Forex Trading - Economic Indicators in Fundamental Analysis

Forex or currency trading can be analyzed and traded using two methods. One is technical analysis and another is fundamental analysis. This article will focus on fundamental analysis.

Fundamental analysis refers to trading forex based on the economic and political performance of the country as these two factors generally influence the exchange rate. Fundamental traders use a variety of news and economic indicators to support their decisions in trading. The news and numerical indicators are usually announced or published by the government or experts at certain period intervals such as monthly or quarterly. With the availability of internet, these indicators are easily accessible and hence, traders are able to react to the news faster.

There are many numerical indicators available and some have marked influence on the market price while others affect the exchange rate moderately and some even less. The effect of those indicators that highly influence the currency market can be observed in the price chart after the release of the indicators or news. Upon release, there is a catalytic effect leading to a high and rapid fluctuation of the currency market.

Listed below are some of the indicators that notably affect the economic growth and inflation that in turn, influence the exchange rates:

• Gross Domestic Product (GDP) - this indicator represents the monetary value of all products and services generated in a country over a specified period of time. It is considered the greatest indicator of a country's economy. This information is released on the last day of the quarter, 8.30am EST by the Bureau of Economic Analysis.

• Non-Farm Payroll (NFP) - this is one of the statistics included in the employment report. The report details information such as pay roll, unemployment and job growth. NFP is regarded as the most important due to its significance to the economic growth and inflation. This report is released by the Bureau of Labor Statistics on the first Friday of every month at 8.30 EST.

• Consumer Price Index (CPI) - this index is used broadly as a measure of inflation. It is considered as an indicator on the effectiveness of government policy. A rise in CPI signifies inflation while a fall denotes deflation. This piece of news is usually released by Bureau of Labor and Statistics around the 20th of each month, 8.30am EST.

• Retail Sales - it is a significant measure of consumer spending based on the data supplied by the retail stores on the monetary values of the merchandise sold as well as their inventories. This data is published by Bureau of Census around the 12th of each month, 8.30am EST.

There are many more indicators such as Purchasing Managers Index, Industrial Production, Consumer Confidence Index, Trade Balance and Housing Starts which are released on different day of the month and therefore providing ample opportunities to trade forex based on fundamental analysis.

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Forex Trading and Fundamental Analysis

No serious discussion of forex trading would be complete without talking about the subject of fundamental analysis, and it's bearing on the markets. Forex traders should always keep their "finger on the pulse" of what is going on behind the economic scenes of the various countries whose currencies they trade.

Fundamental Analysis can best be defined as the study of the underlying economic and political factors that influence a particular currency. The goal is to attempt to predict price action and trends by looking at many different economic indicators and governmental policies.

Fundamentals for a currency may include interest rates, central bank policies, employment figures, and Gross Domestic Product numbers. These statistics are made public on a regular basis by most governments, and are watched closely by the astute foreign exchange trader.

Why bother with fundamental analysis? The simple answer is because only by looking at the fundamental factors that influence currency prices can you gain an accurate long-term view of where the prices are going.

It gives you the "raw material" as to what is driving prices, but it still does not give a trader the entry and exit points of his individual trades. It will help the trader, though, in developing a plan based on his unique trading strategies and goals.

Many of these economic reports are watched closely by traders, and can sometimes have huge short-term effects on market movement. Some astute forex traders will trade the markets at the time of these releases, hoping to make quick profits from the huge moves that often occur.

Unless you are experienced in trading, and familiar with the huge price swings during these report releases, it is best to stay out of the markets until they settle back down to their normal price movements.

The two releases in the US that tend to move the markets the most are the Employment report and the Federal Open Market Committee (FOMC) meeting minutes release.

While on the surface it might appear necessary that a trader needs an advanced degree in economics, actually a few simple guidelines are all that is needed to make sense and trading decisions based on this data.

Does the data strengthen or weaken the currency of that country? What are the long-term stated goals of that country's policy makers? Do their policies and data support more investment in that country, or make investors more wary of putting their money there?

Fundamental analysis can certainly appear to be a confusing subject and best left to professional economists. However, the retail forex trader can glean enough information from monitoring the major indicators to more accurately predict the strength or weakness of a particular currency. It is a fascinating and never ending study, to be sure!

