Fundamental analysis is the study of how the global events and news affect the currency markets.
In this edition of my Forex strategy trading Hints I will be teaching you how I you can utilize fundamental indicators to help you take better trading conclusions.
The implement of fundamental analysis in the foreign currency market is done by utilizing economic indicators. These fundamental indicators provide you with economical elements of a country that can help you to measure the strength of a country’s currency.
Economic indicators are available through a number of divisions of a country’s government and private companies. This information is analyzed by foreign currency exchange traders to foresee the direction of the currency markets. Foreign currency economic indicators are offered at determined times and dates, and are followed by most succesful Forex traders.
Because so many investors are looking at them, currency exchange economic indicators have a massive impact on the exchange rates of the currencies that are traded in the Forex market.
A large portion of Forex traders do not use fundamental analysis because economic indicators seem hard to them.
On the other hand, utilizing fundamental analysis and following economic indicators can be a whole lot easier when you follow easy guides that will keep you updated with the Forex economic indicators with no trouble.
How to Start Using Forex Economic Indicators
It is beneficial to keep a log of all the important Forex economic indicators’ release dates. Keep a log or register to one of the economic journal services that are available via the internet.
Aside from that, you should employ and follow economic indicators that are related to the currencies you trade.
Each currency belongs to a different country and therefore the economic indicators will be different for each currency.
You will moreover need to learn what each indicator means and how it will impact a currency’s health.
The main theory behind Forex fundamental analysis is that if a country’s economy is doing well its currency will go up in value and if the economy is doing bad then their currency will devalue and its price will go down.
The Most Significant Fundamental Forex Indicators
As I mentioned before each currency will have unique economic indicators and the date and time when they are published are different. It is now time to talk about the most popular fundamental indicators that each FX trader should pay attention to.
The Treasury International Capital: The treasury international capital or TIC records the flow of treasury and agency securities. The basic principle behind this indicator is that a high reading is positive (or bullish) for the USD, while a a lower reading is negative (or bearish).
Durable goods: This is released monthly by the Bureau of Census and reflects new orders placed with domestic manufacturers for delivery in a near future. The basic principle behind this indicator is that a increased reading is positive (or bullish) for the USD, while a decreased reading is negative or bearish.
Consumer Price Index (CPI) Ex Food & Energy: This indicator measures and analysis the weighted average of prices of consumer goods and services such as transportation, food, and medical care. This indicator is used to measure the level of inflation of a country. The basic principle behind this indicator is that a increased reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).
There are many other Economic indicators that can be used to analyze the FX Market and you should spend some time analyzing the ones that impact the currency pairs you trade. I hope I was able to supply you with useful information in this part of my Forex strategy trading hints.
Pro foreign exchange trader & trainer