If you ask about what kind of market analysis you use, the majority will answer without hesitation – technical. The reasons for this approach, of course, there is. Technical analysis is not as difficult as fundamental. You do not need to track the relationship emerging forex trading news and to assess their importance and influence. In addition, many are not psychologically prepared to survive the drawdown on the account due to short-term fluctuations (market noise). In addition, about the cause of exchange rate changes can be completely forgotten, as the market will show it in the price. Based on experience, I can say that individually both options will not bring the desired results.
If you do not analyze the market yourself, you are “exempt” from the proceeds
You can read all the reviews, forecasts and opinions of analysts are available today, but the result is you do not get any. Trading – is an art. Everyone has an opinion, an explanation of the current situation. Remember that a change of course is possible to justify any relevant news, but it does not mean that it was the catalyst for this news. Doing all the work on the forecast to the transaction alone. The only way you gain experience.
What to look at independent fundamental analysis?
Almost all currencies react to the same economic factors.
The strongest factor influencing the movement of the price, is the interest rate. And it is not its size, and its change in the future in relation to the interest rate of the bank of another country.
If the expected increase in euro zone interest rates of the bank, and it will be sooner than the growth rate of the Bank of England, it will cause the growth of the euro. Such a rate of return to attract investors.
Making a decision on interest rates, the Central Bank is based on inflation in the country. The main of them – it is the consumer price index and producer price index. For example, if there is a rapid increase in inflation (say, 1%), the bank will be forced to raise interest rates to prevent the economy from overheating, which causes the growth of quotations.
Direct impact on the change of course has GDP. The greater the size of the GDP, the more money comes from abroad. The result is that soon will increase the bank’s interest rate, and therefore will grow rate. But, unfortunately, the GDP is a lagging indicator, that is ineffective. In this case, better to take into account the indicators that make up GDP. This industrial production, retail sales, construction spending, personal income and spending.
I hope that now you will be able to evaluate those or other economic indicators, as well as the right to interpret them in the trade. Of course, this is only a small part of the fundamental vision of the market, but it can help you become more aware of price movements and learn to separate the noise from the market of the emerging trend, and are interested in the study of fundamental analysis and learn forex trading tips for success.