What Are The Major Events In Forex Trading? Whether you are an expert investor in the Forex markets or want to get started, there are many things you need to consider or understand to achieve more success in your trading. Forex trading with currency pairs can seem overly complex, and to some extent, investors can use a number of different methods to improve trading results.
Every factor that affects currency trading can be extremely complex, but all these complexities do not need to be explored very deeply. However, getting a good overview and good understanding of the currency market will be enough to help make better trading decisions.
Here are some things investors should consider when investing in Forex markets, which are divided into simpler terms to help average investors.
Important Events In Forex Trading
As with any market, certain breaks or jumps can be seen in FX markets. The fundamentals of FX markets are indexed by currencies in the world. What are the major events in Forex Trading? we created an article in his name. In our article, we will give you basic information about how markets are oriented.
We will give you the important factors that we will implement in the narrative, summarizing them in titles. Let’s start.
How Do Interest Rates Affect Currency Value?
Almost every country has interest rates set by a “central bank” in that country. In the United States, that official resides at the U.S. central bank, and the name of each institution changes, but they basically do the same, that is, to determine the national interest rate.
This interest rate is not the rate at which banks borrow money from customers to fund houses, cars or businesses. Instead, it is the interest rate that banks charge each other for loans. Yes, banks constantly borrow from each other to meet other federal requirements, but that’s for another time.
Higher interest rates help lower inflation, while lower rates help boost business activity. Any news published about interest rates will usually affect the forex and stock markets, and changes in interest rates will directly affect the value of that country’s currency.
How Does Overall Economic Health Affect Currencies?
The strength of a country’s economy will have a huge impact on how that country’s currency is assessed against other currencies. A country with a robust or growing economy; it has the ability to buy more goods and services and put most of its money into circulation. This, in turn, will affect how the currency is valued.
There are several monthly, quarterly, and annual reports that show how well a country’s economy is performing. The most important of these reports is Gross Domestic Product (GDP). Therefore, investors are advised to pay attention to any news about GDP growth in large countries such as the US, China and the EU.
In addition, unemployment figures, consumer confidence and inflation reports can directly affect forex markets.
Be aware of political turmoil and military conflict
Political and military turmoil in any country or region can have a significant impact on other countries and regions that are seen to have no direct relationship to the conflict. However, we live in a global economy and the world is shrinking or becoming more connected by the day.
Follow news about political situations at the highest levels and all kinds of military conflicts. Or actively ask questions and look for answers on how these can affect trade around the world.
Political turmoil in a small country like Myanmar, for example, could affect trade with China because Myanmar is a net exporter of natural gas to China. Rising energy costs to Chinese producers could push up market prices. It can therefore reduce profitability for others. As you can imagine, even some small fluctuations can create some economic waves.
Combine basic and Technical Analysis
Some new investors may be asking” what is market analysis “and” what is the difference between fundamental and technical analysis.” Rest assured, it is neither very complex nor difficult to understand with some time and practice, and both are used in general foreign exchange market analysis (forex). Fundamental analysis is mainly based on economic and political news shown in the first 3 points. However, technical analysis requires the evaluation of actual trading charts for currency pairs.
A good strategy is to identify one or several different currency pairs and become familiar with them over time. You will be able to see patterns of behavior based on economic news and how these couples reverse their tendencies.
For example, the EUR / USD pair is the most traded forex asset. Interest rate changes would be sensitive to U.S. and European economic data such as unemployment and GDP. However, technical analysis shows that since 2015, it will almost always trade above an exchange rate of 1.1 (1 euro equals 1.1 USD).
Here’s a 1-month chart of the pair showing tremendous support at 1.1 level with a pink horizontal line. Understanding the historical behavior of the pair will be useful in how to make a news-based trading decision if it approaches the 1.1 level in the future. Using many tutorials, you can improve your skills on how to perform technical analysis of the market on the platform. So you can make much better decisions about when to enter and exit positions in the market. Moreover, if investors implement many of the forex trading strategies that can be learned on the platform, they can maximize their profitability.
Become An Expert Using These Principles
Investors do not need to have a degree in finance or economics to become experts in forex and understand how to analyze markets. All the information needed is available free of charge and in more detail than described above.
Keeping the ideas discussed here in mind when trading will improve your trading behavior on its own. Because your awareness will affect your Sunday analysis and decision making. However, improving your analytical skills and taking extra time to apply when you see relevant information in the news or elsewhere will certainly increase your trading success rate.
Remember, if your basic and technical analysis gives you another lucrative trade of $ 100 a week, you can earn another $ 5,000 a year later. The reward is definitely worth the effort.