Top Four Fundamentals of the Currency Market September 14, 2017 Contents hide Forex Fundamentals Interest Rates Economic Growth Trend and Expectations Employment Factor Commodity Prices Do you have a strong investment instinct? Are you wondering which market to trade? If yes, then you should definitely try your luck at trading forex. With over 3.2 trillion turnovers every day, the forex trading market has become the fastest growing, most sought after and highly liquid financial market worldwide. To become a professional forex trader, you need to master the art of how to make the right currency trading decisions at the right time to maximize profits and minimize losses. For this, you must be aware of the forex trading fundamentals. Forex Fundamentals Here are the top four fundamentals of the currency market: Interest Rates Forex is a dynamic market with round the clock buying and selling of currencies, five days a week. As a forex trader you need to be aware of money market fluctuations and activities in order to make profitable decisions. As forex trading is related to interest rate changes and speculation of its direction, a slight change in the interest rate can create waves in the forex market. Since interest rates have a significant impact on currency trading, it is one of the important fundamental factors that you must monitor closely to make good decisions. Economic Growth Trend and Expectations For novice traders, it is advisable to keep an eye on the GDP (gross domestic product) and the CPI (consumer price index) of the two countries you are planning to engage in currency pair trading in the forex market. These factors are the economic growth indicators that impact the currency value. The best way to forecast forex movements on the basis of these factors is to get growth expectation reports of the two countries. Compare and evaluate the reports on economic growth factors, and observe strengths and weaknesses of the two countries. This will help you devise a flawless trading strategy. Employment Factor Are you thinking what does employment have to do with forex trading? Well, according to professional traders this is one fundamental factor of trading that is often overlooked by everyday traders. When it comes to trading forex, you need to have a good understanding of the economic trends and environment of the country of which you are investing in the currency of. And employment is one of the many factors contributing to the stability and growth of the economy, isn’t it? Since employment directly affects consumer spending and inflation, it impacts the central bank’s decision of whether to increase or decrease interest rates, which impacts the currency value. In other words, the employment factor can help traders to forecast central bank decisions and eventually trade accordingly. Commodity Prices This is another fundamental factor that has a significant effect on currency value. To determine the value of a country’s currency, you need to analyze its exports and imports. For example, you could look at a country’s crude oil prices. If you are trading USD/CAD, then in this case Canada is considered to benefit more from rising crude oil prices. However, this does not mean you overlook the above factors and just trade on the Canadian dollar. When you open a forex trading account with your IMMFX broker, keep all the fundamental factors in mind to formulate a winning trading strategy, and then make your move. Good Luck!