Learn and Master the Underlying Economic Factors

Every trader has had his experiences with crystal balls. Some of us seek them in technical indicators. For some, forex robots offer the greatest possibility of finding the holy grail. And sometimes we are tempted to believe that a secret report, a news service or something similar will give us the keys to limitless riches.

Sad to disappoint you, but we don’t know who has the crystal ball, or the Holy Grail. What we do know is that if anyone really possesses such tools, he is to be sought among fundamental analysts, because the record of those is very clear. George Soros, Warren Buffet, Jim Rogers, Marc Faber, who all have stellar track records and reputations, openly declare that they owe their powers (magical or not) to the elixir of fundamental analysis.

Many traders are apprehensive of studying and applying fundamental methods. This is a sad fact, because experience shows clearly that fundamental analysis is the most credible and successful method for profiting in the forex market. In the following sections, you will find a detailed, but straightforward examination of the dynamics that run the world of money.

A Step-by-step Guide to Fundamental Analysis of the Currency Market

January 21, 2015 at 11:41 AM 2 Comments

In this brief guide we will try to provide you with a step-by-step plan for analyzing the global economic environment and deciding on which currency to buy or sell. Read More

The tag team of Bernanke and Draghi has the forex market in a headlock

July 30, 2013 at 3:56 AM

Financial textbooks tell us that markets move according to fundamental influences, whether they be of an economical, financial, political or crisis-related nature. But, experience often counters this basic axiom by suggesting that perception, not reality, is the true market driver. Read More

Pure Expectations Theory

This is the second part in our article series on interest rate theories. Read the first part here. Read More

Forex Derivatives

May 30, 2013 at 9:54 AM

Thanks to the unmatched liquidity and competition in the forex market, trading currencies also allows a trader to take advantage of a number of other instruments which use currencies as the underlying asset. Read More

The Professional Interbank Forex Market

May 16, 2013 at 10:56 AM

The largest forex trading volumes by far go through the network of professional forex dealers known collectively as the Interbank forex market. Read More

Commodity Futures Trading Commission: Are They Our Forex Friend or Foe?

May 16, 2013 at 10:37 AM

The Commodity Futures Trading Commission, or CFTC, has been making news headlines of late due to financial reform legislation that increased their responsibilities and preserved their independence from the SEC. Read More

Pending NFA and CFTC Registration Legislation

May 16, 2013 at 10:35 AM 1 Comment

The National Futures Association or NFA raised many forex traders’ hackles by its FIFO ruling in August of 2009 that limited U.S. based forex brokers from taking essential forex trading orders like stop loss orders, limit orders and one cancels. Read More

Forex Market Regulatory Agencies

May 16, 2013 at 10:22 AM

With the exception of currency futures and options traded on exchanges like the Chicago IMM, foreign exchange trading generally takes place in a remarkably decentralized manner. Read More

Forex Market Participants

May 16, 2013 at 10:16 AM

When it comes down to who trades forex, the answer used to be largely confined to well-capitalized financial institutions and corporations. While such large players still dominate the forex market in terms of overall forex transaction volumes, the recent rise. Read More

From the Gold Standard to Floating Exchange Rates

May 16, 2013 at 10:12 AM

The currency or foreign exchange market has evolved gradually to become the largest capital market in the world where major currencies are actively traded in a system of floating exchange rates. Read More

How to Use Fundamental Analysis to Profit in Forex

May 16, 2013 at 8:05 AM

The forex market is the market par excellence for fundamental analysis. Since currencies are the basic building blocks of all economic activity, all the developments in all the various sectors of an economy have implications for currency market trends. Read More

How Gold Affects the Forex Market

May 16, 2013 at 7:57 AM

Gold and other precious metals like silver, platinum and palladium have intrinsic value as hard physical assets with important industrial applications. They also have value due to their ability to store a considerable amount of wealth in a rather small space. Read More

The Impact of Inflation Measures on the Forex Market

May 08, 2013 at 8:06 AM

Inflation has long been a serious enemy to economic growth and the world’s central banks constantly try to keep inflation in check by adjusting monetary policy. Read More

Fundamental Forex Factors

May 08, 2013 at 8:02 AM

When it comes to forecasting forex rates, the science of fundamental analysis involves taking into account a variety of relevant economic and political factors for one currency relative to the other currency in each currency pair considered. Read More

How a central bank’s interest rate decisions affect forex rates

May 08, 2013 at 7:59 AM

If there is one paramount factor that affects foreign exchange rates more dramatically than all others, it would most likely be interest rates set by central bankers. Read More

The Relative Risk Ratio: An Alternative Way to Manage Risk in Forex Trading

April 22, 2013 at 4:08 AM

Without complicating the subject too much, and engaging in a discussion which may generate results that are inapplicable in the context of the common tools possessed by a retail trader, we can identify three variables in the equation that determines. Read More

Forex Currency Code, Quotation and Naming Conventions

April 17, 2013 at 8:47 AM

The forex market, much like any other financial market, has its nicknames and slang terms for currencies and exchange rates. Some of them even have colorful histories behind them. Read More

