| FOREX FUNDAMENTALS: Handling news about foreign exchange |
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| Written by Brad Morgan |
| Wednesday, 12 August 2009 05:56 |
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Knowing the ABC's of forex is a precursor for making money in the foreign exchange market. Knowledge of the basics of technical analysis is found wanting because the foreign exchange markets are operating on more than the mathematical components. Failure to do so could mean making a mistake at a critical point.
Knowing the ABC's of forex is a precursor for making money in the foreign exchange market. Knowledge of the basics of technical analysis is inadequate because the foreign exchange markets are operating on more than the mathematical components. Failure to do so could mean cause misjudgement at a critical point. There are major forces wielded by news reports both global and local on the currency market. While finance related news without a doubt yields the greatest effect, other non-finance but major events have their own impact too. They are possibly anticipated or come as a complete surprise . A volcanic eruption or a major pandemic are descriptive of such unforeseen events that impact the currency market. Stop-losses are just about the only remedy in these cases. A good example of anticipated events would be choosing the host country for the Miss Universe Pageant. The chosen countries economy would feel an increase in investor trust which can lead to an appreciation in its currency value. On the other hand, countries that were defeated in the quest to host this event could suffer devaluation of their currency. Thus a currency trader must be aware about such events as well as the nations involved. Daily finance reports that are circulated in quite a number of countries are related circumstances. Data on the nation's economy while irregular , are pretty much anticipated. Currency trading always comprises two currencies, a fact that you must keep in mind. Trading in your own currency provides you with the luxury of a lot of data but this may be at the expense of ignoring key information about the other currency. Americans in particular, are prone to this due to the domination by the US currency as far as foreign exchange intelligence is concerned. This is further increased when a secondary currency is traded against the dollar. Making sure that your data is always two sided is the proactive step you can make to evade this. Being a novice trader is no excuse for being oblivious of this basic scrutiny of the foreign currency market. Departing the market before major news events is always a wise move for the newbie. A method based on fundamentals may take form as you become experienced in the market. But more than anything else familiarity with the forex fundamentals is essential . DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn how to calculate forex profit when trading forex. Find out about forex trading software to be fully informed with your forex trading. |