Fundamental Analysis

• Pending NFA and CFTC Registration Legislation

  January 06, 2012 at 12:54 PM • 1 Comment

  The National Futures Association or NFA raised many forex traders' hackles by its FIFO ruling in August of 2009 that limited U.S. based forex brokers from taking essential forex trading orders like stop loss orders, limit orders and one cancels... Read More

• Popular European Currency Nicknames

  February 23, 2011 at 1:11 PM

  Just like the major dollar currencies have been assigned informal names among traders in the forex market, so too have the major European currencies. Read More

• Key Forex Fundamental Factors

  February 23, 2011 at 1:10 PM

  Trading in the forex market and keeping track of changes in all of the possible influences on a currency pair's exchange rate can be a daunting experience, regardless of a person's experience and trading acumen. Read More

• Fundamentals of Currency Evaluation

  February 23, 2011 at 1:10 PM

  Many forex traders wonder what determines the value of a nation's currency. Read More

• Forex Trading Sessions

  February 23, 2011 at 1:10 PM

  Unlike conventional stock and commodities exchanges, the forex market provides traders with the opportunity to trade 24 hours a day. The forex market keeps open around the clock from Sunday afternoon at 5:00 PM EST until Friday afternoon at 5:00... Read More

• Common Nicknames for the Dollar Currencies

  February 23, 2011 at 1:10 PM

  Just as many people have nicknames that their friends call them, all of the major dollar currencies and their primary traded currency pairs also have common friendly names. Read More

• Forex and the Yield Curve: Understanding Interest Rates

  February 23, 2011 at 1:10 PM

  Whether one is a technical or fundamental trader, there is little disagreement that forex prices depend very strongly on the interest rate differentials between currencies. We are most used to measuring this differential in terms of the basic rate of... Read More

• How to Make Use of the Yield Curve in Trading Forex?

  February 23, 2011 at 1:10 PM

  The yield curve is one of the best indicators of current economic conditions as perceived by the bond market. It is crucial for the pricing of many financial derivatives, as well as consumer credit and mortage rates for ordinary borrowers;... Read More

• How to Use Fundamental Analysis to Profit in Forex

  February 23, 2011 at 1:10 PM

  The forex market is the market par excellence for fundamental analysis. Since currencies are the basic building blocks of all economic activity, all the developments in all the various sectors of an economy have implications for currency market trends. Read More

• Preferred Habitat Theory

  February 23, 2011 at 1:10 PM

  In our previous discussions of both the expectations theory and the market segmentation theory we noted that both fail to explain some observed phenomena in the market satisfactorily. Read More

• Market Segmentation Theory

  February 23, 2011 at 1:09 PM

  The third approach that we'll discuss in this article is radically different from the two previous ones that we've examined. Both the liquidity preference theory, and the expectations theory depend strongly on the presumption that debt instruments of different maturities... Read More

• The Basics of Fundamental Analysis

  February 23, 2011 at 1:09 PM

  In this section we will examine the various economic indicators released by the governments, central banks and statistical agencies of nations. We're not going into which indicator is what (although we will do that later), but our goal is to show you... Read More

• Liquidity Preference Theory

  February 23, 2011 at 1:08 PM

  In the previous chapter, we noted that the pure expectations theory cannot explain why short-term yields are typically lower than longer-term yields most of the time. Read More

• The Bond Market and Currency Prices

  February 23, 2011 at 1:08 PM

  Currencies are the basic building blocks of all economic activity. A grocery, a military contractor, a mortgage borrower, and even gangsters evaluate their economic plans in terms of currencies. Read More

• Pure Expectations Theory

  February 23, 2011 at 1:08 PM

  The simplest of interest rate theories is the pure expectations theory which assumes that the term structure of an interest contract only depends on the shorter term segments for determining the pricing and interest rate of longer maturities. Read More

• Interest Rates and Volatility's - Correlation Between Interest Rate Gaps and Volatility

  February 23, 2011 at 1:08 PM

  Volatility in the currency markets is influenced by a number of factors foremost among which is the risk perception of financial actors. Risk, of course, can be defined in terms of many different variables including politics, natural disasters, in addition... Read More

• Gold and Inflation: How Strong is the Relationship?

