| A lot of attention, among Forex traders, is always drawn to the technical analysis side of Forex trading, and as a result Forex fundamental indicators are often left to the wayside. This is an oversight that could be dangerous to any Forex trader's success. The Forex fundamental indicators are just as important as any support and resistance line, because if the news changes, it doesn't matter what your chart says; the market is going to react. So many indicators If you think there are too many things to pay attention to when it comes to your technical analysis and charting, you'll be amazed at the possibilities of Forex fundamental indicators. Right off the bat you can include, macroeconomic, monetary, economical, financial, weather-based news, and so on and so forth. If you paid attention to all these indicators you wouldn't have any time left to trade. Something new is coming out all the time. There is always a new report, but the problem is that hardly any of all this news will have any impact on the Forex market. It's difficult to decide what is important and what can be ignored. The important ones There are a few reports that should not be ignored. These are the main Forex fundamental indicators that can keep your trading in order. The first one being the GDP for the country. The Gross Domestic Product report is the main indicator of the macroeconomic state of any particular country. The report comes out according to a schedule so you don't have to keep checking the news for it. The volatility in the market of the particular pair increases a great deal when these reports come out. Some traders actually choose to close their positions during this time period. You don't want to get caught wrong in these situations. Interest rates are set by the central banks. These Forex fundamental indicators can prove to be more interesting because the banks can choose to change the interest rates at an undisclosed time. When this happens, the Forex market reacts immediately. It's important to monitor the interest rates to be able to predict the long term results of any Forex pair. Unemployment rates are the third set of numbers the Forex trader should pay attention to. These numbers directly affect the interest rates which directly affect the Forex market. These figures usually come out weekly and they are strong Forex fundamental indicators that should always be noted. Stay informed A well balanced Forex trader will have a much better rate of success than one who is strictly a technical trader or strictly uses Forex fundamental indicators. It's a combination of both that will keep you ahead of the game. The news, when breaking, will ignore the technical analysis. On the same note, sometimes news will break out, but that support or resistance line will hold as if there was no news at all. The key is not to let yourself fall prey to any unnecessary surprises. There will be enough. To stay on top of Forex fundamental indicators is to put one more weapon to work for your Forex trading. | |
Thursday, November 18, 2010
Forex Fundamental Indicators
A Powerful Binary Option Trading Strategy
By: Hillel Fuld
We all want to make money, I think most of us can agree about that. The problem is that today’s culture of instant gratification, which is magnified with the Web and social media, people do not have the patience they require to make serious money. Binary trading is no different, if you want to make profits, you need a binary options strategy.
So, now, if you have ever trading binary options, you must be thinking, how can such a simple industry require a strategy and what is a binary options strategy anyway? Good question.
The truth is, binary trading is different than other markets such as Forex in many ways, but when it comes to a binary options strategy, you can look to Forex for some guidance.
The basic principles that make up a good Forex strategy can and should also be applied to a binary options strategy. Here are a few examples:
- Risk VS Reward: When trading binary options, you need to decide how much capital you are able to risk losing. If you need that money to feed your family, as strong as the craving is to try and double it, it is not the kind of thing you want to do. You need to sit down and figure out what you can afford to lose and use that money to trade binary options. That is 101 of a binary options strategy.
- Demo: Just like in Forex, practice makes perfect. You need to familiarize yourself with the binary trading platform and then jump in with real money.
- No Emotion: You need to constantly fight the urge to overcompensate for losses or ride the wave of success for too long when trading binary options. This is an underlying principle for any binary options strategy.
- Limits: Know your limits and do not pass them even by a little margin. Once you let yourself go, it is a slippery slope. Define your boundaries and stick to them no matter what.
- Getting out: Lastly, binary trading just like Forex is not for everyone and every day is not going to be your best day. If you see yourself falling, get out while you still can. Tomorrow is another day and you should always reserve the option to reach the truthful and sometimes painful conclusion that binary options trading is not for you. That is also part of a binary options strategy.
We all want to make money, I think most of us can agree about that. The problem is that today’s culture of instant gratification, which is magnified with the Web and social media, people do not have the patience they require to make serious money. Binary trading is no different, if you want to make profits, you need a binary options strategy.
