To make profitable investments in Forex, it is important to consider the economic and political events in different countries. Factors that influence the currency rates are unemployment, the trade balance, GDP and the development of the sector of goods and services. All these indicators are used to determine precisely the tendency of a value in the short, medium and long term.
The Main Indicators Forex Trading
It is necessary to know the news to make profitable investments in Forex and thus anticipate the rise or fall of a currency.
The value of a currency depends on certain economic indicators such as:
– the unemployment rate
– the GDP
– statistics of consumption
– the trade balance
– the inflation rate
– changes in the tertiary sector
– the interest of the central bank
The two most important indicators to consider are the interest rate and the level of trade balance that show the difference between the volume of goods imported and exported at those rates.
If the volume of imports increases, the value of the currency will trend downward. Exports boost the national economy and revalue the local currency. The interest rate is a good indicator to measure the economic situation globally. This rate is reviewed monthly by the Fed, the European Bank or the Bank of England. A higher interest rate means that the country is in a great economy.
An increase in the rate attracts foreign investors. Statistics on consumption determine the purchasing power of the population. Thus, during the financial crisis of 2009, the United States, limited the recession, their figures for consumption, thus offsetting the level of inflation and high unemployment.
The indicator of the level of debt
Investors performing long term Forex transactions must verify the debt ratio of a country. A debt index means that the high population incurs debt and invests or consumes more. However, if people avoid getting into debt in the long term, the country will pass through an economic crisis in the coming years.
Study the results of economic surveys
Investigations and surveys are used to measure the economic outlook for the coming months. In Europe, the ZEW provides this by analyzing the various market trends.
In the United States, Chicago Pmi determines the state companies based in Chicago. Results obtained in this city can be extrapolated to the national level The Net Tic measures the flow of money between the U.S. dollar and certain currencies.
A massive dollar purchase by foreign agencies indicates a significant dynamism of the U.S. economy. Investors can view the results of surveys of consumer confidence in the economy of his country. However, the Net Tic is not a very reliable indicator.
Consult specialized media
TV channels and newspapers dedicated solely to the economic sector should be consulted daily. Some channels offer continuous information on the key financials. Their services are available only subscription. Investors may also subscribe to magazines to get informed by the analysis of expected trends from financial experts. These various journals are available on the trading platforms.
The trader must also learn through other investors. Several forums are powered by thousands of experienced traders and provide free information which can be particularly useful.