Forex Basics
By TechGuy - November 17, 2017
Where I can Trade?
Online, anywhere, anytime, on the device of your choice. You have full control to monitor the status of your trades, modify the terms of your open deals, close deals, or withdraw profits. The ability to access your deals 24/7 is a great benefit of online trading.
How do I make a profit?
You can profit from Forex trading by correctly determining whether one currency in a currency pair will go up (strengthen) or go down (weaken) relative to the other currency in the pair. With forex, you can profit whether the market is rising or falling. This is because currencies are traded in pairs. The key is to buy when a currency is low and sell it back once it is high. In chapter 2 we take you step by step through a trade. Traders develop trading strategies based on technical and fundamental analysis. Technical analysis (chapter 4) is the use of charts and other statistical measures to predict future price movements based on past prices, while fundamental analysis (chapter 3) looks at how macro-economic data releases, news announcements and other reports may cause rates to change.
What drives Forex prices?
As with any marketplace, the main factor behind changes in exchange rates is supply and demand. In the Forex market there are however many other factors that cause prices to fluctuate as well. These factors may be of an economic, political or geographical nature. Fundamental analysis (chapter 3) explains how you can use these factors to forecast currency rate movements.
More to read- A number of economic indicators affect currency prices, ranging from unemployment to Gross Domestic Product (GDP) to retail sales data. One of the most influential indicators is interest rates. A change in interest rates in one country can have an impact on many other exchange rates at the same time. For example, when the Federal Reserve Bank (Fed) of the United States announces a change in the interest rate at which it loans to banks, this influences the value of the US dollar, which is involved in nearly 90% of all forex transactions. Politics are closely related to economics and so it is natural for changes in government or policy to also play a role in currency price fluctuation. Finally, geography can play an important role. Think of the earthquake in Japan in March 2011 and the negative effect it had on the value of the Japanese yen.
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