Forex Trading Guide

FOREX Fundamental Analysis

Introduction: Why Trade Forex

Millions of people are trading FOREX online. FOREX trading is gaining momentum every day. As the word goes out that is a safe market to trade in. The major reasons why FOREX trading is catching on to the individual trader are Safety and Liquidity. Trade when you wish, guaranteed stop losses, and of course FOREX is fun.

You don’t actually need to sit at the computer all day long to trade FOREX., Although once you see the power of Forex trading you might want to spend more time at the PC. Our teaching methods will show you the correct entry and exit points. All you have to do is glance at the charts occasionally to see if the correct entry point is approaching.

If it is then you should consider getting in on the trade. We will even show you how to leave your computer and have your trade be closed automatically at the level that you wish.

Everything you need to know about trading FOREX will be provided to you. The world of FOREX is getting more complex, but getting smaller at the same time. The internet provides the opportunity to anyone on the planet to trade FOREX.

We urge you to educate yourself in the techniques of FOREX trading. Because FOREX is already one of the best ways to increase your income from your own computer. And the comfort of your home

I urge you to not be the one that says, “FOREX, I could have been in that.”. It’s time for ForexGuide to teach you how to make money with money. After all, when you give it some thought. That is exactly what currency trading really is. Plain and simple.

This is one of the main things and reasons I enjoy trading FOREX. It’s a direct way of making money. Knowledge and money are the tools we use. Though there are plenty more other tools at our disposal. Such as those we can use in the MetaTrader 4 and 5 Trading Platforms.

Advantage of Forex Currency Trading

FOREX consists of trading in the many currencies of the world. It is the largest market providing the highest liquidity to traders. Daily volume in the currency markets is over $5 trillion dollars and growing. By comparison, the NYSE (New York Stock Exchange) daily volume is just “pocket change” per day.

The spot Forex market is the most liquid type. Spot, meaning that trades are settled within two trading days. There is no central exchange of physical location. Trading happens over-the-counter, 24hours a day, 5 days a week. Directly between the two telephones (client and broker) and/or computers (online).

FOREX participants include central banks, corporations, individual investors and speculators, and hedge funds. With the advent of electronic trading platforms. Private investors and smaller financial firms now have access to the same liquidity as larger market participants. This has not always been the case. To get involved in trading FOREX was a lot more difficult in the past.

Trading, or speculation, consists of over 90% of the daily volume. The other percentage of the daily volume consists of governments and commercial companies. By buying and selling goods and services they convert one currency into another.

Fundamentals in Detail

Fundamental analysis, among other things, requires a good examination of the FOREX market. To discover its current financial strength, future growth and profitability prospects. Including current management skills, in order to estimate whether the currency’s price is undervalued or overvalued.

A large amount of reliance is placed on annual and quarterly earnings reports. The economic, political and competitive environment affecting the country. Along with any current news, currency, or rumors relating to the economy. The fundamental analysis concerns itself with the “basics” of the business in assessing the value of a currency.

Fundamental analysis is commonly the preferred method to use for mid to longer-term investing. Though it is not suitable nor recommended for use by Day Traders. Due to the amount of research required. And the fact that trades are entered and exited within a very short time frame.

At its broadest, Fundamental Analysis studies any data that might be expected to impact the price or perceived value of a currency, other than analyzing the trading patterns of that Forex itself. Fundamentals included are such as economic factors, industry-specific trends, capital market conditions. Company-specific data and qualities amongst others.

In Fundamental Analysis are equally broad concepts of quantitative analysis. Where economic or company-specific data are analyzed. Using computer software and other objective means. And qualitative analysis, which examines less tangible concepts. Such as technology strength and management effectiveness.

Understanding FOREX Quotes

A Forex quote is always a two-sided quote. It has a “bid” and “offer”’. A bid is a price at which you can sell the base currency (buy the second currency). An Offer is a price at which you can buy the base currency (sell the second currency).

As mentioned earlier, the first currency listed is the Base Currency. In the major currency pairs, the US dollar is traditionally the base currency. This includes USD/JPY, USD/CHF, and USD/CAD. In this case, $1 USD (the base currency) is quoted in terms of the second currency.

Example: A quote of USD/JPY = 110.45 means that $1 US dollar is equal to 110.45 Japanese Yen.