The smaller the spread, the more liquid the currency! Section 01 Introduction and key concepts 5 advantages of forex Make money even in times of crisis While the stock market and commercial bank deposits are in deep depression during the crisis, Forex profits, because any change in currency can be used to make profit.

A falling market is as profitable for Forex trading as a developing one because unlike in stock trading you can short the falling assets. Work while lying in a hammock All you need to start making money is a computer or a smart phone and an Internet connection. Your work space and goals are up to you! Easy rules Unlike the stock market with tens of thousands of different shares, Forex works with 8 basic currencies, which are the center of most trades.

Moreover, there are significantly less factors that influence currency exchange rates than in the stock market. Section 01 Introduction and key concepts 3 main disadvantages of forex Most of other forex learning materials will tell you that forex offers an easy way to make money.

High risk to lose the whole position In stock trading, unlike forex, it is very unlikely that you will lose all the money when investing in the stock market. But the truth is, you struggle with finding enought time to do it all. Emmanuel Follow Follow their activities. This is also a good way to learn Forex strategies in a real-life trading environment. I believe the investors.

This was a great opportunity to make money shorting betting that it would decline the euro. This is useful because the larger trade. Leverage is shown as a ratio, for movement in currency rates can be very small, example profits and losses alike. Leverage allows you to trade with more money Stock market Forex market Maximum leverage from to Varying lot sizes Term Lot In Forex, all transactions can be conducted via standard, mini, and micro lots.

Each lot size accounts for a different measure of units of the base currency, which in turn presents a different pip value.

Below is a simple chart to illustrate the differences in lot sizes, measured in units, volume for the major pairs where the base currency is USD. Those traders who are looking to get started in the forex market should consider opening a mini account because of the smaller contract sizes.

Term Spread The difference between the bid price and the ask price is called a spread. Although these movements may seem insignificant, even the smallest point change can result in thousands of dollars being made or lost due to leverage.

Again, this is one of the reasons that speculators are so attracted to the forex market; even the tiniest price movement can result in huge profit. While the high degree of leverage used in forex trading magnifies returns and risks, a few safety precautions used by professional traders may help mitigate these risks. Do you need more than strategy and only those with high risk , US dollars to open the trade?

With tolerance should consider using big leverage. If you are a relatively cautious Leverage investor or trader, use a lower level of leverage with perhaps or leverage.

Maximum leverage limits vary in different This is the amount that will be used to cover your potential losses. In other words, the countries, varying from to margin is the actual amount that you are Use Stop Loss orders! Stops can be used not risking to lose if the trade goes against you.

just to ensure that losses are capped, but also to protect profits. Section 01 Introduction and key concepts Example: leverage in use Going short on euro Europe has been hit by a crisis, so you expect the euro to fall against the US dollar.

nov 1. dec Case B: Leverage Case B: Leverage 1. You open a position of 1 lot, which 1. You were right. Euro depreciates against 2. Euro depreciates against the dollar to 1. close your trade and take your profits. Result: The euro fell by pips 1. Your profit is x 1 - 1. Section 01 Introduction and key concepts How much should I invest? Traders should look to use an effective leverage of to1 or less. Research shows that the amount of capital in your trading account can affect your profitability. With smaller investment you will not get enough profits as the average changes in the currency rates are small.

If you haven't heard of these terms already, you undoubtedly will as you begin to invest. The terms bull market and bear market describe upward and downward market trends, respectively, and can be used to describe either the market as a whole or specific sectors and securities.

These images will help you memorize which is which. Doji - when the opening and closing price are equal. Long-Legged Doji - after small candlesticks, they indicate a potential trend change. Normally only seen on thinly traded pairs. Your Capital may be at risk.

That is, on the most fundamental level, a currency rallies because there is a demand for that currency. Regardless of whether the demand is for hedging, speculative, or conversion purposes, true movements are based on the need for the currency.

Currency values decrease when there is excess supply. Supply and demand should be the real determinants for predicting future movements. However, how to predict supply and demand is not as simple as many would think. Two of the primary factors affecting supply and demand of currencies are interest rates and the overall strength of the economy. There are many factors that contribute to the net supply and demand for a currency and the strength of the economy.

Read on to uncover the main drivers that influence the exchange rates. The number of economic announcements made each day from around the world can be intimidating, so we will focus just on the most important ones. How are they divided The drivers are divided into three major groups: Geo-political, Economic and Market Psychology.

Here they are: Kathy Lien Chief Currency Strategist at Forex Capital Markets LLC. Former Currency trader at JPMorgan Chase.