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Forex Technical Analysis Indicators

Before you make a decision to enter currency trading market you should be aware of many things connected with technical analysis and trading indicators in the Forex market. It is really impossible to trade Forex without crucial technical instruments and tactics. Forex market should be understood in complex with trading basics, fundamental and technical trading approaches. Technical analysis is the main approach to trade Forex. Having little knowledge about technical approach of the market brings you to a dead end. So dedicate your time to learning technical analysis in the Forex market. Read books and watch video lessons online to understand how the market operates.

Technical analysis comprises dissimilar technical instruments and methods for market research. Forex technical trading indicators are efficient tools in hands of a trader. Every Forex trading indicator and oscillator has its own nature, destination and coherence. These technical indicators are created to help the trader observe the market and obtain the signals for making the deals. Some traders use the combination of specific indicators to strengthen the confirmation of a signal and be certain to enter the deal. There are trend indicators, indicators for determining enter and exit points, price change indicators, volume indicators, momentum indicators, volatility indicators and so on.

Use the indicators that are appropriate for your Forex trading approach you stick to. Always search for tactics that allow you to use the right combination of indicators for the specified Forex market conditions. Besides support and resistance lines are also effective trading indicators that help you to determine the levels between extremum in the Forex trading market. Due to these levels you are able to see the zone of trading in the specified period of time. Dedicate your time and efforts to learning the Forex technical analysis and apply it practically in your trading. You can reach positive results in Forex only with the help of technical analysis.

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Forex Technical Analysis Basic Concepts

Most forex traders around the world will agree with the trading school that considers technical analysis as the most precise way of trading the forex market. This trading school bases its confidence on technical trading by considering that all available information on a particular currency pair, along with its influence on the markets and the community of forex traders is already reflected in that particular currency price.

Even if you have barely look at one forex chart, I'm pretty sure that you must have noticed that the forex market moves along clear trends most of the time, and experience has shown us that these patterns tend to repeat with time, a useful characteristic that makes this market specially suitable for technical analysis tools to work at their best.

There is a saying among forex traders stating that those who trade with the trend will have a much higher probability of being profitable at the end of the session than those who haven't learned how to pinpoint a trend in the charts.

Here is where technical analysis enters into the picture. In order to correctly determine the trend of the forex market you need to use the tools provided by technical analysis, also known as technical indicators. By using them correctly you will be way ahead of most traders that haven't took the time to understand these great trading tools.

Also it is important for you to understand that technical analysis and its indicators are not magical or something that performs miracles for your trading account. You must have a criteria and be wise in how you manage the money in your trading account, so you won't be left with a zero balance in a bad market move.

For example, two useful technical indicators are these: MACD and RSI. The first one stands for Moving Average Convergence Divergence and the second stands for Relative Strength Index.

The MACD indicator is used to plot the difference between a 26-day exponential moving average and a 12-day exponential moving average. Most of the time a 9-day moving average is used as a trigger line, what this means is that as the MACD crosses below this trigger it is a sell signal and when it crosses above it, it's a buy signal.

Now, the RSI is used to measure the market activity, in other words it monitors if the market is overbought or oversold. This way the RSI gives the forex trader an indication relative to the direction the forex market is moving. The higher the RSI number is, the more overbought the market is. The lower the RSI number, the more oversold the market is.

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RSI - Relative Strength Index - Technical Analysis Indicator For Stocks - Futures - And Forex

The RSI (Relative Strength Index) is a popular technical analysis oscillator. There are numerous uses of the RSI, including objective buy and sell signals and bullish and bearish divergences. The RSI, as its name implies measures the relative strength of price currently compared to the past: the formula usually uses a 14-period input. As an oscillator, above 70 is considered overbought and below 30 is considered oversold.

Some traders use the RSI for objective buy and sell signals. They usually interpret a buy signal as occuring when the RSI crosses back above 30 after spending time in the oversold area. A sell signal is declared when the RSI moves back below 70 after spending a period of time in the overbought region. The RSI as well as buy and sell signals is visually depicted in the link to the chart Relative Strength Index.

Another popular use of the Relative Strength Index for stock, futures, or currency traders is bullish and bearish divergences. At times when price is increasing, but the RSI is falling or not moving, this can signal trouble. This bearish divergence can suggest that a trader exit his/her position.