So, now, if you have ever trading binary options, you must be thinking, how can such a simple industry require a strategy and what is a binary options strategy anyway? Good question.
The truth is, binary trading is different than other markets such as Forex in many ways, but when it comes to a binary options strategy, you can look to Forex for some guidance.
The basic principles that make up a good Forex strategy can and should also be applied to a binary options strategy. Here are a few examples:
- Risk VS Reward: When trading binary options, you need to decide how much capital you are able to risk losing. If you need that money to feed your family, as strong as the craving is to try and double it, it is not the kind of thing you want to do. You need to sit down and figure out what you can afford to lose and use that money to trade binary options. That is 101 of a binary options strategy.
- Demo: Just like in Forex, practice makes perfect. You need to familiarize yourself with the binary trading platform and then jump in with real money.
- No Emotion: You need to constantly fight the urge to overcompensate for losses or ride the wave of success for too long when trading binary options. This is an underlying principle for any binary options strategy.
- Limits: Know your limits and do not pass them even by a little margin. Once you let yourself go, it is a slippery slope. Define your boundaries and stick to them no matter what.
- Getting out: Lastly, binary trading just like Forex is not for everyone and every day is not going to be your best day. If you see yourself falling, get out while you still can. Tomorrow is another day and you should always reserve the option to reach the truthful and sometimes painful conclusion that binary options trading is not for you. That is also part of a binary options strategy.
Economic Calendar 2010
The Forex market is not traded on technical analysis alone. The economic calendar 2010 is as important to a Forex trader's daily strategy as any support or resistance line. Although your charts will tell you where to buy and sell any particular Forex pair, these points naturally assume the market is working in a vacuum. In other words, as long as nothing on the outside happens, the support and resistance lines; or the trading range; or even the wave; is legitimate.
The Forex market does not trade in a vacuum. There are hundreds of factors a day that will have an affect which way the market is going to turn. The economic calendar 2010 is a necessary to have on your computer to predict the unpredictable.
Reports for everything
If you take a look at the economic calendar 2010, it will look like you won't have time to trade. You'll only be spending all day, every day, waiting for yet another report to come out. To spend any amount of time concentrating or anticipating the Industrial Orders report in Denmark might not be the best use of your time. The Imports and Exports report in Japan might not interest the Forex trader if he is only trading the EUR/USD pair. The point is, that it's on the calendar; and it's on there with the reports the Forex trader wants to be aware of.
Even though the plethora of reports contained in the economic calendar 2010 may seem like information overload, it can also spark some interest in some trading pairs not otherwise considered. There's nothing wrong with expanding your horizons and seeing when major reports come out in other countries. Even those reports might have some indirect effect on the trading of the pairs in which you're involved.
Search for relevance
The nice thing about having and using an economic calendar 2010 is that you can plan your trading around either using, or avoiding, the time that a major report is coming out. There are certain reports that you can't predict and won't be on the calendar. If a country decides suddenly to change its interest rates, there's nothing any Forex trader can do about that. When something like that happens the market is going to react and that is the reason every Forex trader uses a stop-loss. Of course there will be the occasional time you get caught on the right side of the market and you find yourself riding an unexpected profit. Be happy about that. It doesn't happen often.
Major reports in the United States pretty much affect everything worldwide. These should always be noted. It is a major reason to have and economic calendar 2010 handy. Something like the Jobless Claims report can have an impact on the interest rate of the dollar, which indirectly affects every other country. It is always something to watch. Reports of GDP for any country in any Forex pair you might be trading should be watched.
What to do
There are a couple tactics that can be used when dealing with reports available on any economic calendar 2010. The first thing a Forex trader might consider is staying out of the market when the report comes out. Wait for the market to react and not predict how the market will react. It is certainly a safer way to go.
Another way is to try to jump the gun and keep a close stop-loss. Any Forex trader must remember that once the report has come out, the results are already in the market. The huge financial institutions and banks don't like to be surprised. They know about the report and what is in it before you ever will. In either case, the economic calendar 2010 will always give you a heads-up.
The Forex market does not trade in a vacuum. There are hundreds of factors a day that will have an affect which way the market is going to turn. The economic calendar 2010 is a necessary to have on your computer to predict the unpredictable.
