LESSON 1 : INTRODUCTION TO FOREX AND FUNDAMENTAL ANALYSIS.

What is Forex ...? 

This refers to the exchange of rates in large sum of money between currency to currency. A person  who is doing forex is known as a Trader.

 Foreign exchange market, the foreign exchange market is a global decentralized market for trading currencies .this comprises the buying and selling of currency.

How does the Forex market looks like .

The forex market appears in a chart either in Line , Candle sticks and Blocks  example 

A screenshot of GBPUSD , showing candle stick chart.

The chart is good to do analysis when it's in a candlestick chart but it's better for a trader to use the better way which gives a clear view to do analysis.(analysis refers to determination of when to buy or sell a currency in foreign exchange Market)

Types of forex market analysis.

1. Technical analysis

2. Sentimental analysis

3. Fundamental analysis.

Note : this lessons will focus in fundamental analysis. 

What is Fundamental analysis..? »this is a type of analysis which involves the analyzing economic, social, and political situation which may have effect negativily or positively in price of currency.

        Some of examples are NFP NEWS and CPI 

Screenshot from forexfactory.com ,calendar showing news and events with time, and description of the news to be held

The roles of fundamental analysis in forex

1. Economic indicator analysis  , 

Forex traders use the fundamental analysis in order to determine inflation, GDP , Employment data and central bank interest rates.

2. Political stabilities with  economic performing 

The fundamental analysis put focus on the situation such as ongoing election, 

National ceremony,and political events which have the impact in market .

3. Interest rate differential,

Also traders use the differential rate between two countries example German and United States .

The use of IRD is vital concern and interest in foreign exchange market pricing.

4.Balance of trade and current account

Balance of trade (BOT) this is the difference between the value of the import and export of a country for a given period this help traders to determine either trade is surplus which will make the currency stronger while the deficit will make the currency more weak .

5 . Market sentiment

Traders take opportunity to positive news on which can lead to bullish sentiment with currency appreciation while negative news leads to bearish sentiment which provides depreciation.

 6. Risk aversion, 

trades at universe (uncertainty or risk aversion), traders are used to safe-haven currencies like the US dollar, Swiss franc, or Japanese yen. For them to not get loss.

7.Commodity prices.

Currency like AUD , Australian dollars is being close with gold hence the price of gold affect positive and negative towards the currency. The traders  use the information to determine how trends correlation of a currency.

Image from Yahoo finance, Australian dollars

8 . Central bank policies,Determination of adjut supply of money on usual sell and buying the  Security in Open market , trades put big eyes on the statements made by the central bank .

How fundamental analysis are important in  for making trading decisions...?

1. Helps traders to forecast market trends during trading of currency,index and stocks

2. Determination of long term investing opportunity

3. Promotes risk management due to the liquidity in the market

4.Income generation

Continue with Lesson two ( understanding economics indicators in fundamental analysis is here )