Fundamental analysis is the study of how the global events and news have an impact on the currency markets.
In this edition of my Forex strategy trading Helpful Hints I will be teaching you how I you can use fundamental indicators to help you take better trading decisions.
The usage of fundamental analysis in the currency market is done by utilizing economic indicators. These fundamental indicators provide you with economical aspects of a country that can help you to evaluate the robustness of a country’s currency.
Economic indicators are available through various areas of a country’s government and private companies. This information is studied by foreign currency exchange traders to forecast the direction of the currency markets. Foreign currency economic indicators are offered at determined times and dates, and are followed by most profitable foreign currency traders.
Due to the fact that so many investors are looking at them, currency exchange economic indicators have a massive impact on the exchange rates of the currencies that are traded in the Forex market.
The majority of Forex traders do not use fundamental analysis because economic indicators seem complex to them.
Nevertheless, making use of fundamental analysis and following economic indicators can be a whole lot simpler when you follow straightforward guides that will keep you updated with the Forex economic indicators easily.
How to Start Using Forex Economic Indicators
It is beneficial to keep a log of all the important Forex economic indicators’ release dates. Keep a log or sign up to one of the economic journal services that are available on the internet.
Moreover, you should utilize and follow economic indicators that are relevant to the currencies you trade. Each currency belongs to a different country and subsequently the economic indicators will be different for each currency.
You will moreover have to learn what each indicator represents and how it will have an effect on a currency’s strength.
The basic theory behind Forex fundamental analysis is that if a country’s economy is doing good its currency will go up in value and if the economy is doing bad then their currency will devalue and its price will go down.
The Most Vital Fundamental Forex Indicators
As I said before each currency will have unique economic indicators and the date and time when they are released are different. It is now time to talk about the most popular fundamental indicators that each currency trader should pay attention to.
The Treasury International Capital: The treasury international capital or TIC monitors the flow of treasury and agency securities. The simple principle behind this indicator is that a high reading is positive (or bullish) for the USD, while a decreased reading is negative (or bearish).
Durable goods: This is released monthly by the Bureau of Census and reflects new orders placed with domestic manufacturers for delivery in a near future. The basic principle behind this indicator is that a increased reading is positive (or bullish) for the USD, while a a lower reading is negative or bearish.
Consumer Price Index (CPI) Ex Food & Energy: This indicator measures and analysis the weighted average of prices of consumer goods and services such as transportation, food, and medical care. This indicator is used to measure the level of inflation of a country. The basic principle behind this indicator is that a high reading is seen as positive (or bullish) for the USD, while a a lower reading is seen as negative (or Bearish).
There are several other Economic indicators that can be used to assess the Forex market and you should spend some time analyzing the ones that affect the currency pairs you trade. I hope I was able to provide you with useful information in this portion of my Forex strategy trading secrets.
Pro foreign exchange trader & mentor
Jay Molina is an advanced Forex trader that helps other investors around the world to learn about the Forex market and its rewards and risks.
To understand more about forex strategy trading , visit the link: http://www.myfxinvestment.com