TOP 9 Unemployment NFP or Non Farm 1 Payroll 6 Retail sales Will US employment continue to grow? For example, if the U. trade the U. more dollars flow out of the U. and the value of the U. currency depreciates. ongoing uncertainty for the U. If the deficit is greater than Stretch, London-based head of market expectations however, it can trigger a foreign-exchange strategy at CIBC.

negative price movement. After three straight years of gains, strategists All traderswill find it are forecasting the U. currency will be a world beater again in , strengthening valuable to know when against seven of 10 developed-world peers important economic data by the end of the year, according to the median estimate in a Bloomberg survey. This world keep them flat or lower. economic monetary policy.

Section 02 Key drivers of currency movements Key indicators A closer look at some indicators Stock market Even day and swing traders will find it valuable to keep up with incoming economic reports from the conditions major economies. Stock markets have a significant impact on exchange rate movements because they are a major place for high-volume currency movements. When foreign investors There are times where sentiment in the equity move their money to a markets will be the precursor to major moves in the forex market.

If the stock equity market is particular stock equity rising, investment dollars generally come in to seize the opportunity. Alternatively, falling equity market, they convert markets could prompt domestic investors to sell their capital in a their shares of local publicly traded firms to take advantage of investment opportunities abroad. domestic currency and To understand this further, let's imagine that the push the demand for it UK economy is booming, and its stock market is higher, making the performing well.

Meanwhile, in the United States, a lackluster economy is creating a shortage of currency appreciate. investment opportunities. In this type of environment U. investors will feel When the equity more inclined to sell their U. dollars and buy British pounds to participate in the markets are outperformance of the UK economy. When they elect to do so, it results in the outflow of capital experiencing recessions, from the United States and the inflow of capital however, foreign into the United Kingdom.

pushing the domestic currency down. Section 02 Key drivers of currency movements Key indicators The most overrated indicator GDP is no longer a big deal GDP report has also become one of least important economic indicators on the U. calendar, as it has led to some of the smallest relative movements in the EURUSD. One possible explanation is that GDP is released less frequently than other data in our study it comes out quarterly versus monthly , but in general, the GDP report is more prone to ambiguity and misinterpretation.

For example, surging GDP brought about by rising exports will be positive for the home currency; however, if GDP growth is a result of inventory buildup, the effect on the currency may actually be negative. Also, a large number of the components that comprise the GDP report are known in advance of the release. Section 02 Key drivers of currency movements Most volatile news reports That traders should follow closely Volatility and profits in forex are measured in pips.

The bigger the volatility the more pips and money a trader can make from a certain trade. Keep this chart by your side and make sure to mark these reports in your calendar! Unemployment indicator, showing if U. employment is growing or not. interest rates. Inflation indicator. for month prior to the release of the report. Section 02 Key drivers of currency movements Economic indicators What you need to know about them Part 1 What are Economic Indicators?

Economic indicators are snippets of financial and economic data published regularly by governmental agencies and the private sector. These statistics help market observers monitor the economy's pulse - so it's no surprise that they're followed by almost everyone in the financial markets. With so many people poised to react to the same information, economic indicators have tremendous potential to generate volume and move prices. It might seem like you need an advanced economics degree to parse all this data accurately - but in fact traders need only keep a few simple guidelines in mind when making trading decisions based on this data.

Mark Your Economic Calendars Watching the economic calendar not only helps you consider trades around these events, it helps explain otherwise unanticipated price actions during those periods. Consider this scenario: it's Monday morning and the USD has been falling for 3 weeks, with many traders short USD positions as a result.

On Friday, however, U. employment data is scheduled to be released. If that report looks promising, traders may start unwinding their short positions before Friday, leading to a short-term rally in USD through the week. Know exactly when each economic indicator will be released. You can find these calendars at the New York Federal Reserve Bank's site. What does This Data Mean for the Economy?

You need not understand every nuance of each data release, but you should try to grasp key, large-scale relationships between reports and what they measure in the economy. For example, you should know which indicators measure the economy's growth gross domestic product, or GDP versus those that measure inflation PPI, CPI or employment strength non-farm payrolls.

Not All Economic Indicators can Move Markets The market may pay attention to different indicators under different conditions. That focus can change over time and from one currency to another. For example, if prices inflation are not a crucial issue for a given country, but its economic growth is problematic, traders may pay less attention to inflation data and focus on employment data or GDP reports.

Section 02 Key drivers of currency movements Economic indicators What you need to know about them Part 2 Watch for the Unexpected Often the data itself may not be as important as whether or not it falls within market expectations. If a given report differs widely and unexpectedly from what economists and market pundits were anticipating, market volatility and potential trading opportunities may result.

