So why should Fundamentals be added to your Forex trading strategy?
Here are 5 reasons to read around the subject of Forex trading and general economic factors.
1. Firstly factors like Retail Sales figures and GDP will move the market. If your Forex trading strategy includes trading these events and it’s a fully back-tested plan then great. If not then I would advise to close your positions before the news comes out.
2. Secondly you can gain some advantage over other traders by being informed and anticipating how the market might react to certain events. Countries like Australia and Canada are major producers of commodities. If Australia has had good crop gorwing seasons then this might strengthen the Australian Dollar – which you could anticipate as part of your Forex trading strategy.
3. Exports. Canada exports a large proportion of the goods they produce to the US. If your research shows an increase in goods produced, then you would look to possibly buy Canadian Dollars.
4. The price of oil will have a major effect on currency prices for both oil producing countries in addition to those major consumers of oil – especially for industry purposes. Keep an eye on the price of oil as this will move the currency markets.
5. The general economic stability of countries will also move the market. As we saw last week, the European Summit was successful in coming up with a strategy to deal with the debt problems of Greece which strengthened the Euro – especially in the US session!!
Those are just a few of the factors you can look out for. Having a little more background understanding and taking a look at the bigger picture will make sure you are well informed. This way you can take advantage of potential strengths or weaknesses in the currency pairs you trade – being one step ahead of others.
There are many more tips and strategies over at www.tradeforexfromhome.com Act now and click on the link for much more!
Do you have your own top 5 watch lists for good Fundamental analysis to add to your Forex trading strategy? Add your comments below – would be interested to hear from you.
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