) moved to increase interest rates, and currency prices followed. The Aussie more than doubled while RBA moved rates from 4.25% to 6.75% Created with MarketscopeTrading Station II. This is an interest rate cycle, and it drives capital flows that are at the heart of the FX market. How Interest Rate Cycles Drive Economies. It all goes back to the incentive to invest. If Central Bankers want to slow down their economy, they look to raise rates. If they want to encourage more growth within an economy, they look to decrease rates. Higher or lower rates bring a two-pronged impact on the economy. The first and most obvious impact is the incentive to invest. If rates increase, that incentive to invest also increases; and if rates decrease, so does the incentive to lock up one’s money. The second impact is what this does for capital expenditures. If rates decrease, the attractiveness of locking up a long-term loan at the new lower rate is much higher than it was previously. The incentive to buy big-ticket items like homes, and cars is now higher. And when you buy a home or a car, the homebuilder or car maker has to turn around to pay for their materials and workers. If the lower rates increase the number of homes or cars that are being purchased, this amounts to growth. Homebuilders and car makers will eventually have to hire new workers to keep up with the demand; and as demand for workers increases, so will the wages that are needed to attract qualified candidates.

This is how lower interest rates can bring higher employment and inflation (often shown as CPI or ‘Consumer Price Index’); and it’s at this point that Central Bankers are going to investigate increasing rates in an effort to prevent the economy from over-heating. If interest rates stay low, the effects of ‘over-heating’ could be immense. Prices can continue inflating, and if left unchecked – could bring hyperinflation. Imagine going to the store to buy a gallon of milk and seeing the price at 27 dollars. I don’t know about you, but I’d freak out at seeing something like this. Then my mind would wander to other areas where costs might be increasing. If a gallon of milk is 27 dollars, then how much will that new car cost me? How much is milk going to cost tomorrow? So, Central Banks want a moderate rate of inflation. This helps to keep growth within an economy; people get pay increases, more people are working and paying taxes, and consumers have the confidence that they can save their money for tomorrow because prices won’t increase a hundred-fold overnight. What do Central Bankers Watch? Both Central Bankers and Forex Traders watch macroeconomic data prints with the goal of getting something out of them; but their objectives are slightly different. FX Traders are often interested in the price reaction of a data print. If CPI comes out higher than expected, then traders may be looking for long positions to move higher.

FX Traders can price in new data quickly, creating volatile price movements. Created with MarketscopeTrading Station II. Central Bankers, however, take a much more broad view on such statistics. Central Bankers want to watch the primary points of reference for an economy in an effort to make the correct decision as to where to move rates. Inflation and employment are chief amongst these statistics, as these are two of the primary pressure points within an economy. If unemployment is high, the economy will likely struggle. As employmentunemployment prints are released out of an economy, this new information is factored in fairly quickly. FX Traders will begin pricing this in with the probability of an eventual rate hike or cut by Central Bankers to factor this information in. Same for inflation: As inflation (CPI) data prints are released in an economy, traders will act quickly to incorporate this new information in to prices. Meanwhile, Central Bankers are watching cautiously to decide if they want to do anything at their next meeting. Increasing unemployment (decreasing employment) along with decreasing inflation are threats to an economy that will usually see Central Bankers investigate rate cuts. Decreasing unemployment (increasing employment), and increasing inflation are signs of a growing economy, and this is when Central bankers will look at potential rate hikes. But, Central Bankers and Forex traders alike are not happy to just sit around and wait for employment or inflation numbers to show changes within an economy. This has brought to light numerous additional data prints that traders and investors will look to in an effort to anticipate changes to inflation, unemployment and interest rates. Consumer statistics are extremely important in large economies like The United States, or Europe in which consumer activity has a heightened level of importance for the global economy. In the article, The Lifeblood of the US Economy , we looked at the major data releases that include this information. The Euro can get extremely volatile around releases of Consumer Sentiment Numbers, and this is because consumer activity in established economies is often looked at as a precursor to inflation, employment, and growth.

