Fundamentals Of Trading

Fundamentals Of Trading

No matter whether we talk about Forex or stock market, we can mention as well as discuss two types of analysis. And rather than advising you to stick to one of those, we support the use of both analyses. The best traders recommend the use of a combination of those two practices which means that you should look at economic indicators for a sign of a possible trade and then double-check it in charts. Now, while everyone understands what charts represent, many people get confused with economic indicators. Some guides tell them to focus on one type of signs, while others ignore them and point at other things. We will try to water that down and make a list of few indicators that are relevant to any given situation.

 Economic indicators you should keep an eye on

The economic indicators that influence currencies happen on the state-wide level. Events that affect one industry may also shift the value of the currency, but that industry has to be one of the economy carriers in that country. Some indicators are published, and anyone can go through them, while others are harder to find. The indicators, we will list, belong to the former group.

Industrial production shows the overall production of the industry within a country. It also contains the data about the capacity of various factories and how much of it is used. Utility production is one part of the industrial production that every trader watches as it is volatile and it relies on weather. GDP is the broadest measure of the state of the economy in a country. It represents all products that a country produces in one year. Only the beginners rely on GDP because they don’t realize that currency shifts before it due to two other reports that come before it. Experienced traders use those reports to trade.

Another indicator that is tricky to utilize is the CPI aka Consumer Price Index. It represents the price of consumer goods within a country. It also includes the export prices, and they are the primary focus of many traders. The issue comes with the fact that some export prices change due to the strength of the currency. So, you have to be careful if you want to use CPI to determine the possible change of the value of currency.

Retail prices represent the purchase power and habits of the people. This indicator won’t help you find good trades, but it is useful as it indicates some other lagging indicators. It also reveals the spending patterns of the people and one can compare that with the industry and whether it can support that style of expenditures.

Indicator software is not a thing on Forex

While one can argue that indicator software like Fintech LTDhelps them, they are probably talking about the stock market or binary options. There have been tries at software that would work on Forex, but none of them had any success. So, if someone suggests software that will make you rich, refuse them politely and report them to one of the blacklist sites.

Read More