At the same time, be careful of pulling the trigger too quickly when an indicator falls outside expectations. The number of economic announcements made each day from around the world can be intimidating, so we will focus just on the most important ones. How are they divided The drivers are divided into three major groups Geo-political, Economic and Market Psychology. Here they are Kathy Lien Chief Currency Strategist at Forex Capital Markets LLC. Former Currency trader at JPMorgan Chase.

TOP 9 Unemployment NFP or Non Farm Payroll Will US employment continue to grow? The consequence of the ongoing uncertainty in markets, where we see two of the big three global central banks still biased toward additional monetary easing, and ongoing uncertainty for the U. Aher three straight years of gains, strategists are forecasting the U. currency will be a world beater again in , strengthening against seven of 10 developed-world peers by the end of the year, according to the median estimate in a Bloomberg survey.

That outlook is backed by the Federal Reserves stated intent to continue raising interest rates while peers in the rest of the world keep them flat or lower. For example, if the U. trade figures show greater imports than exports, more dollars flow out of the U. and the value of the U. currency depreciates. Similarly, if trade figures show an increase in exports, dollars will flow into the United States and appreciate the value of the dollar.

From the standpoint of a national economy, a deficit in and of itself is not necessarily a bad thing. If the deficit is greater than market expectations however, it can trigger a negative price movement.

All traderswill find it valuable to know when important economic data are scheduled for release, particularly those that will aGect the U. This is because 90 of all currency trades are against the greenback, making currencies naturally sensitive to U.

economic releases. There are times where sentiment in the equity markets will be the precursor to major moves in the forex market. If the stock equity market is rising, investment dollars generally come in to seize the opportunity. Alternatively, falling equity markets could prompt domestic investors to sell their shares of local publicly traded firms to take advantage of investment opportunities abroad.

To understand this further, let's imagine that the UK economy is booming, and its stock market is performing well. Meanwhile, in the United States, a lackluster economy is creating a shortage of investment opportunities.

In this type of environment U. investors will feel more inclined to sell their U. dollars and buy British pounds to participate in the outperformance of the UK economy. When they elect to do so, it results in the outflow of capital from the United States and the inflow of capital into the United Kingdom.

Even day and swing traders will find it valuable to keep up with incoming economic reports from the major economies. When foreign investors move their money to a particular stock equity market, they convert their capital in a domestic currency and push the demand for it higher, making the currency appreciate.

When the equity markets are experiencing recessions, however, foreign investors tend to flee, thus converting back to their home currency and pushing the domestic currency down. calendar, as it has led to some of the smallest relative movements in the EURUSD. One possible explanation is that GDP is released less frequently than other data in our study it comes out quarterly versus monthly , but in general, the GDP report is more prone to ambiguity and misinterpretation.

For example, surging GDP brought about by rising exports will be positive for the home currency however, if GDP growth is a result of inventory buildup, the euect on the currency may actually be negative. Also, a large number of the components that comprise the GDP report are known in advance of the release.

The bigger the volatility the more pips and money a trader can make from a certain trade. Keep this chart by your side and make sure to mark these reports in your calendar! NFP - Non Farm Payroll. Unemployment indicator, showing if U. employment is growing or not. FOMC - decision on the U. interest rates. Trade Balance - deficit or surplus. CPI - Consumer Price Index. Inflation indicator. Retail Sales - An estimate of the total sales of goods by all retail establishments in the U.

for month prior to the release of the report. Economic indicators are snippets of financial and economic data published regularly by governmental agencies and the private sector. These statistics help market observers monitor the economy's pulse - so it's no surprise that they're followed by almost everyone in the financial markets. With so many people poised to react to the same information, economic indicators have tremendous potential to generate volume and move prices.

It might seem like you need an advanced economics degree to parse all this data accurately - but in fact traders need only keep a few simple guidelines in mind when making trading decisions based on this data. Mark Your Economic Calendars Watching the economic calendar not only helps you consider trades around these events, it helps explain otherwise unanticipated price actions during those periods. Consider this scenario it's Monday morning and the USD has been falling for 3 weeks, with many traders short USD positions as a result.

On Friday, however, U. employment data is scheduled to be released. If that report looks promising, traders may start unwinding their short positions before Friday, leading to a short-term rally in USD through the week. Know exactly when each economic indicator will be released. You can find these calendars at the New York Federal Reserve Bank's site.

What does This Data Mean for the Economy? You need not understand every nuance of each data release, but you should try to grasp key, large-scale relationships between reports and what they measure in the economy. For example, you should know which indicators measure the economy's growth gross domestic product, or GDP versus those that measure inflation PPI, CPI or employment strength non-farm payrolls.

Not All Economic Indicators can Move Markets The market may pay attention to diuerent indicators under diuerent conditions. That focus can change over time and from one currency to another. For example, if prices inflation are not a crucial issue for a given country, but its economic growth is problematic, traders may pay less attention to inflation data and focus on employment data or GDP reports.