Reports for everything
If you take a look at the economic calendar 2010, it will look like you won't have time to trade. You'll only be spending all day, every day, waiting for yet another report to come out. To spend any amount of time concentrating or anticipating the Industrial Orders report in Denmark might not be the best use of your time. The Imports and Exports report in Japan might not interest the Forex trader if he is only trading the EUR/USD pair. The point is, that it's on the calendar; and it's on there with the reports the Forex trader wants to be aware of.
Even though the plethora of reports contained in the economic calendar 2010 may seem like information overload, it can also spark some interest in some trading pairs not otherwise considered. There's nothing wrong with expanding your horizons and seeing when major reports come out in other countries. Even those reports might have some indirect effect on the trading of the pairs in which you're involved.
Search for relevance
The nice thing about having and using an economic calendar 2010 is that you can plan your trading around either using, or avoiding, the time that a major report is coming out. There are certain reports that you can't predict and won't be on the calendar. If a country decides suddenly to change its interest rates, there's nothing any Forex trader can do about that. When something like that happens the market is going to react and that is the reason every Forex trader uses a stop-loss. Of course there will be the occasional time you get caught on the right side of the market and you find yourself riding an unexpected profit. Be happy about that. It doesn't happen often.
Major reports in the United States pretty much affect everything worldwide. These should always be noted. It is a major reason to have and economic calendar 2010 handy. Something like the Jobless Claims report can have an impact on the interest rate of the dollar, which indirectly affects every other country. It is always something to watch. Reports of GDP for any country in any Forex pair you might be trading should be watched.
What to do
There are a couple tactics that can be used when dealing with reports available on any economic calendar 2010. The first thing a Forex trader might consider is staying out of the market when the report comes out. Wait for the market to react and not predict how the market will react. It is certainly a safer way to go.
Another way is to try to jump the gun and keep a close stop-loss. Any Forex trader must remember that once the report has come out, the results are already in the market. The huge financial institutions and banks don't like to be surprised. They know about the report and what is in it before you ever will. In either case, the economic calendar 2010 will always give you a heads-up.
Online Forex Software
The need for online Forex software seems, at first glance, pretty obvious. The Forex market is traded online, therefore a need for software exists. However, there are some intricacies even as far as whether or not you can get the software and how to use it.
Online Forex software is designed to allow end users to trade currencies online in a real time, secure, private and efficient manner. When shopping around for Forex brokers who offer their own software, these are the key concerns every trader should have.
What to look for
Make sure the online Forex software you choose is providing constantly up-to-date exchange rates in increments of a few seconds. These rates, in contrast to traditional bank rates, are actual, tradable Forex quotes. Once you decide to trade on a currency you can lock in a rate and this will be the actual rate at which the transaction will take place.
Make sure of the security, privacy, and data integrity of any online Forex software you choose. Any user performing financial transactions over the Internet, whether it's eBay or trading Forex, already knows this is a concern that can't be ignored. This point is further emphasized with online Forex trading software, where the amounts traded may be significant. The software must be designed with the highest level of data security, integrity and privacy. Most systems use at least one layer of at least 64-bit SSL encryption, as well as various data backup and recovery methods and procedures.
Make sure the software is available all day every day. There is nothing more frustrating than software that fails during a time you want to trade.
What about Macs
As far as online Forex software goes, people with those wonderful MacBooks are still out of luck. It's a market that is ready for the entering, but so far everyone with a Mac has to use the web based Java program of their favorite Forex broker. It is amazing that there isn't software for Macs, but that's the way it is. Windows still has a hold on Forex.
The same is true of mobile devices as is true with the Mac. It's all web based operations.
Which is better
Concerning mobility and universal use, the web based platform is probably the only way to go at this point. However, having downloadable online Forex software always seems to be more stable with any consistent and constant use. It's true that you have to have a dedicated computer to utilize it, but so far the majority of Forex traders are trading from the same spot every day. It's their work day and they have a work station in which to trade.
The rule of thumb is to have a Forex broker who offers both. You want to have an option and these days, there's no reason why you shouldn't. Whether it's online Forex software or web based Java platforms, stability and reliability will be your biggest asset. Do your research and use the demos.
