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Description
A fundamental trading strategy consists of strategic assessments in which a
certain currency is traded based on virtually any criteria excluding the price
action. These criteria include, but are not limited to, the economic condition
that the country the currency represents . . . monetary policy of the given
country . . . interest rates . . . political or military events . . . and other
elements that are fundamental to economies.
The focus of fundamental analysis in Forex lies on the economic, social and
political forces that drive supply and demand of a given currency. There is
no single set of beliefs that guide fundamental analysis, yet most fundamental
analysts look at various macroeconomic indicators such as economic growth rates,
interest rates, inflation, and unemployment. Several theories prevail as to
how currencies should be valued.
By itself, fundamental analysis can be very difficult to implement when dealing
with commodities, currencies and other margined products. The reason for this
is that often fundamental analysis does not provide specific entry and exit
points, and therefore it can be difficult for risk to be controlled when utilizing
leverage techniques. What is more, Forex traders who follow fundamental analysis,
as we generally do, are making longer-term trades.
In general terms, currency prices are a reflection of the balance between supply
and demand for currencies. Interest rates and the overall strength of the economy
are the two primary factors that affect supply and demand. Economic indicators
(for example, GDP, foreign investment and the trade balance) reflect the overall
health of an economy. Therefore, they are responsible for the underlying changes
in supply and demand for that currency. A tremendous amount of data is released
at regular intervals, and some of this data can be useful when predicting the
relative movement of currency values. Data that is related to interest rates
and international trade is analyzed very closely.
Overall, I believe the best Forex trading systems seem to be those that use fundamental analysis to determine which markets to trade. . . and a simple trend-following system to time entry and exit points.
Secret Forex Trading Techniques
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U.S. Government Required Disclaimer - Commodity Futures Trading Commission |
Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All trades, patterns, charts, systems, etc., discussed in this advertisement and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher or Tradewins. |