How Fundamental Analysis Can Increase Profits For Forex Traders. |
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How Fundamental Analysis Can Increase Profits For Forex Traders.

The Forex Market can be potentially more profitable and a lot more easier to trade than the stock market, yet it is surprising how few share traders actually take the time to learn about Forex trading rules and how it works. Quite possibly because it is unfamiliar territory plus also Forex instills a fear of the unknown, which tends to frighten a lot of traders off.

Now the good news is that irregardless of whether you are experienced trader in Forex trading or if you’re a share trader looking at the Forex market for the very first time, you will be pleased to learn  that many of the same techniques that are used when trading stocks are every bit as useful when they are used in Forex trading. The principles of Fundamental analysis are a very good example

As you are aware when you are trading in the stock market you always use fundamental analysis techniques to determine the long-term value of a company and the likelihood that it will continue to generate profits that are in line with your investment goals.

Now when you are trading in the Forex market,what you are actually attempting to do is to predict long term currency trends, this is achieved by utilising basic financial data about the country pairs behind the currencies you are considering trading in.

Most of the traders in the Forex market use Forex trading fundamental analysis techniques to predict long-term economic trends that will affect a  currency pair quite often believe that it is not a technique that suits short-term Forex traders.

However this is not always the case as the devoted Forex trading professional who keeps up-to-date on the data used to predict these long-term trends can also easily become quite expert at spotting “mini-trends” that become obvious when the collected data is analysed correctly.

The sort of information that makes up fundamental analysis in Forex trading requires you to analyse such economic indicators as Inflation Rate, Unemployment Rate, Interest Rates, Gross National Product (GNP), Retail Sales, Consumer Price Index (CPI), Non-Farm Payroll, and the sales of Durable Goods.

All of these indicators are quite readily available to the trader. But fundamental analysis in the Forex market also requires you to be also aware of each country’s political climate as well as any world trends that might have a trickle-down effect such as changes in tourism to that particular region, trade embargos, threats of war, and the possibility for economy-disrupting natural disasters which also may occur within these regions. Such as earthquakes,tsunamis, floods etc. all of which have been in the News as of late.

While the procedure of executing technical analysis on a company is much easier than performing it on two separate countries, it is well worth taking both the time as well as the effort to learn these techniques, that is if you want to be “ahead of the pack” by being capable of predicting Forex market trends well before most of the world’s Forex trading investors do.

I wish you profitable trading. :-)