GDP, or Gross Domestic Product, is a direct expression of growth (or contraction) within an economy, and this can also be a huge precursor to price movements; especially if the announced rate of growth is far away from expectations. But, in and of itself, increases or decreases in GDP don’t bring more jobs or higher inflation, so this is often looked at as more of a ‘lagging’ fundamental indicator. Production numbers can be especially important in growing economies that are at a very industrialized stage of the growth process. China is a phenomenal example; as each months ‘PMI’ (Purchasing Managers Index), will draw massive interest from numerous parties around the globe. PMI is a survey that’s recorded from producers gauging their sentiment on future orders. The thought behind this statistic is that if producers are seeing growth, then that growth will eventually cycle through to consumers; after all, if someone wants to buy a good, it has to be produced in the first place, right? Tips for Forex Trading Beginners. Before you start something new, begin with the fundamentals. Let’s look at trading tips every trader should consider before trading currency pairs. We cannot overstate the importance of educating yourself on the forex market. Take the time to study currency pairs and what affects them before risking your own capital; it’s an investment in time that could save you a good amount of money. 2. Make a Plan and Stick to It. Creating a trading plan is a critical component of successful trading. It should include your profit goals, risk tolerance level, methodology and evaluation criteria. Once you have a plan in place, make sure each trade you consider falls within your plan’s parameters.

Remember: you’re likely most rational before you place a trade and most irrational after your trade is placed. Put your trading plan to the test in real market conditions with a risk-free FOREX. com practice account. You’ll get a chance to see what it’s like to trade currency pairs while taking your trading plan for a test drive without risking any of your own capital. 4. Forecast the “Weather Conditions” of the Market. Fundamental traders prefer to trade based on news and other financial and political data; technical traders prefer technical analysis tools such as Fibonacci retracements and other indictors to forecast market movements. Most traders use a combination of the two. No matter what your style, it is important you use the tools at your disposal to find potential trading opportunities in moving markets. This is simple yet critical to your future success: know your limits. This includes knowing how much you’re willing to risk on each trade, setting your leverage ratio in accordance with your needs, and never risking more than you can afford to lose. 6. Know Where to Stop Along the Way. You don’t have time to sit and watch the markets every minute of every day. You can better manage your risk and protect potential profits through stop and limit orders, getting you out of the market at the price you set. Trailing stops are especially helpful; they trail your position at a specific distance as the market moves, helping to protect profits should the market reverse. Placing contingent orders may not necessarily limit your risk for losses. 7. Check Your Emotions at the Door.

You have an open position and the market’s not going your way. Maybe you could make it up with a trade or two that don’t fit with your trading plan. just a couple couldn’t hurt, right? “Revenge trading” rarely ends well. Don’t let emotion get in the way of your plan for successful trading. When you have a losing trade, don’t go all-in to try to make it back in one shot; it’s smarter to stick with your plan and make the lost back a little at a time than to suddenly find yourself with two crippling losses. 8. Keep It Slow and Steady. One key to trading is consistency. All traders have lost money, but if you maintain a positive edge, you have a better chance of coming out on top. Educating yourself and creating a trading plan is good, but the real test is sticking to that plan through patience and discipline. 9. Don’t Be Afraid to Explore. While consistency is important, don’t be afraid to re-evaluate your trading plan if things aren’t working like you thought. As your experience grows, your needs may change; your plan should always reflect your goals. If your goals or financial situation changes, so should your plan. 10. Choose the Right Trading Partner for You. It’s critical to choose the right trading partner as you engage the forex market. Pricing, execution, and the quality of customer service can all make a difference in your trading experience.