If a given report diuers widely and unexpectedly from what economists and market pundits were anticipating, market volatility and potential trading opportunities may result. At the same time, be careful of pulling the trigger too quickly when an indicator falls outside expectations. Each new economic indicator release contains revisions to previously released data. Read more about this in the next section Consensus Vs Actual numbers. Don't Get Caught Up in Details While your macroeconomics professor may appreciate all the nuances of an economic report, traders need to filter data to focus on the numbers that can inform their trading decisions.

For example, many new traders watch the headlines of the employment report, for example, assuming that new jobs are key to economic growth. That may be true generally, but in trading terms non-farm payroll is the figure traders watch most closely and therefore has the biggest impact on markets.

Similarly, PPI measures changes in producer prices generally - but traders tend to watch PPI excluding food and energy as a market driver. Food and energy data tend to be much too volatile and subject to revisions to provide an accurate reading on producer price changes.

There are Two Sides to Every Trade Just remember that no trader's knowledge can be complete all the time. You might have a great handle on economic data published in Europe - but there are times when data published in the U. or Australia might have a surprising impact on your currency market. Doing your homework before trading any currency can help you make better decisions. For example, lets say that the U. unemployment rate is expected to increase.

Imagine that last month the unemployment rate was at 8. With a consensus at 9. economy, and as a result, a weaker dollar. So with this anticipation, big market players arent going to wait until the report is actually released to start acting on taking a position. They will go ahead and start selling ou their dollars for other currencies before the actual number is released. Now lets say that the actual unemployment rate is released and as expected, it reports 9. As a retail trader, you see this and think Okay, this is bad news for the U.

Its time to short the dollar! However, when you go to your trading platform to start selling the dollar, you see that the markets arent exactly moving in the direction you thought it would.

Its actually moving up! What the heck! This is because the big players have already adjusted their positions way before the news report even came out and may now be taking profits aher the run up to the news event.

Now lets revisit this example, but this time, imagine that the actual report released an unemployment rate of 8. The market players thought the unemployment rate would rise to 9. What you would see on your charts would be a huge dollar rally across the board because the big market players didnt expect this to happen.

Now that the report is released and it says something totally diuerent from what they had anticipated, they are all trying to adjust their positions as fast as possible. This would also happen if the actual report released an unemployment rate of The only diuerence would be that instead of the dollar rallying, it would drop like a rock! Since the market consensus was 9. looks a lot weaker now than when the forecasts were first released.

Its important to keep track of the market consensus and the actual numbers, you can better gauge which news reports will actually cause the market to move and in what direction.

Reference babybips 28 How Geo-politics aGect currency rates Section 02 Key drivers of currency movements Wars Natural disasters Political unrest Elections About elections and continuity Armed conflicts lead to depreciation A surprise, strong showing for Sanders "would have upset markets" by reducing the likelihood of Clinton becoming the next president, Lim Say Boon, chief investment ouicer at DBS Bank Ltd.

in Singapore, wrote in a report. The Super Tuesday results are being seen as "an outcome for continuity over the disruption threatened by Trump and Sanders," he said. You must remember that investors hate uncertainty! An impending war tends to negatively auect major currencies.

Instability in the world market prods investors to pull out of their financial positions, leading to currency depreciation. Dollar gains as new Presidents get elected Dollar gains as Reagan cuts taxes Fed raises interest rates. Similar euects have occured with Clinton and Obama. For Trump the upward trend was also there due to his promise to lower taxes and increase government spending on infrastrucure. Sentiment analysis is a kind of FX analysis that concentrates on indicating and consequently measuring the overall psychological and emotional state of all participants of the foreign exchange market.

This kind of Forex analysis strives to quantify what percentage of FX market participants are bullish or bearish, in other words being optimistic or pessimistic. As already mentioned in the previous sectionConcensus Vs Actual numbers - Markets start moving from expectations and forecasts that are also available in the economic calendars. If the forecast promised a positive growth and the actual data comes out even better than forecasted, it amplifies the rise of the currency even more. Actual gt Forecast Good for currency If the actual data comes out worse than expected, it creates a strong downward pressure on the currency.

Here is the rule to remember with financial reports 30 SECTION 03 FOREX TIMING 31 Section 03 Forex timing The importance of timing Top 3 events when maximum volatility happens Why timing is important The Foreign Exchange market operates 24 hours a day, making it nearly impossible for a single trader to track every market movement and respond immediately at all times.

Timing is everything in currency trading. In order to devise an euective and time-euicient investment strategy, it is important to understand how much liquidity there is around the clock to maximize the number of trading opportunities during a trader's own market hours. Besides liquidity, a currency pair's trading range is also heavily dependent on geographical location and macroeconomic factors.

