Success Of Forex Trading
How is to concern the fundamental analysis?
In the center of our attention there was a theory of the prices. What is it and how it can help us? We will try to stop in more details on predominating factors and postulates of the given theory.
The theory of the prices follows from the theory of a perfect competition and is summarized by the statement that “the market is always right”. Even those who do not have special trust for the fundamental analysis, usually agree with this statement.
At the analysis of movement of exchange rates the quotation on currency couples is passive reflexion of value of each currency. To values are added those or other preferences of market process participants. And if to add here existing ability of the market to anticipate event we will receive following conclusions about the market:
1. In the market always there are preferences of this or that direction.
2. The market can influence a course of events anticipated by it.
The combination of these two statements explains, why so often it seems that the market truly anticipates events. Using as a starting point of participants preference, we will try to construct interaction model between sights of participants and a situation in which they participate.
Trading on Forex, it is necessary to analyze prevailing preference – it is an observable phenomenon. Other conditions, however, never happen equal. For giving to trading system of the moment of objectivity it is necessary to the trader to try to learn a bit more about these “other conditions”. And further we come nearer to concept “the basic trend” which influences all changes of quotations of the currency market, despite of what current fundamental release of the data. Degree of its influence on market quotations will vary, of course, depending on sights of participants. The trend of quotations can be presented as synthesis of “the basic trend” and “prevailing preference”.
For correct understanding of macroeconomic market condition the currency trader should understand the nature of communication of business factors well and some elements of a financial policy, sense of the basic financial and economic indicators. The rest – the trick of technique, is more exact – the technical analysis.
The positive moment for the currency speculator is that the economic data and the basic financial indicators are published widely, at least, for the basic countries with market economy, and are published during in advance appointed time.
On the basis of previous history and forecasts the market creates the opinion on expected values of indicators from which the mood of the market on each currency follows – to move it upwards or downwards. This opinion at each trader can be based on his personally executed analysis of schedules of the economic data, or on comparison and intuitive weighing of opinions of different experts and analysts. An optimum tandem as practice shows, is presence at the trader of an own estimation proceeding from which, he looks at other opinions. But the main thing at the analysis and decision-making on the basis of the fundamental data it is all the same understanding of the market opinion. Absolutely exact forecasts in economy do not happen, and if really published data essentially differs what expected the market it does not remain indifferent to it. Then the vigorous course of the rate exchange schedule begins, and it is necessary to be ready to it.
Before you make up your mind to make a forex investment or start forex trading yourself, better find a good forex book and read more about the currency exchange market – this will save you from tons of troubles and traps.