  February 23, 2011 at 1:08 PM

  For the past five to ten years we have been bombarded by commentary that gold is a hedge against inflation, and that wise, prudent, sensible people invest in precious metals in order to protect themselves against the out-of-control behavior of... Read More

• A Brief History of Currency Based Trading

  February 23, 2011 at 1:08 PM

  The forex market currently makes up the largest financial market in the world, with a daily turnover of over US$2 trillion per day in a wide variety of actively traded currency pairs. Read More

• Balance Sheet of the Federal Reserve: Its Meaning and Implications for Currency Analysis

  February 23, 2011 at 1:08 PM

  Apart from its responsibility of directing monetary policy, the Federal Reserve also functions as the regulator of the U.S. Financial system. It is also a powerful direct and indirect intermediary between various participants in the wholesale money markets, working to... Read More

• Forex Market Participants: Who Trades Forex?

  February 23, 2011 at 1:08 PM

  When it comes down to who trades forex, the answer used to be largely confined to well-capitalized financial institutions and corporations. While such large players still dominate the forex market in terms of overall forex transaction volumes, the recent rise... Read More

• Oil and Forex: An Intimate Relationship

  February 23, 2011 at 1:07 PM

  Although forex traders do not always have access to oil trading, due to regulatory constraints, trends in the oil market often have a very direct impact on their trading. Read More

• The Power of Fundamental Analysis: George Soros and the Bank of England

  February 23, 2011 at 1:07 PM

  Fundamental analysis examines the reasons behind the price action. The analyst uses economic indicators and news flows to decide on the causes behind price movements. Since one cannot determine the cause of something which has not yet happened, the causal... Read More

• Key Fundamental Information for Forex Traders

  February 23, 2011 at 1:07 PM

  Many experienced forex traders prefer to use objective technical analysis methods to direct their short-term trading activities, especially when it comes to timing trade entry and exit points. Read More

• The Treasury International Capital reports - Gauge Inflow of Capital With the TIC Report

  February 23, 2011 at 1:07 PM

  The Treasury International Capital reports measure the monthly demand of international investors and governments for US private and government securities. The TIC report measures the US financial account, and as such it is of great importance in demonstrating the inflow... Read More

• Investment Fraud: Flavor of the Year Must be Ponzi Schemes

  February 23, 2011 at 1:07 PM

  Seasons change, as do tastes, but investment fraud this year seems stuck in one genre. Ponzi schemes and related arrests are dominating news headlines in communities far and wide. Read More

• How Gold Affects the Forex Market

  February 23, 2011 at 1:07 PM

  Gold and other precious metals like silver, platinum and palladium have intrinsic value as hard physical assets with important industrial applications. They also have value due to their ability to store a considerable amount of wealth in a rather small space. Read More

• Understanding a Global Currency: What Makes the Dollar the Reserve Currency of the World?

  February 23, 2011 at 1:07 PM

  USD is the world's currency. Through its ups and downs, recessions, stagflation, bull and bear markets, wars, and turmoil, the Dollar has shown great resilience as the world's measure of value. Read More

• Modern Forex Trading History

  February 23, 2011 at 1:06 PM

  The world was a different place after the Second World War and the Allied Powers needed to reorganize the world economy, establishing currency standards for the world's nations was a priority and was the basis for the forex market as... Read More

• Currency Trading vs. Futures Trading: Forex & Eurex Under the Microscope

  February 23, 2011 at 1:06 PM

  Since the late 90's, retail currency trading has become one of the fastest growing sectors in the financial industry. This success has largely been due to online trading platforms that are increasingly making forex trading available to consumers. Read More

• How Professional Forex Market-Makers Quote Counterparties

  February 23, 2011 at 1:06 PM

  Many individual forex traders who trade online and have never worked for major banks wonder what goes on inside those huge forex market-making financial institutions. This article is written to assist individual traders in understanding the process that a professional... Read More

• Where are the Bond Vigilantes?

  February 23, 2011 at 1:06 PM

  One of the more puzzling aspects of market trends these days has been the obvious indifference of the bond market to budgetary indiscipline and rising risk associated with the increasing debt burden of the government. Read More

• Austerity or Profligacy: Can America Convince Europe to Adopt its Spending Habits

  February 23, 2011 at 1:06 PM

  The widening gap between the approaches adopted on both sides of the Atlantic towards mending the damage done by the economic crisis could not be more striking. Read More

• Will the U.S. Federal Reserve Ever Raise Interest Rates?