Overlap between two sessions Generally, whenever there is an overlap in the market e. For instance, every morning during London Open session. Euro pairs are active and if you have a good strategy, you could get pips. News Release Fundamentals drive the market. During News Release, volatility is experienced and some pairs could move over pips depending on the type of news. For example Non-Farm Payroll is the most volatile news release and dollar based currency pairs could move hundreds of pips in seconds.

However, trading news is risky if you are not knowledgeable about it. Knowing what time of day a currency pair has the highest or narrowest trading volatility will undoubtedly help traders improve their investment utility due to better capital allocation.

Central Bank Govenor's Speech Speeches from these guys could make pairs go hundred's of pips and even change market sentiment with euects lasting into months. High volatility oGers lucrative profit potentials to short-term traders. Lower volatility under 80 pips per day is better for risk-averse traders, because there are less iregular market movements caused by aggressive intraday speculation.

The timing in forex trading is crucial! traders can then purchase currencies from diuerent continents. The Forex market of London is usually the most active as it involves many countries of the European Union. The US market comes next, so the time when the London session intersects with the US session usually provides the biggest returns. Expert traders consider 10 AM to be the best time as this is the period when the London market is preparing to close the trades and traders are getting ready to move to US market.

This creates big swings in currency prices thus opening great opportunities for profit. The Forex market is open 24 hours a day, but it is not active all this time!

In Forex trading money is made when the market is active when traders are bidding on the prices so it is crucial for you to learn about the most productive hours of the day and of the week for trading the forex! There are three major trading sessions of the Forex market London, US and Tokyo session. The busiest times are when the sessions overlap as The best time of the day to trade forex Download Forex Hero app to see the hours in your time zone!

Fridays are busy as well, but only until PM and during the second half of the day the movements can be very unpredictable. Best time MON WED THU I F TUE R SAT SUN 33 When NOT to trade forex Section 03 Forex timing Save your money and keep your nerves by not trading at the wrong time.

While it is crucial to understand when is the best time to analyze the charts and make the bids, it is equally important to know when NOT to open positions. An inactive ohen called thin market ouers smaller movements of rates, thus smaller potential profits. A thin market also comes with higher commissions spreads for each trade due to the decreased liquidity. In simple words if you want to sell a currency, it is harder to find potential buyers, so the broker or bank must increase the commission as it takes a risk of not finding a buyer so quickly.

A good example of chaotic trading is shortly before, during and shortly aher important news events. In these times of uncertainty, the currency rates can swing wildly and unpredictably, thus messing up trading by creating execution lags, triggering stop-loss orders, etc.

So here are some examples of when you should at least be careful when trading Friday akernoon weekends Primetime TV events 6 1 Trading session closing time 2 7 Asian sessions Important news events When angry or frustrated 3 8 4 Overnight Bank holidays 9 If you want to know the WHY behind these points - download the forex hero app here.

Usually, the higher the liquidity, the lower the volatility, and therefore the tighter the spread Spread is like a commission that you pay for the trade.

However, even major pairs can experience wider than normal spreads during volatile periods, such as interest rates announcements, GDP reports, unemployment figures, to name a few examples.

There will also be wider spreads during ou market hours, when there is only a fraction of the participants in the market, so the liquidity is lower. This can be seen when the markets open for the Asian session, at GMT Sunday, for example.

This widening occurs typically around news announcements or oG-market hours. Most forex brokers allow you to trade all weekend, but spreads will be significantly wider during weekends when liquidity is almost non-existent.

Dealing desk or market making brokers are going to widen their spreads coming into economic announcements to ouset the risk they take on by filling orders. Unfortunately, banks do the same thing, so an average forex broker could be better, but only marginally. What happens before or during important announcements. The volatility jumps before important anouncements and the drastic movements can hit the stop-losses, resulting in a lost trade and investment.

Work while lying in a hammock All you need to start making money is a computer or a smart phone and an Internet connection. Your work space and goals are up to you! Easy rules Unlike the stock market with tens of thousands of different shares, Forex works with 8 basic currencies, which are the center of most trades.

Moreover, there are significantly less factors that influence currency exchange rates than in the stock market. Section 01 Introduction and key concepts 3 main disadvantages of forex Most of other forex learning materials will tell you that forex offers an easy way to make money.

High risk to lose the whole position In stock trading, unlike forex, it is very unlikely that you will lose all the money when investing in the stock market. But the truth is, you struggle with finding enought time to do it all. Emmanuel Follow Follow their activities. This is also a good way to learn Forex strategies in a real-life trading environment. I believe the investors. This was a great opportunity to make money shorting betting that it would decline the euro.

