Forex Trading 4 Important Factors to Be Kept In Mind

Page 1

Forex Trading: 4 Important Factors to Keep in Mind


Introduction

The Foreign Exchange (Forex) is one of the most dynamic monetary markets in the world; the reason being that Forex trading valuations can vary in a very short period of time due to macro-economics and political reasons. Well aware of these quick changes, experienced Forex traders invest time and effort in forecasting and planning for unforeseen circumstances. To understand more, we list the four important factors a Forex trader should keep in mind.


Watch Interest Rates Changes in interest rates have an important impact on currency values. Currencies with higher interest rates attract greater foreign investments and are in high demand. The opposite is often true in areas with lower interest rates – so it’s important to monitor this.


Keep an eye on Employment The employment rate in a nation has a huge impact on currency valuation because it is an early indicator of economic stability or instability. High employment often leads to increased expenditure on durable goods, which in turn leads to inflation and higher interest rates. Areas of low employment are often instable and best avoided.


Track Economic Growth Reports on elements such as consumer spending and the housing market key are key indicators of economic growth in a nation. For instance, high expenditure is an indicator of a strong economy and can boost a currency’s valuation. These reports are often published regularly and are publicly available.


Watch Commodity Prices The price of important commodities such as oil and iron ore can affect the currencies of countries which export or import them in large quantities. For example, if the price of petroleum increases then the exporting country’s currency will often increase, while the importing country’s currency decreases.


Contact US Suite 501,132 Arthur Street North Sydney 2060 NSW info@learntotrade.com.au

(02) 8412 6000

https://www.learntotrade.com.au


Turn static files into dynamic content formats.

Create a flipbook
Issuu converts static files into: digital portfolios, online yearbooks, online catalogs, digital photo albums and more. Sign up and create your flipbook.