HFM information and reviews
HFM
96%
FXCC information and reviews
FXCC
92%
FxPro information and reviews
FxPro
89%
FBS information and reviews
FBS
88%
Vantage information and reviews
Vantage
85%
XM information and reviews
XM
82%

Important Factors in Trading Forex


Whether you are already investing in the Forex markets with Olymp Trade or you’re looking to start, there are many things to consider and understand in order to find more success in your trades. While Forex trading with currency pairs may appear to be overly complex, and it is to some extent, traders can employ a number of different methods to improve their trading results.

Each factor that affects currency trading can be extremely complex, but not all these complexities need to be explored too deeply. However, getting a good foreign exchange market overview and a good understanding will suffice in helping to make better trading decisions.

Here are some of the things traders should consider when investing in Forex markets that are broken down in simpler terms to help average investors.

How Interest Rates Affect Currency Value

Nearly every country has interest rates that are set by a “central bank” in that country. In the United States, that authority resides with the U.S. Federal Reserve Bank, and the names of each institution varies, but they essentially do the same thing, which is to determine the national interest rate.

This interest rate IS NOT the rate that banks charge customers to borrow money for homes, cars, or to start/fund businesses. Instead, this is the interest rate that banks charge each other for loans to each other. Yes, banks borrow money from each other constantly to meet other federal requirements, but that is for another time.

Higher interest rates help to reduce inflation while lower rates help to increase business activity. Any news released about interest rates will often affect forex and stock markets and changes to an interest rate will directly affect that country’s currency value. You can find many news updates with Olymp Trade’s Insights section of the platform like those in the image below, but combining news sources is usually best.

How the General Economic Health Affects Currencies

The strength of a country’s economy will have a big impact on how that country’s currency is valued against other currencies. A country with a solid or growing economy has the ability to buy more goods and services and puts more of its money into circulation. This, in turn, will affect how it’s currency is valued.

There are several monthly, quarterly, and yearly reports that will indicate how well a country’s economy is performing. The most important of these reports is Gross Domestic Product (GDP) and traders are advised to pay attention to any news on the growth of GDP in major countries like the U.S., China, and the EU.

Additionally, unemployment figures, consumer confidence, and inflation reports can affect the forex markets directly.

Be Aware of Political Turmoil and Military Conflict

Political and military upheaval in any country or region can have a significant impact on other countries and regions that don’t appear to have any direct relationship to the conflict. However, we live in a global economy and the world gets smaller and more connected by the day.

Keep an eye out for news on the political situations at the top levels and of any brewing military conflicts and actively ask questions and seek answers as to how these things might affect trade in the world.

For example, political turmoil in a small country like Myanmar could have an impact on trade with China since Myanmar is a net exporter of natural gas to China. Any increased energy costs to Chinese manufacturers could raise market prices and lower profitability for others. As you can imagine, even some small ripples can create some economic waves.

Combine Fundamental and Technical Analysis

Some newer traders might be asking “what is market analysis” and “what is the difference between fundamental and technical analysis”. Rest assured, neither is too complicated or hard to understand with some time and practice and both are used in overall currency market analysis (forex). Fundamental analysis is based more on economic and political news illustrated in the first 3 points. Whereas, technical analysis requires the evaluation of the actual trading charts for currency pairs.

A good strategy is to identify one or a few different currency pairs and become very familiar with them over time. You will be able to see patterns of behavior based on economic news as well as how these pairs trend and reverse their trends.

For example, the EUR/USD pair is the most traded forex asset. It will be sensitive to U.S. and European economic data such as interest rate changes, unemployment, and GDP. However, technical analysis shows that since 2015 it will almost always trade above an exchange rate of 1.1 (1 euro is equal to 1.1 USD).

Here is a 1 month chart of the pair with the pink horizontal line showing the tremendous support at the 1.1 level. Understanding the historical behavior of the pair will be useful if/when it nears the 1.1 level in the future in respect to how to make a trading decision based on news. You can improve your skills on how to conduct technical analysis of the market on the platform by taking advantage of the many tutorials and make much better decisions on when to enter and exit positions on the market. What is more, if traders implement many of the forex trading strategies which can be learned on the platform, they will be able to maximize their profitability.

Become an Expert Using These Principles

Traders don’t need to have a degree in Finance or economics to become an expert on forex and understand how to analyze the markets. All the information needed is available for free and in greater detail than what has been explained above.

