Forex Broker Reviews 2012

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Analyzing Economical Fundamentals in Forex Trading

forex 9 Analyzing Economical Fundamentals in Forex TradingThe economy is the most important fundamental indicator of Forex trading. However, economical analysis for Forex trading is very different than with other trading, like the stock market.  With stocks, you can simply look at the values of the company’s assets and the flow of funds.  With Forex trading, you must look at all the numerous factors which influence a local and global economy.  Here are the core economical factors which must be analyzed for Forex trading.

Retail Sales Reports

The retail sales reports of a country (or region) can give you insight about the resident’s spending powers.  These reports will tell you the total amount spent in retail stores throughout that country.  High sales are an indicator of a strong economy which will likely have a surging currency.

Interest Rate

When a country’s interest rates go up, it becomes more attractive to investors because they get a high rate of return.  This leads to a stronger currency because of the increased investment. However, raises in interest rate can also cause the currency to go down because it may reduce the purchase power of the country’s residents. Thus, interest rates must be weighed against the purchase power of the country.


Gross domestic product refers to the total dollar amount of all of the goods and services produced in a country during a specific period.  The GDP is the main indicator of how healthy a country is financially.  Usually, GDP is referred to in percentages of how much it has increased or decreased from the previous period (usually the year or quarter). A very simple way of calculating GDP is either totaling all of the nation’s income or all of the nation’s expenditures. A more advanced method of calculating GDP is:

GDD= (customer expenditures) + (business investment capital) + (governmental expense on all goods/services) + (gross export – gross import)

Unemployment Rate

A nation’s unemployment rate is highly indicative of its economical health.  A high unemployment rate is also likely to affect the retail sales reports as well.

Economical Analysis Does Not Exist in a Vacuum

forex 20 Analyzing Economical Fundamentals in Forex TradingWhile these economical aspects can help predict Forex trading, traders must always be aware of the larger picture.  The economy of a nation can quickly change based on other fundamental aspects, such as a natural disaster or changes to government policies.  But just looking at fundamental policies is also unwise because nations typically follow trends.  For example, a tsunami in a country could cause its economy to falter for some time but, over the long run, the technical analysis may be correct in that the nation’s currency will stabilize.

Are You Ready for Forex Trading?

Forex trading is often hyped up because it is so easy to get started, even with a small investment amount.  All you really need to get started with Forex trading is a home computer and about $2000 (even less with some brokers).  However, just because you can start Forex [...] Continue Reading…

Fundamental or Technical Analysis for Forex Trading?

There are two main methods of predicting risk in Forex trading: fundamental and technical analysis.  Fundamental analysis factors in all of the political, social, and economical aspects which may alter the value of a currency.  This can include environmental catastrophes, changes to governmental policy, and social climate.  Technical analysis [...] Continue Reading…

How to Manage Risk in Forex Trades

The foreign currency exchange market is in constant flux.  There are so many various factors which change the value of a currency – social aspects, economy, politics, environmental catastrophes, etc – that it is impossible to track them all.  However, you will have to have a strong general understanding [...] Continue Reading…

How Much Should You Risk with Forex Trading?

If you talk to any experienced Forex trader, the trader is going to have plenty of stories about major losses – even when all the tips and trends said that the trade was going to bring a major profit.  Before you get too caught up in all of those [...] Continue Reading…

Understanding Currencies in Forex Trading

What many new Forex traders don’t realize is that no money is ever actually being traded on the market.  Instead, the market is complete speculation with the changes in values, profits and losses only existing as computer entries.  While these computer entries may not really represent any actual exchanges, [...] Continue Reading…

Understanding Leverage in Forex Trading

In investing, leverage is used to increase the amount that can be returned on the investment.  With foreign currency exchange (Forex) trading, leverage occurs when the trader borrows moneys from a broker and uses the funds for the specific purpose of Forex trading.

Thanks to the leverage system of Forex [...] Continue Reading…

Guide to Forex Quotes

With trading on the foreign currency exchange market, the currencies are always going to be listed as a pair.  Each currency has its own three-letter symbol, most of which are obvious, such as USD for United States dollars. A currency pair for US dollars and British pounds looks like [...] Continue Reading…

Why Forex Trading is Advantageous over Other Investments

In the past, individual investors focused on stock options, futures, and commodities.  Now, increasingly more individuals are starting to trade on the foreign currency exchange market. When you look over the advantages of Forex trading, it is easy to understand why this market is becoming so much more popular.

On [...] Continue Reading…

An Introduction to Forex Trading

If you are interested in trading on the Foreign Currency Exchange (FOREX) market, then you have probably heard the stories of people who become millionaires while working from their homes.  These stories are not exaggerations – there really is millions to be earned with Forex trading.  But the truth [...] Continue Reading…