Currency Options Explained

April 17, 2013 at 8:30 AM

A currency option is a type of foreign exchange derivative contract that confers to its holder the right, but not the obligation, to engage in a forex transaction. To learn more about forex trading, visit forex for dummies here. Read More

Currency Devaluation Examples

April 17, 2013 at 5:32 AM

The way that currencies appreciate and depreciate against each other depends on certain key factors. Under today’s system of managed floating rates, currency values usually depend on market forces, political and economic factors, and the forces of supply and demand. Read More

Investment Fraud: Flavor of the Year Must be Ponzi Schemes

April 05, 2013 at 3:04 PM

Seasons change, as do tastes, but investment fraud this year seems stuck in one genre. Ponzi schemes and related arrests are dominating news headlines in communities far and wide. Read More

What Forex Traders Need to Know About GDP

April 05, 2013 at 12:09 PM

The Gross Domestic Product or GDP fundamental economic indicator is one of the most closely watched indicators used by forex traders. Furthermore, both the influential data’s initial release and its subsequent revisions can often result in wild swings in the. Read More

Understanding a Global Currency: What Makes the Dollar the Reserve Currency of the World?

April 05, 2013 at 11:54 AM

USD is the world’s currency. Through its ups and downs, recessions, stagflation, bull and bear markets, wars, and turmoil, the Dollar has shown great resilience as the world’s measure of value. Read More

Trading Forex and Why it is so Popular

April 05, 2013 at 11:35 AM

As a result of international commodity and finished product trading activities, the currencies of the major nations of the world usually remain in demand and see active trading on the forex market. Read More

Why Forex Market Intervention Usually Does Not Work

April 05, 2013 at 8:55 AM

Many experienced forex traders have observed over the span of their careers in the forex market that intervention by central banks to support or weaken their currency is generally not effective in reversing market trends in the long run. Read More

Modern European Exchange Rate Systems

April 04, 2013 at 6:33 AM

A highly significant event that occurred in the forex market over just the past decade or so has been the unification of many of the national currencies of Europe into a single consolidated currency known as the Euro. Read More

Currency Reserve Trends

April 04, 2013 at 5:03 AM

A reserve currency is one held by central banks to pay their international debts with or to use as a way of influencing the exchange rate of their country’s currency. Read More

Currency Groups

April 04, 2013 at 4:36 AM

In basic forex nomenclature, the different currency pairs of the world are divided into groups by the amount of daily trading activity and liquidity in each of them. Read More

The Secret To Forex Trading Success: Recognizing The Journey

April 02, 2013 at 11:27 AM

Trading is a journey that has a clear beginning and no end.  When you decide to begin trading, the journey begins, but it never ends until the day you stop.  Each year you will learn more and become more proficient. Read More

Producer Price Changes and Their Economic Effect

April 02, 2013 at 10:46 AM

Producer price changes in the United States are measured with the Producer Price Index. This important economic indicator is computed by taking a weighted average of the price changes observed in physical goods measured at the wholesale or producer level. Read More

Economic News That Affects Currencies

April 02, 2013 at 9:47 AM

One of the most important types of information available to a forex trader comes in the form of economic news or data releases. Such key news items concerning the economic health of a country will have a tendency to directly. Read More

How Professional Forex Market-Makers Quote Counterparties

April 02, 2013 at 9:18 AM

Many individual forex traders who trade online and have never worked for major banks wonder what goes on inside those huge forex market-making financial institutions. This article is written to assist individual traders in understanding the process that a professional. Read More

The Power of Fundamental Analysis: George Soros and the Bank of England

April 02, 2013 at 8:58 AM

Fundamental analysis examines the reasons behind the price action. The analyst uses economic indicators and news flows to decide on the causes behind price movements. Since one cannot determine the cause of something which has not yet happened, the causal. Read More

Assessing Central Bank Reserves for Forex Profits: Reading the COFER Report

March 30, 2013 at 9:53 AM

The Currency Composition of Official Foreign Exchange Reserves or COFER Report, is the most useful public source of data relating to central bank reserve allocations. The report is published by the IMF quarterly, and can be downloaded from the institution’s website. Read More

Benefits of High Forex Market Liquidity

March 30, 2013 at 9:46 AM

The forex market is not only the largest capital market in the world, but also has the largest number of individual and corporate participants. The chief benefit of having more participants in any capital market consists of the higher degree. Read More

Understanding Forex Forward Transactions

March 30, 2013 at 9:40 AM

A forward transaction in the foreign exchange market is a contractual agreement to take part in a currency transaction on a date other than the spot value date at a specific rate of exchange. More on the spot transaction. Read More

Currencies Traded in the Forex Market

March 30, 2013 at 9:33 AM

The currencies most heavily traded in today’s foreign exchange market roughly mirror the international trading activities of the countries involved. Read More

The Influential CPI Data and its Forex Market Impact

March 30, 2013 at 9:27 AM

The Consumer Price Index or CPI is a fundamental economic indicator that has become one of the most closely watched inflation measures used by forex traders. Read More

Gold and Inflation: How Strong is the Relationship?

