How to use fundamental analysis in the FOREX - Part 2

After reading and studying the major economic indicators, here are some more reports you should check: Retail Sales, Industrial Production, PMI, PPI, ECI, and durable goods report. These reports can prove to be a priceless resource for predicting the market's movements.

Economic indicators can be easily found - they are available on the Internet for any FOREX investor and trader to read, so take your time, study them, understand them and how they affect a certain country's economy and currency.

For conclusion here are a few tips to help you FOREX traders while using the fundamental analysis on the foreign currency exchange market:

1. Look out for the more comprehensive economic indicators that the market usually moves in accordance with. 2. Write down the release dates of the economic indicators and keep them near your trading-desk while always keeping an open eye for the future. 3. Pay attention to the trend the economic indicators created. Don't react and invest right away to the new. Numbers can be published and then revised. 4. Usually before a certain economic indicator is released the market makes assumptions about the data, so look out to see whether the assumptions were right or wrong. That information is more important to you than the report itself. Basically the report is just a tool used to forecast the market's reactions and movements. When there seem to be huge gaps between the assumptions and the report itself, find out and study the reason for the gap - that may help you in a future investment.

Economic indicators can be easily found - they are available on the Internet for any FOREX investor and trader to read, so take your time, study them, understand them

Mia Milis is an independent trader and provides financial advice regarding foreign exchange to several institutions as well as private individuals. Being an Internet enthusiast, she has taken up to provide advice through her brilliant articles, and in recent years has also founded http://www.theforexblogger.com in order to provide a platform online traders worldwide could share experiences through. To learn more about the FOREX market, visit Mia's website at http://www.theforexblogger.com

FOREX glossary (Part 2):

Buy Quote - This quote is normally displayed on the right side and stands for the price that you can buy the base currency for.

Cross rate - is used to express the values between the two currencies when it's not involving the USD.

Resistance - A high point in a market chart that rescues frequently and where the market will begin a bearish.

Support - A low point in the market chart that recurs frequently and where the market will begin a bullish.

Pivot points - is a short-term trend datum that analysts use as a tool to forecast low (support) and high (resistance) points of the chart. If one of those points is broken it's expected to create a trend in the same direction.

Going long - investing in the leading currency against the counter currency.

Going short - investing in the counter currency against the base currency.

Lot - $100,000 contract value.

Mini Lot - $10,000 contract value.

Pips - the smallest rise of a change in price (1/10,000 of the value).

Currency shortcuts: USD (U.S. dollars) also known as Greenback, buck GBP (United Kingdom pounds) also known as Cable, sterling, pound CAD (Canadian dollars) also known as Loonie AUD (Australian dollars) also known as Aussie CHF (Swiss francs) also known as Swissie JPY (Japanese yen) EUR (European euros) CNY (China Yuan) HUF (Hungarian Forint) INR (Indian Rupee) THB (Thai Baht) KRW (Korean Won) MXN (Mexican Peso) PLN (Polish Zloty) ZAR (South African Rand) CZK (Czech koruna) HKD (Hong Kong dollar) SGD (Singapore dollar)

FOREX glossary (Part 1)

Bid - to buy a currency.

Ask - to sell a currency.

OTC - over the counter.

Pips- the difference between the proposed buying price and the actual selling price, also known as bid/ask spread.

A Trader - his main mission is to increase his funds, standing in the line of fire of FOREX and fight his way, choosing the investment options, such as option trading using his judgment.

An Investor- an individual or a company who puts its money where there is an opportunity to generate profit. Investors are the buyers of real estate or funds, an investor is playing the silent partner part and does not getting involved in the money making process.

Trading volume - the quantity traded.

Exchange rate - the difference between currency values; for instance, a Canadian dollar is valued at .86 of a US dollar.

Hedge funds - large mutual fund that are able to manipulate and influence the market due to the fact they control vast amounts of money. Those companies can even influence a currency value only by reporting speculations.

Central bank - the national bank of a nation.

Bullish (Trading Trend) - When the direction of the currency ratio is consistently moving up.

Bearish (Trading Trend) - When the direction of the currency ratio is consistently moving down.

Trend Reversal - When a certain currency trend is changing and reverses its direction.

Trading Range - a chart pattern used to represent a resting period before the original trend is resumed.

Marginal trading - trading with a borrowed funds.

Leverage - the ratio between the money you deposit in your account (Margin) to the actual value. Many firms offer different varieties of ratios, from 1:10 to 1:200.

Fundamental analysis - Trying to predict the market movements by using both political and economic factors and indicators.

Technical analysis - Trying to predict the market movements by using analysis of historical price activity and charts

Spot Market - currencies contracts are usually come to settlement within 2 business days (aka the value date).

Exchange Rate - a value of one currency expressed in the terms of another

Currency Pair - All currencies are being trade in pairs. FOREX is about trading two currencies ratio, so when one currency is bought, the other is consecutively sold.

Base Currency- This is the first currency in a pair (EUR/USD).

Counter Currency- This is the second currency used in a pair (EUR/USD).

Sell Quote - This quote is normally displayed on the left side and stands for the price that you can sell the base currency for.

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How to use fundamental analysis in the FOREX - Part 2

FOREX glossary (Part 2):

FOREX glossary (Part 1)

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