  February 23, 2011 at 1:06 PM

  One of the most important questions that many traders have in mind with respect to the price of USD is about the direction of the federal funds rate. Read More

• The Increasingly Influential Euro

  February 23, 2011 at 1:05 PM

  Perhaps one of the most significant developments in the foreign exchange market over the last ten or so years was the consolidation of the currencies of sixteen European countries (now know collectively as the Eurozone) into a single currency known... Read More

• Assessing Central Bank Reserves for Forex Profits: Reading the COFER Report

  February 23, 2011 at 1:05 PM

  The Currency Composition of Official Foreign Exchange Reserves or COFER Report, is the most useful public source of data relating to central bank reserve allocations. The report is published by the IMF quarterly, and can be downloaded from the institution's website. Read More

• The Relative Risk Ratio: An Alternative Way to Manage Risk in Forex Trading

  February 23, 2011 at 1:05 PM

  Without complicating the subject too much, and engaging in a discussion which may generate results that are inapplicable in the context of the common tools possessed by a retail trader, we can identify three variables in the equation that determines... Read More

• Using Fundamental Analysis to Measure Market Sentiment

  February 23, 2011 at 1:05 PM

  A reasonably accurate evaluation of market sentiment can be an extremely valuable asset to a forex trader if the knowledge is used with caution. Read More

• If Large-Cap Company Leaders Refuse to Hire, Will SMEs Save the Day?

  February 23, 2011 at 1:05 PM

  Earnings season has come and gone. Earnings were up 35% to 40%, yet hiring plans are still on hold. Corporations have nearly $2 trillion on their balance sheets, but investment plans for more production are on hold, at least in... Read More

• Fundamental Forex Factors

  February 23, 2011 at 1:05 PM

  When it comes to forecasting forex rates, the science of fundamental analysis involves taking into account a variety of relevant economic and political factors for one currency relative to the other currency in each currency pair considered. Read More

• The Secret To Forex Trading Success: Recognizing The Journey

  February 23, 2011 at 1:04 PM

  Trading is a journey that has a clear beginning and no end.  When you decide to begin trading, the journey begins, but it never ends until the day you stop.  Each year you will learn more and become more proficient... Read More

• Commodity Futures Trading Commission: Are They Our Forex Friend or Foe?

  February 23, 2011 at 1:04 PM

  The Commodity Futures Trading Commission, or CFTC, has been making news headlines of late due to financial reform legislation that increased their responsibilities and preserved their independence from the SEC. Read More

• Developing a Single European Currency

  February 23, 2011 at 1:03 PM

  A highly significant event that occurred in the forex market over just the past decade or so has been the unification of many of the national currencies of Europe into a single consolidated currency known as the Euro. Read More

• The Impact of Inflation Measures on the Forex Market

  February 23, 2011 at 1:03 PM

  Inflation has long been a serious enemy to economic growth and the world's central banks constantly try to keep inflation in check by adjusting monetary policy. Read More

• Currencies Traded in the Forex Market

  February 23, 2011 at 1:03 PM

  The currencies most heavily traded in today's foreign exchange market roughly mirror the international trading activities of the countries involved. Read More

• Scenarios for the Deutschemark's Return

  February 23, 2011 at 1:03 PM

  Back in mid-May, an interesting rumor hit the forex market and caused the Euro to sharply decline. The rumor consisted of the possibility that the German government was ready to reintroduce the Deutschemark and exit the European Monetary Union and... Read More

• Currency Options Explained

  February 23, 2011 at 1:03 PM

  A currency option is a type of foreign exchange derivative contract that confers to its holder the right, but not the obligation, to engage in a forex transaction. Read More

• Forex - The World's Largest Capital Market

  February 23, 2011 at 1:03 PM

  The forex market makes up the largest single capital market in the world. With a daily turnover often seen of over $3 trillion, the forex market has no equal in the world of international finance. Read More

• Forex Currency Code, Quotation and Naming Conventions

  February 23, 2011 at 1:02 PM

  The forex market, much like any other financial market, has its nicknames and slang terms for currencies and exchange rates. Some of them even have colorful histories behind them. Read More

• Understanding Forex Forward Transactions

  February 23, 2011 at 1:02 PM

  A forward transaction in the foreign exchange market is a contractual agreement to take part in a currency transaction on a date other than the spot value date at a specific rate of exchange. Read More

