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Intro to Forex Fundamental Analysis

The best course of action to take sometimes isn�t clear until you�ve listed and considered your alternatives. The following paragraphs should help clue you in to what the experts think is significant.

FOREX traders almost always rely on analysis to make plan their trading strategies. There are two basic types of FOREX analysis � technical and fundamental. This article will look at fundamental analysis and how it used in FOREX trading.

Fundamental analysis refers to political and economic conditions that may affect currency prices. FOREX traders using fundamental analysis rely on news reports to gather information about unemployment rates, economic policies, inflation, and growth rates.

Fundamental analysis is often used to get an overview of currency movements and to provide a broad picture of economic conditions affecting a specific currency. Most traders rely on technical analysis for plotting entry and exit points into the market and supplement their findings with fundamental analysis.

Currency prices on the FOREX are affected by the forces of supply and demand, which in turn are affected by economic conditions. The two most important economic factors affecting supply and demand are interest rates and the strength of the economy. The strength of the economy is affected by the Gross Domestic Product (GDP), foreign investment and trade balance.

Indicators

Various indicators are released by government and academic sources. They are reliable measures of economic health and are followed by all sectors of the investment market. Indicators are usually released on a monthly basis but some are released weekly.

Most of this information comes straight from the Forex Fundamental Analysis pros. Careful reading to the end virtually guarantees that you�ll know what they know.

Two of the most important fundamental indicators are interest rates and international trade. Other indicators include the Consumer Price Index (CPI), Durable Goods Orders, Producer Price Index (PPI), Purchasing Manager�s Index (PMI), and retail sales.

Interest Rates - can have either a strengthening or weakening effect on a particular currency. On the one hand, high interest rates attract foreign investment which will strengthen the local currency. On the other hand, stock market investors often react to interest rate increases by selling off their holdings in the belief that higher borrowing costs will adversely affect many companies. Stock investors may sell off their holdings causing a downturn in the stock market and the national economy.

Determining which of these two effects will predominate depends on many complex factors, but there is usually a consensus amongst economic observers of how particular interest rate changes will affect the economy and the price of a currency.

International Trade � Trade balance which shows a deficit (more imports than exports) is usually an unfavourable indicator. Deficit trade balances means that money is flowing out of the country to purchase foreign-made goods and this may have a devaluing effect on the currency. Usually, however, market expectations dictate whether a deficit trade balance is unfavourable or not. If a county habitually operates with a deficit trade balance this has already been factored into the price of its currency. Trade deficits will only affect currency prices when they are more than market expectations.

Other indicators include the CPI � a measurement of the cost of living, and the PPI � a measurement of the cost of producing goods. The GDP measures the value of all goods and services within a country, while the M2 Money Supply measures the total amount of all currency.

There are 28 major indicators used in the United States. Indicators have strong effects on financial markets so FOREX traders should be aware of them when preparing strategies. Up-to-date information is available on many websites and many FOREX brokers supply this information as part of their trading service.

Take time to consider the points presented above. What you learn may help you overcome your hesitation to take action.

By Matthew at http://forex-resource-pro.com/

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The consumer price index, or the CPI, is the last critical economic indicator in analyzing the Forex. The CPI is the measure of the change in the prices of consumer goods in 200 categories. This report can tell whether or not a country is making or losing money on their products and services. The exports that a country has are very important when looking at this indicator because the amount of exports can reflect a currency's weakness or its strength.

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An exchange rate transaction is termed a cross rate when the home country currency is not a party in the trade. For example, for a trader in the U.S., a cross rate would be euro/yen, or the euro against the Japanese yen.
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Before the advent of Internet and ecommerce, only big corporations, multinational banks and wealthy individuals could trade currencies in the Forex market through the use of the proprietary trading systems of banks. These systems required as much as US$1 million to open an account. Thanks to advancements in online technology, today investors with only a few thousand dollars can have access to the Forex market 24 hours a day and around 5 � days of a week.

What Is Forex News From Around The World

Daily Forex Market Commentary for December 1, 2006

Sat, 02 Dec 2006 04:20:00 GMT
GFT Daily Forex Market Commentary for December 1, 2006
Forex Market Commentary by Cornelius Luca, Currencies Analyst, GFT


The dollar made a collapsing decline on Thursday, due to pure spec and rumored corporate orders.

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Why Forex Traders Lose - Avoid These Mistakes

By: Jerry Leung

You may have an illusion that forex trading is something very easy and simple but in reality a lot of trader will lose all the money they have. So what are the mistakes they made?

In fact, the number one mistake they make is that they do not prepare well. They will think that they can make money by following a system from others. They may even think that they can predict the forex price. In fact, you should not just follow the others if you want to be successful in forex trading.