In contrast, when price is falling, but the RSI is failing to go lower, but is maintaining steady or rising, a bullish divergence has occurred. A trader might exit any short positions.

The RSI is a very useful tool for traders and is quite versatile. To learn more about technical analysis, visit http://www.onlinetradingconcepts.com/TechnicalAnalysis.html . There are over 66 technical indicators with explainations and charts with examples.

Trading is inherently risky; only trade with money that you can afford to lose. Past performance is not indicative of future performance.

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Forex Trading - Economic Indicators in Fundamental Analysis

Forex or currency trading can be analyzed and traded using two methods. One is technical analysis and another is fundamental analysis. This article will focus on fundamental analysis.

Fundamental analysis refers to trading forex based on the economic and political performance of the country as these two factors generally influence the exchange rate. Fundamental traders use a variety of news and economic indicators to support their decisions in trading. The news and numerical indicators are usually announced or published by the government or experts at certain period intervals such as monthly or quarterly. With the availability of internet, these indicators are easily accessible and hence, traders are able to react to the news faster.

There are many numerical indicators available and some have marked influence on the market price while others affect the exchange rate moderately and some even less. The effect of those indicators that highly influence the currency market can be observed in the price chart after the release of the indicators or news. Upon release, there is a catalytic effect leading to a high and rapid fluctuation of the currency market.

Listed below are some of the indicators that notably affect the economic growth and inflation that in turn, influence the exchange rates:

• Gross Domestic Product (GDP) - this indicator represents the monetary value of all products and services generated in a country over a specified period of time. It is considered the greatest indicator of a country's economy. This information is released on the last day of the quarter, 8.30am EST by the Bureau of Economic Analysis.

• Non-Farm Payroll (NFP) - this is one of the statistics included in the employment report. The report details information such as pay roll, unemployment and job growth. NFP is regarded as the most important due to its significance to the economic growth and inflation. This report is released by the Bureau of Labor Statistics on the first Friday of every month at 8.30 EST.

• Consumer Price Index (CPI) - this index is used broadly as a measure of inflation. It is considered as an indicator on the effectiveness of government policy. A rise in CPI signifies inflation while a fall denotes deflation. This piece of news is usually released by Bureau of Labor and Statistics around the 20th of each month, 8.30am EST.

• Retail Sales - it is a significant measure of consumer spending based on the data supplied by the retail stores on the monetary values of the merchandise sold as well as their inventories. This data is published by Bureau of Census around the 12th of each month, 8.30am EST.

There are many more indicators such as Purchasing Managers Index, Industrial Production, Consumer Confidence Index, Trade Balance and Housing Starts which are released on different day of the month and therefore providing ample opportunities to trade forex based on fundamental analysis.

Read more...

Reliable Forex Analysis Using Forex Indicators

Forex is a highly volatile market where price will move up and down every single second. Because of the volatile nature of forex, traders have to be very precise and accurate in their forex analysis in order to profit from it. Therefore being able to have a reliable forex analysis can be a great help to your trading account.

In order to do a good forex analysis, you definitely requires the use of several forex indicators that can help you to decide on your entry and exit position. If you have been reading up books or have been attending seminars, you are already exposed to the various commonly used forex indicators that most traders use for their forex analysis and you would have seen how they managed to use them successfully.

However, you need to know that those examples that are used in the books and courses are usually the ideal situation demonstrated by the forex indicators. In reality, the market movement will not be as ideal as those pictures in the books or courses. This is something that made me scratch my head when I first started trading currency after reading some forex books.

The most reliable forex indicators that I have used is the 200 EMA, it is in fact voted as the most realiable forex indicators in a currency trading magazine. You can use the 200 EMA as a gauge for your forex analysis. If your price move above the 200 EMA, it most likely means that the trend is shifting upward and vice versa. Another way to know the trend lies in the steepness of the 200 EMA, the steeper it is, the stronger the trend.

Once you have identified the trend, you can make use of a type of forex indicators called oscillator like the stochastic or RSI to help you check whether the market is oversold or overbought. This can make your forex analysis more reliable as you can check for possibility of reversal. If the currency pair is oversold and the price is above the 200 EMA, there is a good chance that the price is going to move up after the retracement and the opposite is true as well.