• Understanding Forex Spot Transactions

  February 23, 2011 at 1:02 PM

  Spot foreign exchange transactions are simply those which are dealt for delivery on the spot value date. Historically, the term "spot" probably evolved from the phrase "on the spot". Read More

• Unusual Foreign Exchange Derivatives

  February 23, 2011 at 1:01 PM

  The foreign exchange market has proven itself to be fertile ground when it comes to developing new types of derivatives for traders and hedgers to use to take or manage currency risk. Read More

• Currency Groups

  February 23, 2011 at 1:01 PM

  In basic forex nomenclature, the different currency pairs of the world are divided into groups by the amount of daily trading activity and liquidity in each of them. Read More

• Currency Devaluation Examples

  February 23, 2011 at 1:01 PM

  The way that currencies appreciate and depreciate against each other depends on certain key factors. Under today's system of managed floating rates, currency values usually depend on market forces, political and economic factors, and the forces of supply and demand... Read More

• Currency Reserve Trends

  February 23, 2011 at 1:01 PM

  A reserve currency is one held by central banks to pay their international debts with or to use as a way of influencing the exchange rate of their country's currency. Read More

• Exchange Rate Regimes

  February 23, 2011 at 1:01 PM

  The foreign exchange market has gone through several major transitions over the years, moving through prolonged periods of fixed and floating exchange rate systems Read More

• Inflation and Forex Rates

  February 23, 2011 at 1:01 PM

  Currency exchange rates can be "nominal" meaning that the rate is set in the marketplace, primarily on the world foreign exchange market, or "real" meaning the corrected nominal rate, adjusted for inflation. Read More

• Trading Forex and Why it is so Popular

  February 23, 2011 at 1:01 PM

  As a result of international commodity and finished product trading activities, the currencies of the major nations of the world usually remain in demand and see active trading on the forex market. Read More

• Advantages of Trading Forex

  February 23, 2011 at 1:01 PM

  In addition to the fact that the foreign exchange market trades around the clock, five days a week, the currencies that are the object of trading in the forex market are among the most actively traded assets in the world. Read More

• Forex Market Participants

  February 23, 2011 at 1:00 PM

  As the world's largest financial market, the forex market has a number of types of participants. They also vary considerably in their reasons for trading forex. Read More

• Benefits of High Forex Market Liquidity

  February 23, 2011 at 1:00 PM

  The forex market is not only the largest capital market in the world, but also has the largest number of individual and corporate participants. The chief benefit of having more participants in any capital market consists of the higher degree... Read More

• Why Currencies Trade Against the Dollar

  February 23, 2011 at 1:00 PM

  Currencies always trade in pairs because the value of each currency is measured against that of another currency, yielding a rate of exchange for the currency pair. Read More

• Advantages of the Unregulated Forex Market

  February 23, 2011 at 1:00 PM

  Efficient medium and long term trading styles in any market generally involve following the major underlying trend by trading in its overall direction. Read More

• Currency Options for Forex Traders and Hedgers

  February 23, 2011 at 1:00 PM

  Currency options confer the right - but not the obligation - on the buyer to be able to enter into a specified underlying forex contract at a given exchange rate for a certain period of time. Read More

• Currencies and the Average Person

  February 23, 2011 at 1:00 PM

  The average person does not even consider what value the money in their wallet has, except perhaps when shopping and attempting to get the best possible goods for the funds they have available. Read More

• Forex Market Regulatory Agencies

  February 23, 2011 at 12:59 PM

  With the exception of currency futures and options traded on exchanges like the Chicago IMM, foreign exchange trading generally takes place in a remarkably decentralized manner. Read More

• The Strategic Importance of the U.S. Dollar

  February 23, 2011 at 12:59 PM

  Without a doubt, the most important and strategic currency traded in the forex market is the U.S. Dollar. The Dollar is a part of currency pairs that together account for over 85% of trading volume in the huge forex market. Read More

• Economic News That Affects Currencies

  February 23, 2011 at 12:59 PM

  One of the most important types of information available to a forex trader comes in the form of economic news or data releases. Such key news items concerning the economic health of a country will have a tendency to directly... Read More

• Forex Derivatives

  February 23, 2011 at 12:59 PM

  Thanks to the unmatched liquidity and competition in the forex market, trading currencies also allows a trader to take advantage of a number of other instruments which use currencies as the underlying asset. Read More