Online Forex software is designed to allow end users to trade currencies online in a real time, secure, private and efficient manner. When shopping around for Forex brokers who offer their own software, these are the key concerns every trader should have.
What to look for
Make sure the online Forex software you choose is providing constantly up-to-date exchange rates in increments of a few seconds. These rates, in contrast to traditional bank rates, are actual, tradable Forex quotes. Once you decide to trade on a currency you can lock in a rate and this will be the actual rate at which the transaction will take place.
Make sure of the security, privacy, and data integrity of any online Forex software you choose. Any user performing financial transactions over the Internet, whether it's eBay or trading Forex, already knows this is a concern that can't be ignored. This point is further emphasized with online Forex trading software, where the amounts traded may be significant. The software must be designed with the highest level of data security, integrity and privacy. Most systems use at least one layer of at least 64-bit SSL encryption, as well as various data backup and recovery methods and procedures.
Make sure the software is available all day every day. There is nothing more frustrating than software that fails during a time you want to trade.
What about Macs
As far as online Forex software goes, people with those wonderful MacBooks are still out of luck. It's a market that is ready for the entering, but so far everyone with a Mac has to use the web based Java program of their favorite Forex broker. It is amazing that there isn't software for Macs, but that's the way it is. Windows still has a hold on Forex.
The same is true of mobile devices as is true with the Mac. It's all web based operations.
Which is better
Concerning mobility and universal use, the web based platform is probably the only way to go at this point. However, having downloadable online Forex software always seems to be more stable with any consistent and constant use. It's true that you have to have a dedicated computer to utilize it, but so far the majority of Forex traders are trading from the same spot every day. It's their work day and they have a work station in which to trade.
The rule of thumb is to have a Forex broker who offers both. You want to have an option and these days, there's no reason why you shouldn't. Whether it's online Forex software or web based Java platforms, stability and reliability will be your biggest asset. Do your research and use the demos.
Risking The Forex Carry Trading Risks
Most Forex brokers are just fine day trading and they have no “interest” in adding or changing things by getting involved in Forex carry trading risks. If they can buy and sell daily a few times and make a substantial amount of pips, then there's no reason to try anything else.
However for some, the idea of Forex carry trading is an attractive one and often doesn't replace the Forex brokers regular day trading, but serves as an addition to his regular Forex trading.
What It Is
For those that are uninitiated, the concept of Forex carry trading comes from the fact that in Forex trading there is really no such thing as carrying a position overnight. Simplistically, the broker evens up the trades, and re-executes the trades the following trading day. This involves interest, because you are, after all, dealing with foreign currencies. So, either interest is either made or lost on a daily basis if you hold a trade overnight; whether you know it or not.
Every currency carries with it an interest rate. So, at the end of every day the owner of the currency either gains interest or loses interest. By virtue of the Forex trade itself, because you're buying one currency and selling another currency, you're both gaining interest and losing interest. The difference in those numbers is the percentage of interest you'll be making. That amount is automatically put into your margin account. It sounds, from the outset, that Forex carry trading is a great way to make money. But nothing is that easy.
Still trading
The bottom line of this whole process, and should not be taken for granted, is that the Forex trader is still trading Forex. That sounds like an obvious statement, but it can get lost in the shuffle and attraction of Forex carry trading. In other words, if the Forex pair you're trading and carrying is losing money, then any Forex trader is not going to be able to hang onto it simply for the overnight interest rate generated.
It's not a Catch-22 situation, but it is something that always needs to be addressed. Firstly, the Forex pair you're trading should be a pair that has relatively good liquidity. If it begins to move against you, you'll want to be able to get out. And secondly, don't trade the pair just because you're planning making money from the Forex carry trading aspect of it. It should be a secondary consideration; not a primary consideration.
Risks are risks
Even with the Forex carry trading profit generated overnight, this can change, too. If a country suddenly decides to lower or raise their interest rates, this will have a direct effect on the currency you're holding in your carry trade. Nothing is set in stone in the Forex market. It's not often that a country suddenly changes its interest rates, but it has been know to happen. If you're the type that will lose sleep over worrying about this happening; it's best to stick with simply day trading.
Forex carry trading risks are there, however the profit coming from the process can lead to some serious money that many Forex traders find hard to ignore.
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