Fundamental forex trading tips. From everyone here at Currency News Trading, we wish you a wonderful Christmas and Happy New Year. Due to the market condition, the next couple of weeks we will not be trading the news. As a matter of fact, we should avoid news altogether until 2018, perhaps the first tradable release would be the Nonfarm . Forex Weekly Outlook September 18. September 18, 2017 0 Comment(s) Market Review US stock markets advanced to new all-time highs this past week as traders maintained risk sentiment in spite of a barrage of aversion events such as Hurricane Irma, Equifax credit breach, more contempt from the North Korean regime and a terrorist attack in London. Domestically, the US government continued its struggle in tax reform while . CURRENCY OUTLOOK SCORES. Outlook Score is a score assigned to the currency based on economic indicators and high-impact news releases such as: central bank speeches, breaking news, political developments, etc… A score between -3 to +3 is assigned to each scheduled events based on its importance, market focus, and surprise factor. For instance, the Non-farm Payroll should have more impact than the New Home Sales figure in the U. S., but if the New Home Sales comes out 100K more than forecast, it should have equal effect on the USD (as compared to NFP) in the long-term. The Outlook Score is the summary of all of the individual scores assigned to each news releases that matters, and the score is carried over from month to month… this is based on the idea that fundamental sentiments are also carried over from month to month…

The score is modeled after the PMI (Purchasing Manager’s Index) releases, so we start at 50, and any number above 50 is considered positive, or below 50 as negative: The currency market moves for a reason. While technical analysis gives the direction, fundamental Forex news gives the impulse. This article intends to provide a few Forex trading tips the retail trader can use in any given trading week. Since the Nixon shock in the 1970’s, the currency market moved freely. At least, that was valid for most of the free-floating currencies. However, the average Joe didn’t have access to the interbank market. Simply put, the technology wasn’t available. But, things changed. Since the Personal Computer (PC) became ordinary, productivity increased tremendously. For the financial market, it meant a new step forward in technical analysis. Most of the trading theories we know today appeared decades ago. Only recently the PC allowed for new ways to interpret the market. Still, nothing changed the fundamental Forex news like the Internet. Information started to move faster. And, news reached all corners of the world.

For the Forex industry, it signaled the start of a new era. Suddenly, Forex brokers appeared overnight. It was for the first time the retail trader had access to the interbank market. Looking back, the process had terrific costs. However, the benefits far outpaced them. A whole new world, full of opportunities, opened to the masses. With this article, we’ll cover essential aspects for today’s retail trader. That is, we’ll include Forex trading tips to survive a trading week, such as: The ins and outs of the Forex trading calendar Making the best of the Forex market time How to prepare for any given trading week How to trade Forex fundamental news. Fundamental Forex Factors in a Trading Week. Today, the ECN (Electronic Communication Network) and STP (Straight Through Processing) technologies allow for rare trading conditions.

Only a few years ago, retail traders used a four-digit trading account. Nowadays, five-digit quotations are everywhere. In fact, it signals the broker’s ability to offer best conditions in the interbank market. They match the best prices from various liquidity providers. As a result, retail traders get the best bid-ask prices. However, better execution comes with a cost. While re-quotation doesn’t exist anymore, the broker can’t execute orders flawlessly. Fundamental Forex news is to blame. Simply put, sometimes the market moves too fast. As such, the broker will fill a pending order when there is a market. If there’s no market, it’ll do that when it appears. And, most of the times, this would be at a different level. How to avoid it? One answer comes from understanding how the Forex market moves.

More precisely, how each trading week differs from the other. Forex Trading Tips in a Trading Week. Like it or not, trading is a game of expectations. And, probabilities. What are the chances for this to happen? But, no such trade has a hundred percent chances to occur. As such, a trading plan for the trading week helps. Moreover, knowing your way out before you go in the market helps too. But, a trading week differs from traders to traders. Or, for different types of traders, the fundamental Forex factors change. When approaching the market, traders: They go in and out multiple times during the trading day, aiming for quick and small profits. Swing-trade. A trade can take from a few hours to a few days or even weeks. These traders consider the bigger picture. Often, they trade having in mind changes in the macroeconomic fundamental Forex picture.

The Typical Forex Trading Days of a Scalper. A scalper is a technical trader. Scalpers have a precise mechanical system they follow religiously. Retail traders do scalp the news in a trading week. Here’s a guide offering some Forex trading tips for these traders: Look at the major story in the week ahead to influence the Forex dashboard. More exactly, check the red news in a trading week, like: Fed meeting schedule to spot the US Federal Reserve interest rate decisions Inflation and jobs data PMI’s and Retail Sales, etc. Trade with the news flow. Fading the initial reaction might be a risky process. It has the potential to affect all trading week’s gains. In doing that: First, wait for the news to come out Second, look for a pullback into a moving average or oscillator support Finally, go in for a minimum 1:1 risk-reward ratio, always having a stop loss. Don’t keep positions overnight. You would avoid: Paying unnecessary negative swaps Getting caught on the wrong direction Blocking margin in overnight exposure. Forex Trading Tips for Swing Trading. The Forex analysis of a swing trader must consider the fundamental Forex news in a trading week. In fact, significant Forex news signals a potential turn in market expectations.