• Floating Exchange Rates Increase Currency Speculation

  February 23, 2011 at 12:58 PM

  Trading in currencies has gone through numerous attempts to control fluctuations in exchange rates, as well as efforts to fix or peg currency values to the price of hard assets like gold. Read More

• Volatility in the Forex Market

  February 23, 2011 at 12:58 PM

  Volatility is a useful concept for forex traders that can give them a sense of the risk involved in trading a particular currency pair. This can assist them in more intelligently choosing an appropriate size for a trading position based... Read More

• Modern European Exchange Rate Systems

  February 23, 2011 at 12:58 PM

  The Bretton Woods system of fixed exchange rates provided considerable stability among the exchange rates of the major European nations in the post World War II period. Read More

• The Professional Interbank Forex Market

  February 23, 2011 at 12:58 PM

  The largest forex trading volumes by far go through the network of professional forex dealers known collectively as the Interbank forex market. Read More

• From the Gold Standard to Floating Exchange Rates

  February 23, 2011 at 12:58 PM

  The currency or foreign exchange market has evolved gradually to become the largest capital market in the world where major currencies are actively traded in a system of floating exchange rates. Read More

• Fiat Currencies - A House of Cards Waiting to Fall?

  February 23, 2011 at 12:58 PM

  Increasing numbers of financial market observers seem worried that that the world economic system seems just about ready to fall flat on its face and that it will probably take its system of paper fiat currency right along with it. Read More

• The Dollar's Supremacy as a Reserve Currency Threatened

  February 23, 2011 at 12:58 PM

  One sign that people may be losing faith in the U.S. Dollar - one of the world's most printed and held paper currency - is that the Greenback has recently lost favor with a number of central banks as a... Read More

• The Importance of Forex Trading Times

  February 23, 2011 at 12:58 PM

  While you can technically access the forex market and trade at any hour of the day or night during the forex trading week, many traders find that certain hours offer more liquidity and tighter spreads than others. Read More

• Why Forex Market Intervention Usually Does Not Work

  February 23, 2011 at 12:57 PM

  Many experienced forex traders have observed over the span of their careers in the forex market that intervention by central banks to support or weaken their currency is generally not effective in reversing market trends in the long run. Read More

• BOJ Intervention is Unlikely to Reverse Yen Strength Alone

  February 23, 2011 at 12:57 PM

  Many savvy forex traders have seen from their own experience gained from years trading in the forex market that central bank intervention aimed at supporting or weakening their nation's currency tends to be ineffective when it comes to reversing long... Read More

• Will Bank of Japan Intervention Make a Difference?

  February 23, 2011 at 12:57 PM

  Traditionally, intervention in the forex market by a central bank does not sustainably move a currency since the huge capital flows that move through the forex market usually overwhelm any amount that a central bank can counteract them with. Read More

• What Forex Traders Need to Know About GDP

  February 23, 2011 at 12:57 PM

  The Gross Domestic Product or GDP fundamental economic indicator is one of the most closely watched indicators used by forex traders. Furthermore, both the influential data's initial release and its subsequent revisions can often result in wild swings in the... Read More

• The Influential CPI Data and its Forex Market Impact

  February 23, 2011 at 12:57 PM

  The Consumer Price Index or CPI is a fundamental economic indicator that has become one of the most closely watched inflation measures used by forex traders. Read More

• Forex Market Implications of the Non Farm Payrolls Data

  February 23, 2011 at 12:57 PM

  The Non Farm Payrolls or NFP fundamental economic indicator released in the United States has a well deserved reputation as being one of the most focused on pieces of information used by forex traders. Read More

• Producer Price Changes and Their Economic Effect

  February 23, 2011 at 12:57 PM

  Producer price changes in the United States are measured with the Producer Price Index. This important economic indicator is computed by taking a weighted average of the price changes observed in physical goods measured at the wholesale or producer level. Read More

• How Forex Traders React to PPI Data

  February 23, 2011 at 12:56 PM

  The Producer Price Index or PPI is a closely watched fundamental economic indicator that helps forex traders assess how inflationary pressures are faring at the wholesale or producer level for goods. Read More

• A Step-by-step Guide to Fundamental Analysis of the Currency Market

  February 23, 2011 at 12:55 PM • 2 Comments

  In this brief guide we will try to provide you with a step-by-step plan for analyzing the global economic environment and deciding on which currency to buy or sell. Read More