The (Foreign Exchange) Forex Trading Market Explained.

Five Economic Driving Forces that Influence Forex Trading

Forex trading refers to the practice of buying and selling foreign currencies as they rise and fall in value on the global currency market.  Instead of investing in the success of companies, one is investing in the success of the currencies of nations of the world, which is to say that one is investing in the success of the nations themselves.  Of course, the economic success is the most important piece in this puzzle, but the economic success of a country is dependent upon a whole lot of things.  Here are just the five biggest ones.

The first one is the Gross Domestic Product or GDP of a nation.  This concept is not a new one; every American had to do reports at some point during their education that included the GDP of a nation or a region of nations.  However, the way that the GDP works might not be as obvious as what the initials of GDP stand for.  The GDP affects the strength of a nation’s currency by weakening or strengthening the net production of the country.  Regardless of percentage of import and export, the GDP represents the power of the workers’ force of a nation, which is indicative of the working ethic of the inhabitants and the strength of their working power. 

Another easily graspable driving force of a nation’s Forex trading power is simply what the current events are in the nation in question.  This may seem like an odd factor to influence currency values, but actually it’s perfectly logical that this be an influencing factor for a currency’s value.  On a large-scale level, take the devastation of Hurricane Katrina, which obviously affected the US’s currency.  However, there does not need to be huge ‘events’ in order to influence Forex trading.  A currency’s value is closely linked to the overarching state of affairs in the country of question.

The third factor when it comes to analyzing the value of national currencies is the industrial production report of the nation.  This may sound like a repeat of the GDP; the two are actually quite different.  While the GDP measures the amount of production, the industrial production report measures the efficiency of what is being produced and included in the GDP.  A country that is more efficient will have a better rating on this factor than a country that is not very efficient.

The fourth factor is the consumer price index.  The basic idea behind this notion is to find out whether a country is making or losing money with what they are producing.  This is a quite logical one; if the country is making money, their rating will be good for Forex.  In addition to the cut and dry notion of making or losing money, of course a nation who is making more money on products will score better than a country who is making money, but only a very slight profit margin.

The last of the top five factors is the retail sales report.  This report samples retail across a nation in a variety of domains for purchasing.  The idea behind this is to find out what people are spending their money on and just how much they are spending.  This samples the economic fortitude of the people who make up the nation in question.  If you take an event like September 11th, this example shows that the general spending culture changes in this sort of event.  While the GDP may not change and the industrial production efficiency might change only very slightly, retail sales plummet.  Go beyond the word ‘retail’--think of automobile sales and plane tickets; these too are part of the retail spending of the nation’s inhabitants.

These five factors together provide a very clear idea of just how a currency is doing by taking a look at these factors in the country whose currency one is considering.



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Introduction to Online Forex Trading
Current Forex Currency Rates
Forex Trading
How to Get Started In FOREX Trading
FOREX versus Futures Market
FOREX versus Stocks
FOREX Trading Philosophy
Fundamental Analysis In Forex Trading
Forex Technical Analysis - Part 1
Forex Technical Analysis - Part 2
FOREX Trading Strategies
Trading Currencies on Margin
Currency Option Marketplace
FOREX Signals
How to Read FOREX Quotes
Calculating FOREX Profits and Losses
Risks of FOREX Trading
FOREX Training
FOREX Trading Software
FOREX Brokers
FOREX Glossary
Forex Updates and Training
Crash Course in Forex Education
How to Recognize Patterns in Forex Trading Markets
Defining Exotic Currencies and Their Impact on Forex Markets
Defining Trading Trend and Ranges in Forex Trading
Mind Games – The Psychology of Forex Market Trading
Crossing Currency - What’s This Mean to Forex Traders
Money Management Basics for Forex Traders
Choosing Your Forex Broker
Expensive Beginner Forex Trader Mistakes
The Elliott Wave Theory for Forex Markets
Failsafe Facts to Guarantee Failure in Forex Trading
Five No Nonsense Strategies in Forex Trading
Global Expansion and It’s Reaches within the Forex Market
Hedging in the Forex Market
The Important Ways to Keep From Losing in the Forex Markets
An Overview of the Euro’s Performance in the Forex Markets
Six Trading Tips for the Forex Newbie
The Lowdown on Day Trading
Interpreting How Interest Rates Drive the Foreign Exchange Markets
The Basics of the Bollinger Band Technical Indicator in Forex Markets
Relative Strength Analysis in Forex Trading
The Basics on Understanding Forex Options
Forex Charts – What Are They and How Do You Read Them
Interpreting the Future of the Oil Marketplace and How It Affects Forex Trading
Top Five Economic Indicators that Drive Forex Trading
Rules for Trading in Forex Markets
How Does the Japanese Yen Stack Up Against the US Dollar in Forex Markets
Pivot Points in Forex
The Ins and Outs of Trying Out a Forex Demo Account
The Top Currencies to Watch in the Forex Trading Game
Defining Moments Regarding Trading Trends and Ranges with Forex
Top Ten Basic Terms in Forex Trading and Their Definitions
Forex Folklore Investment Myths in the Market
Five Economic Driving Forces that Influence Forex Trading
Day Trading All You Wish You Did Not Have to Know
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