For example, if inflation is due in the upcoming trading week, it should be the cornerstone of that week’s Forex fundamental analysis. Because traders won’t wait for the central bank to react! They’ll merely buy and sell based on what the Forex market signals. And, turns in inflation always signal troubles for the unprepared ones. Here are some Forex trading tips for swing traders: Learn to be patient. If patience is a virtue, it is put to the test in Forex trading fundamental analysis. Learn to trade Forex having the bigger picture in mind. As such, do your analysis on bigger time frames, like four-hour and daily charts. Always look at the Forex economic calendar for the week ahead. As such, you’ll end up trading in the second half of the week, having in mind the fundamental Forex news in the next trading week. Forex Trading Tips for Investors in the Currency Market. Forex trading for a living implies bigger horizons than a single day. A professional retail Forex trader will have something from every trading style. It has to. Traders need to make it day in, day out. Central to any fundamental analysis, Forex investors look at the bigger picture. They interpret: The idea is to prepare the technical picture.

And, the fundamental Forex strategy from a macro-perspective. Next, they look at the fundamental Forex news in any given trading week. As such, traders will use any pullback or spike to add to the original, more meaningful picture. Finally, their Forex fundamental analysis signals changes in monetary policy. Therefore, they mainly look at: Central bank meetings and press conferences Significant speeches of central bank figures Worldwide political and geopolitical factors Elections and other risk-events Other markets that may influence the Forex fundamental analysis. How to Prepare for Any Given Trading Week. There’s no trading week like the other. That’s the beauty of Forex trading and what attracts people to it. In other jobsfields, work tends to have a repetitive character. Not when trading financial markets, Forex especially! We all know the fundamental Forex news for the current trading week. And, for the week to come. And the next one too. However, we don’t know how the market will react to it. Even though traders do have an idea, it is merely an idea, not a rule of thumb. For example, let’s think of the Fed and an interest rate hike. Usually, this is a bullish U. S. dollar event.

But, it so happens that sometimes traders sell the dollar on the news. Because the Forex market deals with future expectations, traders will position for the next event. It happens if the central bank communicates the process swiftly. If in a trading week the Bank of Canada, say, hikes the rates, that’s bullish for the CAD. If on the press conference the bank signals it was one and done, the market will turn in a blink of an eye. Recently, all major central banks in the world embraced the forward guidance principle. The Fed in the States was the first bank to introduce the concept. Under it, central banks pledge to communicate their moves better. The idea is to keep price stability so that the markets won’t react violently anymore. It is understandable if we think of the fact that automated trading rules today’s markets. Still, the principle ruined the way the market reacts to fundamental Forex news. It makes it challenging to use Forex trading tips from similar situations in the past. As such, one needs a different approach to every trading week. Tips and Tricks to use Forex Economic Calendar. It all starts with the Forex economic calendar.

Absolutely everything related to positioning on the Forex market begins with it. The first thing to look for is a significant event for the trading week ahead. If that’s the ECB (European Central Bank) meeting next Thursday, then that’s where the focus will be. If, say, the Fed’s FOMC (Federal Open Market Committee) Statement is due next Wednesday, that’s when the market will move. Everything before the events will merely mean ranges. As such, don’t fall for classic traps. Earlier it was mentioned that retail traders come to the market with unrealistic expectations. That’s so true! If you buy or sell a currency pair on a Monday, and expect two hundred pips profit the same day, that’s not the right approach. The market won’t move, like it or not! On the other hand, you MAY position on Monday for the main event of the trading week. If it is an NFP (Non-Farm Payrolls) week, the main event will happen only on Friday. Therefore, look for the trade to cover it. Either the trade is the result of a more prominent time frame analysis, or it will fail. Of course, that’s true unless you scalp. Swing traders, on the other hand, always look beyond short-term horizons.

