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Introduction to Fundamental Analysis: Forex

Almost all forex traders rely on analysis when creating their trading strategies. There are two main types of forex analysis – technical and fundamental. This article will focus on basic analysis and how to use it in Profit Ball Forex trading.

Basic analysis refers to political and economic conditions that may affect currency rates. Forex traders using fundamental analysis rely on news reports when collecting information on unemployment rates, economic policies, inflation and growth rates.

Fundamental analysis is often used to obtain an overview of currency movements by creating a comprehensive picture of the economic conditions affecting a currency. Most traders rely on fundamental analysis to determine the timing of entry and exit from the market and also to complete their vision of the market, some of which were formed from the fundamental analysis.

Forex rates in the Forex market are affected by supply and demand forces which in turn are affected by economic conditions. There are two economic factors that mainly affect the presentation and demand of currencies, interest rates and the strength of the economy. The strength of the economy is affected by GDP, foreign investment and trade balance.

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Indicators

There are various indicators issued by governments and academic institutions. There are reliable measures to determine the degree of economic recovery of a given country and are often followed by all sectors of the investment market. Indices are often issued monthly, but some are published weekly.

Two key indicators are interest rates and international trade. Indices also include consumer price index (CPI) durable goods orders, producer price index (PPI), purchasing PMI (PMI) and retail sales.

Interest rates – Interest rates may have a positive or negative impact on the currency rate. High interest rates attract foreign investment, which is supported by the local currency. On the other hand, stock market investors usually react to higher interest rates by selling their shares because they believe that rising borrowing costs will negatively impact corporate performance. In some cases, equity investors may sell their shares heavily, which may cause the stock market to contract, but the national economy itself. Determine which of these effects will have the upper hand on the price of the currency depends on many factors and complex, but there is often a consensus in Opinions among observers of the economic situation on how a change in interest rates will affect the economy and the currency.

International trade – The Profit Ball trade balance, which shows deficits (imports larger than exports) is usually one of the indicators that is not favored. Trade Balance Deficit means a flow of funds abroad to buy foreign goods, which may affect the devaluation of the currency. Nevertheless, market expectations usually determine whether the trade balance deficit is unfavorable. If a country faces a constant trade deficit, this factor can be assumed to be already priced when the currency is valued. Then the trade deficit will affect the currency prices only if it comes above market expectations.

Other CPI indicators include the cost of living index and PPI – the cost scale of commodity production. GDP measures the total value of all goods and services produced in a country. M2 Money supply calculates the total money supply of a particular currency.

There are 28 major indexes used in the United States. These indicators usually have a strong impact on financial markets, so forex traders should consider them when designing their trading strategies. The latest information and news are usually available on a number of websites and Forex brokers usually provide this information to their customers as part of their business.

How to Earn with Carry Trade

Curry Trading (The Carry Trade) is one of the most famous strategies in currency trading. As they offer the bonus without requiring anything on your part – as long as the fluctuations in the market are absent. Given the volatility of the currency market, especially after the outbreak of the global financial crisis in 2008, the curry has seen a significant drop in forex trading and the reluctance of many forex traders. However, during the bright spots and times of optimism in the past two years, Kari has been relatively active. .

What curry do you want?

Curry’s strategy simply means that the trader in which the forex trader tries to make money through interest rate differentials, it is known that central banks in all the world are setting interest rates, and here the trader benefits from the difference in the currency. In Curry you can use the leverage and borrow in a low-interest currency to finance the purchase of high-interest currencies. This means in Forex trading, opening a position on a currency pair, where the interest rate is high.

One of the most popular pairs of Curry trades is AUD / JPY. Because Australia’s currency has relatively high interest rates, compared to other developed countries. On the other hand, Japan offers a low interest rate. Already counted, the lowest among major currencies. If you use leverage in the Forex trade to enter positions on the AUD / JPY and hold overnight trading position, you can earn profit and earn money from the difference between the existing interest rate between the two currencies – you can raise the profit cap by maximizing the trading position Using leverage.

When will the curry want more effective ??

For a curry deal to work effectively, high-interest currencies need to make gains, or at least remain constant, in comparison to the low-interest currency. Therefore, in order for the AUD / JPY to trade successfully, the Australian dollar must make gains against the yen or keep the exchange rate steady. In fact, in order to achieve a curry deal you want results in your favor, you do not need to earn anything on your capital center. In our AUD / JPY example, the AUD does not need to make gains against the JPY. The destination earn money on interest teams, so capital gains are not important (but can be an extra bonus).

As long as the high interest rate currency continues to maintain the same price, here you can say that you can profit from curries as long as the interest rate does not drop dramatically against the low interest rate. (In this example, if the yen is rising against the Australian dollar, the capital losses from your long term trading position are likely to overshadow the interest income from the difference). In the past, some individuals and investment institutions were known to maintain a curry deal for several months – or even years. As long as the special part of the high-interest currency pair is rising or maintaining its high, as long as the interest rate remains high, Profit Ball can continue to profit from the difference.

Curry deals want to work well during low volatility periods. Where currencies in periods of low volatility tend to continue to move in a certain direction. In addition, in times of strong economic growth and low volatility, it is easier to maintain the direction of price action. Moreover, the interest rate is likely to rise when economic activity is positive. Japan’s interest rate has been down for a long time as an attempt to stimulate the country’s economy. However, in Australia, growth was large enough as interest rates were raised to rein in inflation. This dynamism resulted in a huge (predictable) price difference in which profits were easily made.

Volatility: The enemy of curry you want

Given the quality of the low volatility environment with the curry trade you want, where it is fairly easy to see where things are going, you can understand the problem of market volatility. It is hard to say that news from the news will want to market in another direction. The current environment is difficult, as you may try to trade AUD / JPY and find that risk aversion has made traders suddenly push the yen upwards – thus spoiling the benefit from profit on interest rates.

Another issue is that central banks may cut interest rates during difficult economic times. Australia has seen interest rate cuts since the financial crisis, reducing the difference between the Australian dollar and the Japanese yen, making curries want less profit. (Given leverage overlap, any change can make a big difference to the end result.)

Although there is some hope for the return of the curry and wants a better and better return. It is a very simple and direct way to earn money in the currency market, so it is no surprise that you find that curries want to become familiar and common among Forex traders.

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