Understand How Forex Trading Is Affected by the Economy with Frederic Sealey
According to Frederic Sealey, the subject of currency exchange is divided into two categories: Forex basic analysis and tесhnісаl аnalysis. Since there are two categories, there is an unexpected debate regarding which one is the best. Though it is important to know that having knowledge of both is very essential.
To make this easy to understand and figure the difference between the two different types of trading, we can sum up that the analysis concentrates more on the world economy, while on the other hand, technical analysis has its focus on the graphs. The main purpose of this guide is to help you understand deeply how your trades may have an effect because of the fundamental as well as economic factors.
No matter how basic or deep understanding you have about the functioning of the currency markets, the fact you will have to face is that the country’s currency value depends to a large extent on the financial status of the country. It is a known fact to all, that when the current performance of the company is good, the price of its stock will also increase. The same principle is applicable in the case of money in a country.
Analysing The Report
Chances of seeing a change in the money exchange rates are mostly when a particular world giants are going to release the financial reports. In such reports, things like national debt., national employment, inflation, and the most important, the GDP (Gross Domestic Product) of a country are shown. Mostly these reports are issued regularly on the basis of predetermined dates and if you follow these reports and pay attention, you can also notice that these reports are responsible for a lot of volatility.
Due to this, it is very important for you to be aware of these reports. It is obvious that you must not stick just to the reports of your own country, but also have the right information on the reports of other countries in whose currency you are trading. You may have been told or you may believe that newspaper and television are enough for the right information, but that is not true. The sources do not have the detailed information of the different economies. It is very important to have dedicated books, most of which are available on the internet.
- All traders must be aware of the fact that it is not just the currency of the nation which is affected by the market but various other factors like influences and social trends. Even in the past, there have been instances which are a witness for currency’s value being directly affected by situations like political unrest, disaster or even by a general election.
- It is impossible to forecast such events but it is possible that you can time your trades around the events which may take place. A good analysis will give you a better idea about the response market had the last time.
- If you have the intention of making your transactions mostly on the basis of the Forex markets, it is quite ideal to be a person who enjoys being aware of the important information.
Another alternative is to get information about the events that may take place in coming time and stop for the time being. Most successful traders who trade on the basis of technical evaluations follow this alternate. If you are not willing to rade during these times, then you must be aware of the events that are going to happen or are happening. Though, even the traders who trust the technical analysis will need to rely to a certain degree on the Forex fundamental analysis.