Second, merely position accordingly. If a significant USD event comes up the next trading week, maybe the best decision is to avoid the USD pairs. How to do that? Well…how about trading crosses? As a reminder, a cross pairs don’t have the USD in its componence. Hence, traders would want to trade them before a significant USD event comes. Finally, this is only one of the vital Forex trading tips to consider in a trading week. However, most of the fundamental Forex news follow the same path. How to Trade Forex Fundamental News. Because trading algorithms dominate today’s markets, trading fundamental Forex news is not natural. It deals with understanding how computers “think.

” The thing is that today, with all the programming and computing power, humans still do the job. While robots execute it, humans program it. Hence, the human factor still exists. Only the execution becomes better and better. As such, trading news becomes more challenging by the day. Any Forex trading tips from the past won’t do the trick in the future. Think of how the trading execution changed. Only a few years ago, the EURUSD pair traded with a three-pip spread. Three pips! Nowadays, brokers offer it for less than 0.3 pips. That’s a huge leap forward regarding cutting the costs for the retail traders. However, did you wondered why this happened? Technology has the answer. With better and faster execution, came different account types. And, various risk understanding.

On a fundamental Forex event today, if you trade an ECN account, you’ll have a problem with trades executed during the news. Previous Forex trading tips won’t work. There’s a reason for that. Before ECN conditions, traders would receive a re-quotation when the market moved too fast. Nowadays, you won’t receive such a thing. Instead, you’ll get filled at the market. That is when there’s a market. If robots moved the market beyond your pending order, due to fundamental Forex events, you'd enter at that level. Not at the desired one! Make the Best of the Forex Market Time. One of the most critical Forex trading tips should do with understanding the game. Oh well, this isn’t a game, in the first place. Real people with real money come to the trading arena.

Everyone tries to make a quick buck, with as little an effort as possible. However, not everyone makes it. In earnest, most of the retail traders fail. Reason for that is they don’t understand the market participants. And the forces behind the market. Moreover, because they fail to understand that, they fail to make the most of the Forex market time. Keep this in mind for as long as you trade: only because the market is open, you don’t have to open a trade! Some people just feel the need to do something, to open a position. If it is a trading day, why not buying or selling something? Well, it doesn’t work if you aim at a profit. Having no position is a position. Sitting on your hands is as good as opening or closing a trade. After all, it deals with human nature. Who you are as a person and who you are as a trader? In a trading week, some fundamental Forex aspects matter the most.

The market will move surrounding these events. Believe it or not, the best timing for opening a trade from a swing trading perspective isn’t on Mondays. But, Thursdays and Fridays. As one of the best Forex trading tips, look at the next week’s events before opening a trade. As such, if next week the Fed will have a meeting, trading on Friday evening makes sense. That is if you plan on keeping it until after next week’s fundamental Forex event. And so, you’ll make the most of the current, and future trading week. To survive in this competitive market, one must adapt. Looking at the trading week ahead is one way to prepare for the next battle. Moreover, it represents a money management strategy.

For example, one may be bullish EURUSD from a weekly time frame analysis but won’t open a trade next week. Heshe only avoids some fundamental Forex news before going long. And, heshe will use any dip caused by these events to position for the actual trade. As such, traders use fundamental Forex events to enter a trade. Or, to find a better entry place. Even more, traders scale into an existing trading plan. In doing that, they follow one of the most important Forex trading tips ever: avoid the news as much as possible! But, avoiding news doesn’t mean preventing a trade. Just use a more significant time frame for the take profit and stop loss, and adjust the volume.

To sum up, traders must focus on the trading week ahead. Regardless of the fundamental Forex news, one of the best Forex trading tips says to consider the events ahead, to position for the big picture. Capital Properties FX October 15, 2017. "Too Close to State Financing via the Money Press," Der Spiegel, August 29, 2012 Too Close to State Financing Via the Money Press" "I think that in my job as president": Mario Draghi, press conference, September 6, 2012.


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