trading forex - blog trading forex - blog trader forex

trading forex - blog trading forex - blog trader forex trading forex - blog trading forex - blog trader forex

Part I of this book offers a look at the “big picture” in foreign exchange (forex)trading, that is, what forces influence currency price movements. These forces areaccepted by economists around the world as responsible for changes in the valueof currencies. The person learning to trade forex or trying to improve his or her tradingwill benefit from a gain of knowledge of these fundamentals. In fact, as you will see,fundamental forces act as leading indicators of currency movement.U.S. and global interest rates, economic growth, and market sentiment toward thedollar are the key ingredients that shape trading opportunities. Part I provides basicknowledge on how these factors impact forex prices and how they can be used in selectingtrading opportunities.

The Fundamentalsof Forex

We begin in this chapter with an exploration of the forces that move the prices:the fundamentals. The reader will learn why fundamentals are important to foreignexchange (forex) traders as well as what kind of economic activity aremost important in affecting price movements. These include interest rates, interest ratedifferentials, economic growth, and sentiment regarding the U.S. dollar.WHY FUNDAMENTALS ARE IMPORTANTIn many ways, forex trading is similar to playing a game. You have an opponent (themarket). In game of chance the key feature is that everyone faces the same oddsand therefore the same level of information. In these games, no player can changethe odds.Playing forex, however, is not a game of odds. Participants in forex trading do notshare the same amount of information. In forex, this asymmetry of information results inadvantages and disadvantages to trades. Some players have more information than theothers. In forex, information about fundamental aspects of economies does not arrivesimultaneously to all participants. The real important question is what kind of knowledgeand information can improve trading performance. The search for an edge starts with afundamental understanding of the nature of the forex market. Having a foundation ofknowledge in fundamentals is a first step in evolving into a winning trader