There are so many different way you can do your forex analysis using different forex indicators. The most important is for you to come up with a trading plan and then pick different indicators that can fit into your trading plan so that you can profit from it.

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Forex Technical Analysis Indicators

Before you make a decision to enter currency trading market you should be aware of many things connected with technical analysis and trading indicators in the Forex market. It is really impossible to trade Forex without crucial technical instruments and tactics. Forex market should be understood in complex with trading basics, fundamental and technical trading approaches. Technical analysis is the main approach to trade Forex. Having little knowledge about technical approach of the market brings you to a dead end. So dedicate your time to learning technical analysis in the Forex market. Read books and watch video lessons online to understand how the market operates.

Technical analysis comprises dissimilar technical instruments and methods for market research. Forex technical trading indicators are efficient tools in hands of a trader. Every Forex trading indicator and oscillator has its own nature, destination and coherence. These technical indicators are created to help the trader observe the market and obtain the signals for making the deals. Some traders use the combination of specific indicators to strengthen the confirmation of a signal and be certain to enter the deal. There are trend indicators, indicators for determining enter and exit points, price change indicators, volume indicators, momentum indicators, volatility indicators and so on.

Use the indicators that are appropriate for your Forex trading approach you stick to. Always search for tactics that allow you to use the right combination of indicators for the specified Forex market conditions. Besides support and resistance lines are also effective trading indicators that help you to determine the levels between extremum in the Forex trading market. Due to these levels you are able to see the zone of trading in the specified period of time. Dedicate your time and efforts to learning the Forex technical analysis and apply it practically in your trading. You can reach positive results in Forex only with the help of technical analysis.

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Spot Forex Trading, Part 3 - Parallel and Inverse Analysis

Very few spot forex traders conduct any form of parallel and inverse analysis of the major currency pairs an exotic currency pairs to determine the best way to trade the forex market on a day-to-day basis. Forex traders do this in spite of the fact that it would be nearly impossible to trade the forex successfully not knowing where the overall strength and weakness was in the spot forex across multiple pairs or the entire forex market.

Lets look at some examples. Many forex traders like to trade the GBP/USD and they spend countless hours losing sleep waiting to trade this currency pair even when no trends or parallel/inverse currency pair confirmation is available. Losses occur and lifestyles change. Forex traders could increase their odds of success dramatically by setting up some forex trade entry rules and examples like the ones shown below.

Example 1 - Only buy the GBP/USD if the GBP/CHF and GBP/JPY are strengthening as well. This would be parallel confirmation that the GBP strengthening across the board. A simple but effective rule. A forex trader could enhance the rules further by examining the EUR/GBP for weakness. This is inverse currency pair entry confirmation.

Example 2 - Only buy the GBP/USD if the EUR/USD is strengthening and the USD/CHF is weakening. This would be confirming the trade entry with two other currency pairs and verification with across the board weakness in the USD. In either situation you have confirmed the forex trade entry with at least two other currency pairs. Both of these entry management rules would include a stop order.

But this is not what forex traders do. They want to trade the GBP/USD so badly that they "manufacture" a trade, or they want to use " forex technical indicators" that all conflict with each other, or trade the forex news. This is a mistake and is equivalent to betting or gambling and driven by greed. There is no logic to support the trade entry. This is not necessary because the forex works in a logical way.

Lets look at some other forex trade entry verification examples. Lets say a forex trader prefers to trade the GBP/JPY, you could set up rules for entry as follows: Only buy the GBP/JPY if the GBP is strong across the board based on parallel and inverse pairs, or only enter the GBP/JPY if the GBP/USD and USD/JPY are both strengthening somewhat or alot. In the second scenario the GBP/JPY will slingshot upward at a very fast pace due to the GBP strength combined with JPY weakness.

Or another scenario is for a forex trader only to buy the GBP/JPY if the EUR/JPY, CHF/JPY and AUD/JPY are all strengthening as well, in this case the USD is not in the picture because of across the board weakness in the JPY. Either way you have confirmed the spot forex trade entry with other currency pairs in the same parallel group..

