A currency exchange rate incorporates interest rate policies and macroeconomic data such as economic growth, inflation, and unemployment.
Basic Fundamental Conditions in the Foreign Exchange Market
Majorly, an exchange rate reflects a combination of the following fundamental conditions:
(i) growth, inflation, and unemployment
(ii) monetary policies, and especially the interest rate policy of the central bank
(iii) fiscal policies & government spending
(iv) political stability (political risk)
(v) legislation regarding capital taxation & the openness of the domestic economy
New macroeconomic conditions can create trading opportunities in the Foreign Exchange market
The Foreign Exchange market is so efficient that the impact of news is instantly incorporated into all exchange rates. However, when there is a major shift in the general macro circle, there can be tremendous opportunities for Forex traders. A macroeconomic shift is behind all key Forex trend reversals.
eBook: THINK LIKE A WHALE TRADE AS A SHARK
Combining Fundamentals, Technical Analysis, and Market Sentiment to Trade Forex, Equities, and Cryptocurrencies
There are three important conditions to trade successfully in any financial market: a strong fundamental landscape, a nice market structure, and an accurately measured trading range. If fundamentals agree, and the market structure has proven itself, knowing the trading range is the only thing you need. This book contains a wide variety of technical analysis methods and techniques to help investors recognize market structure in the early stages, identify support and resistance, and accurately measure the trading range.
The Contents
This book contains all the essential information you need to trade equities, Foreign Exchange, and cryptocurrencies.
Chapter 1 begins with the basics of fundamental analysis when trading equities, Forex currencies, and cryptocurrencies.
In Chapters, 2, 3, 4, 5, and 6, you will find various technical analysis methods with many examples and charts. Trading charts can be read significantly easier than raw data. Reading charts is useful not only for identifying key trends but also for recognizing major support and resistance levels. Furthermore, you will learn how to use moving averages, RSI, the Fibonacci Numbers, the Fibonacci Retracement, and the definition of the long-term trend in any financial market.
Foreign Exchange Risks & Risk Management
Like every other financial market, the Foreign Exchange market incurs many risks, consequently, risk management becomes a vital factor to consider to be profitable in the long run. This analysis will present all major currency risks and specific recommendations on how to deal with them.
Major Forex Investing Risks
These are the six (6) risks when investing in the Foreign Exchange Market:
(1) Exchange Rate Risk
The exchange rate risk is market risk and refers to unfavorable changes in the value of exchange rates. Every active Forex trading position is exposed to exchange rate risk. You can never eliminate it, but you can seriously limit the impact of it.
Hedging against Exchange Rate Risk:
These are some basic techniques to hedge against currency risk:
- Applying multiple portfolio diversification
- Implementing a detailed Money Management (MM) system
- Trading always small sizes
- Limiting the use of trading leverage
- Identifying and hedging against potential correlations between different currency positions
Foreign Exchange Cyclicity & The Role of Central Banks
Recognizing the macroeconomic cycle and decoding the intentions of central banks are the two key elements of the long-term success of any Forex investor.
Identifying Two (2) Major Types of Forex Currency Cycles
It is important for any Forex investor to take advantage of the cyclical nature of the Foreign Exchange market. There are two main types of cycles in the Foreign Exchange market:
(i) Long-Term Macro Cycles
In the long run, Forex currencies tend to coordinate with the general macroeconomic environment and follow the interest rate cycle. The monetary goals of Central Banks play a massive role in the macro-cycles of exchange rates.
Popular Forex Robots (Expert Advisors) are been reviewed and compared, the EA Builder, the FAP Turbo, and the Forex Diamond.
Forex robots are software programs that plug into a trading platform (mostly MetaTrader) and turn your PC into an automated trading machine. Forex robots are usually implementing scalping strategies aiming to achieve small profits of 10-40 pips per trade. They can execute tens of daily trades on a 24/5 basis without any human intervention.
Why do Forex Traders Use Forex Robots?
A Forex robot can eliminate the negative human psychological factor while it doesn’t get tired. Furthermore, it can instantly execute trades without any delays. As in the case of manual trading, Forex robots can place a take-profit and a stop-loss order or even a trailing stop-loss order.
1. Build your Own Manual & Automated Trading Systems with EA Builder
Using EA Builder you can also build your trading systems for MT4/MT5/Tradestation for free.
The EA Builder offers a full set of trading features that include: (i) technical analysis, (ii) money management, and (iii) time functions.
You can build:
(i) your own manual trading systems for free
(ii) but if you want to build an automated system (EA), you have to pay a one-time registration ($97)