By keeping the ideas discussed here in mind while trading will improve your trading behavior on its own since your awareness will impact your market analysis and decision making. However, taking the extra time to hone your analytical skills and apply it when you see relevant information in the news or elsewhere, will certainly increase your trading success rate.

Keep in mind, if your fundamental and technical analysis provides you one more profitable trade of $100 a week, you will have made another $5,000 dollars after a year. The reward is definitely worth the effort.

#source


RELATED

The Essentials of Commodity Trading: A Beginner's Guide

Commodity trading, involving the buying and selling of raw materials and agricultural products, is a complex yet rewarding venture in the financial markets...

Negative Balance Protection: What Is It And How Does It Work

Contract for Difference (CFD) trading is a popular form of investment, but as with any investment, it involves a degree of risk. Managing risk in trading is critical to protect your capital...

How to Trade Oil CFDs: A Comprehensive Guide

The oil and gas industry encompasses different types of oil, such as crude oil, no-lead gasoline, natural gas, and heating oils. Among these, crude oil remains...

Nixse: Deep Access to Global Markets

Trade over 1500 instruments on the NX Trader platform, choose from Currencies, Commodities, Stocks, Indices and Digital currencies with razor-thin fees and low commissions on all markets...

What is forex scalping? Understanding the ins and outs

In the forex industry and investment world, scalping refers to trading currencies based on a set of real-time analysis. The idea and purpose behind this, is to make profit through buying...

A Guide to Cryptocurrency trading

If you've decided to invest in the cryptocurrency market, as with all investments, it's important to do your research. Although Bitcoin is the most well-known...

Short-term trading: Features and Tips

Currency speculations on Forex are short transactions ranging from a few minutes to a month, based on technical and news analysis. In contrast to medium...

What is a Limit Order?

A limit order is a buy or sell order of a digital asset at a specific price. A buy limit order can only be executed at or below the limit price, while a sell limit order can only be executed at or above the limit price...

Can A Stock Go Negative?

There are numerous professional stock traders who have made a name for themselves in the dynamic stock market. However, it is essential to keep in mind that the stock market is also prone...

Guide to Account Security: Safeguarding Against and Addressing Scams

At forex-ratings.com, your security is of paramount importance to us. Our mission is to offer you a digital environment where you can invest, trade, and communicate confidently...

Risk management in financial markets: principles, objectives, strategies

How to protect your savings and investments in a financial crisis? How to create a trading strategy capable of generating profits even in non-standard...

CFD trading: Pros vs Newbies

It seems like everyone is opening a trading account, installing mobile apps and desktop trading platforms, and adding online trading CFDs to their financial activities...

A Comprehensive Guide On How To Trade USD/CAD Currency Pair

The USD/CAD currency pair represents the relationship between the US dollar and the Canadian dollar and is a favored choice among currency traders due to its active trading hours...

How to Become a Professional Trader?

After learning more about the world of trading and getting real money from your trades, you might start thinking about becoming a professional trader. But what makes a professional trader?

Which is the Best Online Trading Platform for Beginners?

If you are new to forex trading, then you must probably be looking for the best trading platform which is usually selected based on top-notch tools and resources...

Guide to Forex Trading Costs: Unraveling the Fees

Forex trading, much like any financial venture, comes with its own set of costs. Grasping these costs is crucial for every trader, as it not only influences their bottom line but can also provide..

Efixxen: Next-level trading with versatile tools and impressive industry-leading technology

Efixxen is your one-stop place to sharpen your trading edge with our competitive conditions tailored to your unique trading style and preferences. Each trader can unlock endless trading possibilities thanks to our next-generation tools...

What is Forex and how to trade on it?

The term Forex - also known as foreign currency trading, currency exchange or by its acronym FX - refers to Foreign Exchange or to transactions between currencies...

What Financial Markets Are and Why They are Important

When we talk about stocks, currencies, bonds and cryptocurrencies, we may not think that all of these assets relate to particular financial markets. And what is a financial market, anyway?

Effective Bitcoin Trading in Five Steps

Rather than starting to invest in Bitcoin, trading Bitcoin can be even more profitable than investing alone. Trading Bitcoin involves taking full advantage of the asset's...

FP Markets information and reviews
FP Markets
81%
IronFX information and reviews
IronFX
77%
T4Trade information and reviews
T4Trade
76%
Exness information and reviews
Exness
76%
Just2Trade information and reviews
Just2Trade
76%
FXNovus information and reviews
FXNovus
75%

© 2006-2025 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.