This is useful because the larger trade. Leverage is shown as a ratio, for movement in currency rates can be very small, example profits and losses alike. Leverage allows you to trade with more money Stock market Forex market Maximum leverage from to Varying lot sizes Term Lot In Forex, all transactions can be conducted via standard, mini, and micro lots. Each lot size accounts for a different measure of units of the base currency, which in turn presents a different pip value.

Below is a simple chart to illustrate the differences in lot sizes, measured in units, volume for the major pairs where the base currency is USD. Those traders who are looking to get started in the forex market should consider opening a mini account because of the smaller contract sizes.

Term Spread The difference between the bid price and the ask price is called a spread. Although these movements may seem insignificant, even the smallest point change can result in thousands of dollars being made or lost due to leverage.

Again, this is one of the reasons that speculators are so attracted to the forex market; even the tiniest price movement can result in huge profit. While the high degree of leverage used in forex trading magnifies returns and risks, a few safety precautions used by professional traders may help mitigate these risks.

Do you need more than strategy and only those with high risk , US dollars to open the trade? With tolerance should consider using big leverage.

If you are a relatively cautious Leverage investor or trader, use a lower level of leverage with perhaps or leverage. Maximum leverage limits vary in different This is the amount that will be used to cover your potential losses. In other words, the countries, varying from to margin is the actual amount that you are Use Stop Loss orders! Stops can be used not risking to lose if the trade goes against you.

just to ensure that losses are capped, but also to protect profits. Section 01 Introduction and key concepts Example: leverage in use Going short on euro Europe has been hit by a crisis, so you expect the euro to fall against the US dollar. nov 1. dec Case B: Leverage Case B: Leverage 1. You open a position of 1 lot, which 1.

You were right. Euro depreciates against 2. Euro depreciates against the dollar to 1. close your trade and take your profits. Result: The euro fell by pips 1. Your profit is x 1 - 1. Section 01 Introduction and key concepts How much should I invest? Traders should look to use an effective leverage of to1 or less. Research shows that the amount of capital in your trading account can affect your profitability. With smaller investment you will not get enough profits as the average changes in the currency rates are small.

If you haven't heard of these terms already, you undoubtedly will as you begin to invest. The terms bull market and bear market describe upward and downward market trends, respectively, and can be used to describe either the market as a whole or specific sectors and securities. These images will help you memorize which is which.

Doji - when the opening and closing price are equal. Long-Legged Doji - after small candlesticks, they indicate a potential trend change. Normally only seen on thinly traded pairs. Your Capital may be at risk.

That is, on the most fundamental level, a currency rallies because there is a demand for that currency. Regardless of whether the demand is for hedging, speculative, or conversion purposes, true movements are based on the need for the currency. Currency values decrease when there is excess supply. Supply and demand should be the real determinants for predicting future movements. However, how to predict supply and demand is not as simple as many would think. Two of the primary factors affecting supply and demand of currencies are interest rates and the overall strength of the economy.

There are many factors that contribute to the net supply and demand for a currency and the strength of the economy. Read on to uncover the main drivers that influence the exchange rates. The number of economic announcements made each day from around the world can be intimidating, so we will focus just on the most important ones. How are they divided The drivers are divided into three major groups: Geo-political, Economic and Market Psychology. Here they are: Kathy Lien Chief Currency Strategist at Forex Capital Markets LLC.

Former Currency trader at JPMorgan Chase. TOP 9 Unemployment NFP or Non Farm 1 Payroll 6 Retail sales Will US employment continue to grow? For example, if the U. trade the U. more dollars flow out of the U. and the value of the U. currency depreciates. ongoing uncertainty for the U. If the deficit is greater than Stretch, London-based head of market expectations however, it can trigger a foreign-exchange strategy at CIBC.

negative price movement. After three straight years of gains, strategists All traderswill find it are forecasting the U. currency will be a world beater again in , strengthening valuable to know when against seven of 10 developed-world peers important economic data by the end of the year, according to the median estimate in a Bloomberg survey. This world keep them flat or lower.

economic monetary policy. Section 02 Key drivers of currency movements Key indicators A closer look at some indicators Stock market Even day and swing traders will find it valuable to keep up with incoming economic reports from the conditions major economies. Stock markets have a significant impact on exchange rate movements because they are a major place for high-volume currency movements. When foreign investors There are times where sentiment in the equity move their money to a markets will be the precursor to major moves in the forex market.

If the stock equity market is particular stock equity rising, investment dollars generally come in to seize the opportunity. Alternatively, falling equity market, they convert markets could prompt domestic investors to sell their capital in a their shares of local publicly traded firms to take advantage of investment opportunities abroad.

domestic currency and To understand this further, let's imagine that the push the demand for it UK economy is booming, and its stock market is higher, making the performing well. Meanwhile, in the United States, a lackluster economy is creating a shortage of currency appreciate. investment opportunities. In this type of environment U. investors will feel When the equity more inclined to sell their U. dollars and buy British pounds to participate in the markets are outperformance of the UK economy.