Besides, some people lose because they think that there is a formula for them to follow and they can just trade according to this scientific formula. However, the sad fact is that there is no such formula in the world. If such formula really exists, all of us have already become billionaire.

The most serious mistake, according to experiences, is probably being too greedy. Some traders want to make the most money out of the market and they try to predict the highest price they call trade. They will be reluctant to make the deal even if they know they have already made some money. However, they will only find later that they cannot make money or even lose because they have missed the chance.

In fact, discipline is very important if you want to be successful in the forex market. Most traders know that it is important but they are just unable to do so. And this will make them lose money in the market.

You have to do your own research. You have also to study the market yourself. Of course you are also going to make your own decision. You should not just listen to what others say. Instead you should only take the opinions of the others some advices.

Besides, if you have set a target, you should make the deal when it is achieved. You should never think that you will be able to make more money and forget your original target. As discussed, this is the most serious mistake some traders make.

To be honest, forex trading is not easy. However, if you can work hard and do your own research, you will always have the chance to make money. You have to keep learning. Education is probably the most important thing if you would like to make money from forex trading. And if you have the discipline and educate yourself well, there is no reason why you cannot be successful in the marketing.

Article Source: http://www.tradeforex2000.info/forexarticledirectory

The author has great interest in finance. You can check his website on Financial Planning http://myfinancialexpert.info/

Some Quick Forex Information

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Ebb and flow of capital between nations, otherwise known as Purchasing Power Parity (PPP) is the central factor that determines market momentum. In addition, fundamental economic forces such as inflation and interest rates are constantly influencing currency prices. Faith in a government�s ability to stand behind its currency will also impact currency price. This is done in two ways: controls and intervention. Controls restrict citizens from doing things, which have a negative effect on the exchange rate (such as sending money abroad). Intervention takes two forms: changing the interest rate on the currency to make it more or less attractive to foreigners, or buying/selling the currency to raise or lower its market value.

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In its simplest form pivot point trading is based on these two tendencies and is also knows as "trading between the lines". The most popular and hence the most successful form of pivot trading is based on reversals. Simply put, when price approaches a pivot above, a trader waits for a reversal at that point and sells. The opposite is true when price action is moving downward. The patient pivot trader waits for a bounce off the pivot of support and places an order to buy.
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In the new millennium, the Forex trading has become accessible for an individual investor or small group of investors. In the current scenario, investors reap many benefits from Forex trading than stock market, e-mini futures and such other trading. Today mostly traders are choosing Forex trading than stock trading because there are approximately 4,500 stocks listed on the New York Stock exchange. Another 3,500 are listed on the NASDAQ. In spot Forex trading, you have 4 major markets, 24 hours a day 5.5 days a week. If you are so inclined, you have approximately 34 second-tier currencies to look at in your spare time. You can concentrate on the major forex and can find your trade. When you are investing in forex you can spend your afternoon on the golf course or with your spouse watching movie or celebrating holidays�in short it is easy and hassle free than stock/future market.

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Forex and Commodity Market Commentary and Analysis (28 November 2006)

Wed, 29 Nov 2006 06:11:00 GMT
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The euro appreciated vis-?�-vis the U.


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Additional Info On Forex Today

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Before you decide to enlist the services of a foreign currency broker, take the time to do some research on the broker and / or brokerage firm. Foreign currency trading has enough pitfalls to avoid without adding a shady broker to the equation. You can make a lot of money trading foreign currencies, but if what the broker says sounds too good to be true, chances are it is.

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What is Forex or Foreign Exchange: It is the largest financial market in the world, with a volume of more than $1.5 trillion daily, dealing in currencies. Unlike other financial markets, the Forex market has no physical location, no central exchange. It operates through an electronic network of banks, corporations and individuals trading one currency for another.

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The Foreign Exchange Market (FOREX) fx is the largest financial market in the world. For the beginner forex currency trading has the highest liquidity in the financial market with daily volume in excess of $1.95 trillion. The forex currency trading market is more than three times the total of the stocks and futures markets combined.
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The Foreign Exchange Market (FOREX) fx is the largest financial market in the world. For the beginner forex currency trading has the highest liquidity in the financial market with daily volume in excess of $1.95 trillion. The forex currency trading market is more than three times the total of the stocks and futures markets combined.

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Daily Forex Market Commentary for October 18, 2006

Thu, 19 Oct 2006 01:11:00 GMT
Forex Market Commentary for October 18, 2006
GFT Daily Forex Market Commentary by Cornelius Luca


The dollar fell broadly on Tuesday amid a very strong TIC data report, a very strong core PPI and a very weak industrial production...


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