It’s been already couple of years the United States changed its trade policy. At first, the new trade approach of this world power was focused against Russia, China and countries belonging to the ASEAN (Association of Southeast Asian Nations). However, the time has shown that appetite comes with eating. At the end, U.S. focused its trade practice against the EU when it adopted import tariffs on European steel and aluminium at the first half of 2018.
But now it really looks like that the U.S. has supported its economy and therefore, the U.S. dollar is constantly strengthening since the beginning of 2018.
The concept has its own tools and steps for being successful at it, but you needn’t worry since that’s exactly why we’re here today, to teach you what you need to do just that
It’s more than a month the stock markets were overwhelmed by real panic. For example, when taking a look at the S&P500 index development, it could look that the best actual solution is the protection of capital so the sale of asset. However, in case of S&P500 history tells us that selling the asset does not have to be the best idea, in particular for the long-term investors.
From the chart below, it’s evident that those hot-headed traders (in the even of economic crisis in 2007), who were selling under the pressure of panic that time, often suffered significant losses. On the other hand, those who remained confident about “more optimistic days” got out of their losses by 2013.
We all know that trading Forex is a risky business and we encounter risks with each trade on a daily basis. It’s our duty as traders to protect our capital from these risks as much as possible.
A common question in the Forex community, especially asked around a lot by rookie traders, is whether fundamental analysis or technical analysis is better to trade the Fx market.
Trading Fundamentals – Differentiating between important and noise events. How misleading stories create abnormal price moves?
We are often witnesses of hectic price action in the Forex market which in most cases leaves traders scratching their heads wondering why and how things happened.
What’s even worse, those sharp moves are very often completely reversed and the market continues in the previous direction anyway! Those who got their stops taken out, lament about all the profit they could have made while those who held their positions are happy that they are still ending with a profit after all.
Combining Fundamentals with Technicals to Trade the Crosses
Although this is the exchange rate that everyone is looking at and referring to, markets are known to often overprice or underprice financial assets, and the same holds true for currencies.
To find out how much a currency pair is over or underpriced and to determine the longer-term fair value of an exchange rate, economists use several different methods by which they can obtain the so-called “real” or effective exchange rates.
This holds true both in the short and the long term, so, for example, one day, the US Dollar will be the strongest currency while the Euro will be the weakest on the day, and on another day the British Pound may outperform all while the Euro and the US Dollar will fall somewhere in between.
Devaluations and Revaluations vs. Appreciation and Depreciation
This is in contrast to a floating exchange rate system as is the standard among most developed countries where the value of a currency is determined by supply and demand forces in the market.
Cross pairs are not moving in isolation – Majors and crosses are closely related
Aside from the relationships that exist between some of the major USD pairs, cross currency pairs also have certain relationships to the major pairs and to other crosses.
Fundamental analysis basically uses underlying economic factors for both countries to forecast future exchange rates for a currency pair.
Similarly, we cannot expect the global FOREX market to exist in isolation without getting affected by numerous other variables.
So, what exactly is this elusive concept of market sentiment in Forex trading?
However, professional traders take one step further and consider every possible factor which has the tendency to affect FOREX rates.
Buying low and selling high is the usual way of making money in FOREX trading, however, it is not everyone’s cup of tea since it requires a lot of work. It’s worth knowing that there is a simpler and easier alternative to this - carry trading.
In 2014, it was overtaken by China, whose economy had been growing three times as fast in the last few decades.
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