When they elect to do so, it results in the outflow of capital experiencing recessions, from the United States and the inflow of capital however, foreign into the United Kingdom. pushing the domestic currency down. Section 02 Key drivers of currency movements Key indicators The most overrated indicator GDP is no longer a big deal GDP report has also become one of least important economic indicators on the U. calendar, as it has led to some of the smallest relative movements in the EURUSD.

One possible explanation is that GDP is released less frequently than other data in our study it comes out quarterly versus monthly , but in general, the GDP report is more prone to ambiguity and misinterpretation.

For example, surging GDP brought about by rising exports will be positive for the home currency; however, if GDP growth is a result of inventory buildup, the effect on the currency may actually be negative. Also, a large number of the components that comprise the GDP report are known in advance of the release. Section 02 Key drivers of currency movements Most volatile news reports That traders should follow closely Volatility and profits in forex are measured in pips.

The bigger the volatility the more pips and money a trader can make from a certain trade. Keep this chart by your side and make sure to mark these reports in your calendar! Unemployment indicator, showing if U. employment is growing or not. interest rates. Inflation indicator. for month prior to the release of the report. Section 02 Key drivers of currency movements Economic indicators What you need to know about them Part 1 What are Economic Indicators?

Economic indicators are snippets of financial and economic data published regularly by governmental agencies and the private sector. These statistics help market observers monitor the economy's pulse - so it's no surprise that they're followed by almost everyone in the financial markets.

With so many people poised to react to the same information, economic indicators have tremendous potential to generate volume and move prices. It might seem like you need an advanced economics degree to parse all this data accurately - but in fact traders need only keep a few simple guidelines in mind when making trading decisions based on this data.

Mark Your Economic Calendars Watching the economic calendar not only helps you consider trades around these events, it helps explain otherwise unanticipated price actions during those periods. Consider this scenario: it's Monday morning and the USD has been falling for 3 weeks, with many traders short USD positions as a result. On Friday, however, U. employment data is scheduled to be released.

If that report looks promising, traders may start unwinding their short positions before Friday, leading to a short-term rally in USD through the week. Know exactly when each economic indicator will be released. You can find these calendars at the New York Federal Reserve Bank's site. What does This Data Mean for the Economy? You need not understand every nuance of each data release, but you should try to grasp key, large-scale relationships between reports and what they measure in the economy.

For example, you should know which indicators measure the economy's growth gross domestic product, or GDP versus those that measure inflation PPI, CPI or employment strength non-farm payrolls. Not All Economic Indicators can Move Markets The market may pay attention to different indicators under different conditions. That focus can change over time and from one currency to another.

For example, if prices inflation are not a crucial issue for a given country, but its economic growth is problematic, traders may pay less attention to inflation data and focus on employment data or GDP reports.

Section 02 Key drivers of currency movements Economic indicators What you need to know about them Part 2 Watch for the Unexpected Often the data itself may not be as important as whether or not it falls within market expectations. If a given report differs widely and unexpectedly from what economists and market pundits were anticipating, market volatility and potential trading opportunities may result.

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Matej Klenovsky. Dagfinn Rime. wilson putra. this is something you have looking for when making serious decision about Dollar investment stuff. jenar mahesa aji. Jose Antonio Muñoz. Channa Khieng. Log in with Facebook Log in with Google. Remember me on this computer. Enter the email address you signed up with and we'll email you a reset link. Need an account?

Click here to sign up. Download Free PDF. aru qat. Continue Reading Download Free PDF. Related Papers. BEAT THE FOREX DEALER. Download Free PDF View PDF. Foreign Exchange Market Structure, Players and Evolution. How To Trade Dollar. Harap gunakan DEMO ACCOUNT dalam proses pembelajaran. How to Make a Living Trading Foreign Exchange.

The 10 Essentials of Forex Trading -free-ebook-download. You will not find long third upgraded edition. We received a lot of great watery essay type paragraphs here, just feedback about the first and second e-book actionable and easy-to-digest information.

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market experience often delivered better performance than those with the experience! If someone teaches you something and it this fact is confirmed as well. sounds really complex, they probably haven't taken the time to think through how to boil it down.

Be careful with folks like that. There's a difference between being good at something and being good at teaching it. The currency pair price changes will generate your profits. It is better to invest in the currency of a country that is growing faster and fund it with a currency of a country that is growing slower.