March 30, 2013 at 9:11 AM

For the past five to ten years we have been bombarded by commentary that gold is a hedge against inflation, and that wise, prudent, sensible people invest in precious metals in order to protect themselves against the out-of-control behavior of. Read More

Popular European Currency Nicknames

March 30, 2013 at 7:13 AM

Just like the major dollar currencies have been assigned informal names among traders in the forex market, so too have the major European currencies. Read More

The Importance of Forex Trading Times

March 30, 2013 at 7:08 AM

While you can technically access the forex market and trade at any hour of the day or night during the forex trading week, many traders find that certain hours offer more liquidity and tighter spreads than others. Read More

Balance Sheet of the Federal Reserve: Its Meaning and Implications for Currency Analysis

March 30, 2013 at 7:00 AM

Apart from its responsibility of directing monetary policy, the Federal Reserve also functions as the regulator of the U.S. Financial system. It is also a powerful direct and indirect intermediary between various participants in the wholesale money markets, working to. Read More

The Treasury International Capital reports — Gauge Inflow of Capital With the TIC Report

March 30, 2013 at 6:43 AM

The Treasury International Capital reports measure the monthly demand of international investors and governments for US private and government securities. The TIC report measures the US financial account, and as such it is of great importance in demonstrating the inflow. Read More

Understanding Forex Spot Transactions

March 28, 2013 at 11:32 AM

Spot foreign exchange transactions are simply those which are dealt for delivery on the spot value date. Historically, the term spot probably evolved from the phrase on the spot. Read More

The Strategic Importance of the U.S. Dollar

March 28, 2013 at 9:55 AM

Without a doubt, the most important and strategic currency traded in the forex market is the U.S. Dollar. The Dollar is a part of currency pairs that together account for over 85% of trading volume in the huge forex market. Read More

Fundamentals of Currency Evaluation

March 28, 2013 at 9:40 AM

Many forex traders wonder what determines the value of a nation’s currency. Read More

Currency Trading vs. Futures Trading: Forex & Eurex Under the Microscope

March 28, 2013 at 9:29 AM

Since the late 90’s, retail currency trading has become one of the fastest growing sectors in the financial industry. This success has largely been due to online trading platforms that are increasingly making forex trading available to consumers. Read More

Exchange Rate Regimes

March 28, 2013 at 9:12 AM

The foreign exchange market has gone through several major transitions over the years, moving through prolonged periods of fixed and floating exchange rate systems Read More

Oil and Forex: An Intimate Relationship

March 28, 2013 at 8:12 AM

Although forex traders do not always have access to oil trading, due to regulatory constraints, trends in the oil market often have a very direct impact on their trading. Read More

Why Currencies Trade Against the Dollar

March 28, 2013 at 8:02 AM

Currencies always trade in pairs because the value of each currency is measured against that of another currency, yielding a rate of exchange for the currency pair. Read More

Forex — The Worlds Largest Capital Market

March 28, 2013 at 6:03 AM

The forex market makes up the largest single capital market in the world. With a daily turnover often seen of over $3 trillion, the forex market has no equal in the world of international finance. Read More

Advantages of the Unregulated Forex Market

March 28, 2013 at 5:53 AM

Efficient medium and long term trading styles in any market generally involve following the major underlying trend by trading in its overall direction. Read More

The Basics of Fundamental Analysis

March 19, 2013 at 6:22 AM

In this section we will examine the various economic indicators released by the governments, central banks and statistical agencies of nations. We’re not going into which indicator is what (although we will do that later), but our goal is to show you. Read More

Forex and the Yield Curve: Understanding Interest Rates

March 19, 2013 at 4:31 AM

Whether one is a technical or fundamental trader, there is little disagreement that forex prices depend very strongly on the interest rate differentials between currencies. We are most used to measuring this differential in terms of the basic rate of. Read More

The Bond Market and Currency Prices

March 11, 2013 at 9:55 AM

Currencies are the basic building blocks of all economic activity. A grocery, a military contractor, a mortgage borrower, and even gangsters evaluate their economic plans in terms of currencies. Read More

Volatility in the Forex Market

March 08, 2013 at 4:59 AM

Volatility is a useful concept for forex traders that can give them a sense of the risk involved in trading a particular currency pair. This can assist them in more intelligently choosing an appropriate size for a trading position based. Read More

Interest Rates and Volatilitys — Correlation Between Interest Rate Gaps and Volatility

March 08, 2013 at 4:49 AM

Volatility in the currency markets is influenced by a number of factors foremost among which is the risk perception of financial actors. Risk, of course, can be defined in terms of many different variables including politics, natural disasters, in addition. Read More

Forex Market Implications of the Non Farm Payrolls Data

The Non Farm Payrolls or NFP fundamental economic indicator released in the United States has a well deserved reputation as being one of the most focused on pieces of information used by forex traders. Read More