Another example would be to buy the USD/CAD only if the EUR/CAD and AUD/CAD are also rising. Similar rules can be applied to any major pair or exotic currency pair and easily monitored upon entry. In the case of the three CAD pairs, if you also do a careful analysis of forex support and resistance, and you can trade the currency pair with the most pip potential rather than just trading the USD/CAD.

But this is not what traders do, they get stuck trading the same pairs like the EUR/USD repeatedly and wind up justifying a trade when a trade is not there. These forex trade entries are not based on logic they are based on emotional needs. This leads to losses. The spot forex works in a very logical process and you must let the logic work for you. Stop looking at forex technical indicators and start looking at other pairs in the same parallel and inverse groups to support your entries, these are the best indicators available.

Across the board strength and weakness in the 8 major parallel and inverse groups of currency pairs occurs weekly in the forex. But if you search the internet far and wide you will see that parallel and inverse analysis of the spot forex is rarely and in fact never discussed by forex traders, forex analysts, and forex trade planning services charging hefty monthly fees. People are too busy looking at forex technical indicators and absolutely no discussion of the market forces governing the spot forex ever occurs. This has to stop or the forex industry and traders will suffer.

It is very rare if nearly non-existent for one forex currency pair to move strong without other currency pairs to confirm the move. This is true for any major or exotic currency pair. If you are "stuck" trading the same currency pairs while the other pairs and exotic pairs are making strong moves its time to look at all of the currency pairs every night for your forex market analysis then pick the best opportunities to trade based on parallel and inverse analysis.

In order to trade the spot forex daily and weekly, you must analyze 15-20 pairs every day to determine the current market forces within each parallel or inverse group of pairs. This forex analysis will lead to less forex trade entries, but more logical forex trade entries, and better methods of confirmation of forex trade entries when the movement starts. Parallel and inverse analysis is the logic behind the spot forex.

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Die Bollinger-Band Indikator ist ein Forex Technical Analysis Tool, das umfangreiche Verwendung von Aktienhändler in den 1990er Jahren sah. Der Verantwortliche für die Erstellung dieses Indikators ist John Bollinger.

Bollinger-Bänder werden hauptsächlich verwendet, um herauszufinden überverkauft und überkauften Situation in den Forex-Märkten zeigen. Es wird häufig in Forex Trading vor allem aber im Aktienhandel eingesetzt.

Allerdings kann John Bollinger nicht alle den Kredit als Fundament der Wert dieses Indikators auf ein Forscher namens Hurst beruhte.

John Bollinger verbessert auf Hurst Theorie mit Hilfe von ein dynamisches Instrument, um eine feste Werkzeug entgegen. Er tat dies, indem Sie einen 20 Zeitraum Moving Average über die Preise zusammen mit einer hohen und niedrigen Abweichung Band.

Dieser Indikator kann mit einer breiten Palette Tools wie der Stochastik-Indikator zusätzlich zu RSI-Indikator verwendet werden. Das Interessante an Bollinger Bands, wenn sie angewendet Preis ist die Tatsache, dass sie dazu neigen, als Unterstützung und Widerstand wirken die meiste Zeit in einem Trendmarkt.

Mit dem Indikator vorhanden, wird der Preis in der Regel innerhalb der Abweichungen bleiben. Wenn der Preis erstreckt sich über die äußeren Bänder kann eine Trendwende sein auftritt. In streichenden Instrumente, ist die 20 gleitenden Durchschnitt Band oft als Unterstützung gesehen. Zusätzlich kann Widerstand in den äußeren Bänder gefunden werden.

Die oben genannten Situation, in der Trend-Preis prallt das mittlere Band und die obere oder untere Bands heißt Reiten der Band. Solche Fälle bedeuten normalerweise gibt es eine gute Tendenz vorhanden.

Bollinger-Bänder sind selten auf ihre eigenen, sondern neben anderen Indikatoren verwendet. Bei Verwendung mit Preis-Aktion und Candlestick-Charts zu sein scheint sehr vorteilhaft. Es kann auf jeden Finanzmarkt einschließlich Waren, die Börse und den Futures-Markt angewendet werden. Aus diesem Grund sind Bollinger-Bänder als ein ausgezeichnetes Werkzeug für alle Arten von Finanzinstrumenten Markthändler gesehen.

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