When does it work The market is open 24 hours, 5. Read on to uncover deeper secrets about forex timing. Spread point The difference between the sell quote and the buy quote in pips. The smaller the spread, the more liquid the currency!

Section 01 Introduction and key concepts 5 advantages of forex Make money even in times of crisis While the stock market and commercial bank deposits are in deep depression during the crisis, Forex profits, because any change in currency can be used to make profit. A falling market is as profitable for Forex trading as a developing one because unlike in stock trading you can short the falling assets.

Work while lying in a hammock All you need to start making money is a computer or a smart phone and an Internet connection. Your work space and goals are up to you! Easy rules Unlike the stock market with tens of thousands of different shares, Forex works with 8 basic currencies, which are the center of most trades. Moreover, there are significantly less factors that influence currency exchange rates than in the stock market. Section 01 Introduction and key concepts 3 main disadvantages of forex Most of other forex learning materials will tell you that forex offers an easy way to make money.

High risk to lose the whole position In stock trading, unlike forex, it is very unlikely that you will lose all the money when investing in the stock market. But the truth is, you struggle with finding enought time to do it all. Emmanuel Follow Follow their activities. This is also a good way to learn Forex strategies in a real-life trading environment. I believe the investors.

This was a great opportunity to make money shorting betting that it would decline the euro. This is useful because the larger trade. Leverage is shown as a ratio, for movement in currency rates can be very small, example profits and losses alike.

Leverage allows you to trade with more money Stock market Forex market Maximum leverage from to Varying lot sizes Term Lot In Forex, all transactions can be conducted via standard, mini, and micro lots.

Each lot size accounts for a different measure of units of the base currency, which in turn presents a different pip value. Below is a simple chart to illustrate the differences in lot sizes, measured in units, volume for the major pairs where the base currency is USD.

Those traders who are looking to get started in the forex market should consider opening a mini account because of the smaller contract sizes. Term Spread The difference between the bid price and the ask price is called a spread. Although these movements may seem insignificant, even the smallest point change can result in thousands of dollars being made or lost due to leverage. Again, this is one of the reasons that speculators are so attracted to the forex market; even the tiniest price movement can result in huge profit.

While the high degree of leverage used in forex trading magnifies returns and risks, a few safety precautions used by professional traders may help mitigate these risks. Do you need more than strategy and only those with high risk , US dollars to open the trade? With tolerance should consider using big leverage. If you are a relatively cautious Leverage investor or trader, use a lower level of leverage with perhaps or leverage.

Maximum leverage limits vary in different This is the amount that will be used to cover your potential losses. In other words, the countries, varying from to margin is the actual amount that you are Use Stop Loss orders!

Stops can be used not risking to lose if the trade goes against you. just to ensure that losses are capped, but also to protect profits. Section 01 Introduction and key concepts Example: leverage in use Going short on euro Europe has been hit by a crisis, so you expect the euro to fall against the US dollar. nov 1. dec Case B: Leverage Case B: Leverage 1. You open a position of 1 lot, which 1.

You were right. Euro depreciates against 2. Euro depreciates against the dollar to 1. close your trade and take your profits. Result: The euro fell by pips 1. Your profit is x 1 - 1. Section 01 Introduction and key concepts How much should I invest? Traders should look to use an effective leverage of to1 or less.

Research shows that the amount of capital in your trading account can affect your profitability. With smaller investment you will not get enough profits as the average changes in the currency rates are small.

If you haven't heard of these terms already, you undoubtedly will as you begin to invest. The terms bull market and bear market describe upward and downward market trends, respectively, and can be used to describe either the market as a whole or specific sectors and securities. These images will help you memorize which is which. Doji - when the opening and closing price are equal. Long-Legged Doji - after small candlesticks, they indicate a potential trend change. Normally only seen on thinly traded pairs.

Your Capital may be at risk. That is, on the most fundamental level, a currency rallies because there is a demand for that currency. Regardless of whether the demand is for hedging, speculative, or conversion purposes, true movements are based on the need for the currency.

The most common form of multiple time frame analysis is to use daily charts to identify the overall trend and then use the hourly charts to determine specific entry levels. If so, just upload it to PowerShow. If your stop is anywhere near price just prior to news, chances are you will be taken out not matter what the result. Trading Price Action Trends: Technical Analysis of Price Charts Bar by Bar for the Serious Trader. But the loans, essentially a bet on the Aussie The price difference in Russia and abroad dollar remaining strong against the franc, made the re-export of cars from Russia went horribly wrong when the dollar lucrative. Use trends in your long-term strategies. Dollar pair Single currency or Fiber - Euro Swissy - Swiss Franc Loonie - Canadian Dollar Aussie or Ozzie - Australian Dollar Kiwi - New Zealand Dollar Barnie - U.

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