Stocks & Commodities V. 23:8 (46-47): Forex Focus by Kathy Lien
Access to foreign exchange trading has opened up exciting trading options for the retail trader. You can now trade alongside corporations and institutions in a highly liquid market that is global, traded around the clock, and highly leveraged. Before jumping into this market, however, we must understand the factors that affect the forex market. With that in mind, STOCKS & COMMODITIES is introducing Forex Focus to better prepare the retail trader to participate in the currency market.
WHAT MOVES THE US DOLLAR?
Many factors are responsible, but some are more
important than others. Most speculative currency traders are technicians — that is, traders who rely solely on charting methods. However, this does not mean that fundamentals are insignificant and have
no bearing on trading decisions. In fact, more and more
technicians are inquiring about the expectations of the market leading up to major economic releases.
NUMBERS TO KEEP AN EYE ON
It is estimated that approximately 25% of all traders base their strategies off fundamentals, using releases such as Gross Domestic Product (GDP), employment, and Consumer Price Index (CPI) as the basis for their trading decisions. Because of this substantial influence in the market, knowing how, why, and which releases provoke the biggest response beforehand can be a profitable way to formulate trades.