As of now, statistics show that the foreign exchange market is the most liquid financial market, and prospects of earning profits are the highest in this form of trading. Currency valuations constantly suffer fluctuations and require traders to consider a wide variety of aspects before investing in a particular pair. While the technicality of forecasting can easily be obtained from online websites, it is the fundamental analysis forex PDF that is difficult to interpret and utilise the information while trading.
Fundamental approach in forex forecasting involves the studying of a country’s economic situation to determine its future currency valuation. Various factors like the country’s GDP, inflation rate, employment rate, political ties, etc. are all taken into account, and future behaviour of the market can be predicted.
Tricks that fundamental analysis forex PDF won’t tell:
Here are few tricks of trading that no fundamental analysis forex PDF will mention; that might help you in increasing your returns.
- Wait for a currency to fall
If you are trading with Euro, your fundamental analysis must show the effect of Brexit on Euros. Britain has long isolated itself from using the same currency as the rest of Euro-Zone’s countries; its recent decision to exit EU will mean that it will no longer contribute to EU’s annual budget.
Combined with its long lasting Debt Crisis, this will certainly affect the Euro’s valuation. Wait for the quote to fall and purchase more Euros at a lower rate. So, when the market rises again, you can generate profit.
- The carry trade concept
You know what the concept is. Forex fundamental analysis news will tell you which currency to borrow and which currency to buy. Developed economies like the US and Japan lend out their currency at very low rates. As these are quite stable, their interests are unlikely to fluctuate and borrowing these currencies is a good option.
With this, buy the currency of developing economies. Buy those currencies whose economies show steady growth rate, like Australia or New Zealand. This will ensure you profit from appreciation in currency valuation as well as carry trading.
- Buy currencies of developing economies
At times, going for the developing economy’s currency is better than trading with developed ones. A fast and developing economy attract foreign investors, and this creates a demand for their currency. A high demand will surely appreciate currency valuation and increase your profits.
- Go for country’s currencies with high export rate
Forex fundamental analysis news will indicate that countries like Australia and New Zealand heavily depend on their exports. While Australia caters to the needs of South Asian countries, New Zealand exports its agricultural products mainly to Australia. Keep track of how their export rates are faring and to which countries they mainly export. Recently, China has decreased their import rate and is looking to create new trading routes with Pakistan.
This will see an increase in Chinese currency rate and fall in AUD. This also means that both AUD and NZD are unlikely to show any recent increase.
Do give fundamental analysis forex PDF available online a thorough read to understand the theoretical concepts and what all to consider while carrying out your analysis. Also, make these smart moves that other traders miss out on and improve your returns. Trade smart and invest smart!
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.