You will find that the publication of major national economic indicators is highly anticipated by the markets because they can generate extensive movements in currency pairs. For example, investors consider the following ones of crucial importance: US Unemployment Claims, US Unemployment Rate, Interest Rate Adjustments and Gross Domestic Product, etc.
Postings, such as these, can produce sudden price spikes especially if the information issued is directly related to the US economy. Sharp movements in price can be especially generated if the data issued catches analysts off-guard by missing their forecasted expectations. Alternately, should the figures meet market forecasts then the resulting price movements are far more subdued.
As such, if you can master how to predict the price movements generated by fundamental economic indicators with some accuracy, then you will definitely improve your aptitude to trade Forex profitably. Nonetheless, you must quickly realize that this objective is far from simple to achieve on a consistent basis without the necessary skill and knowledge required.
You must understand that legions of traders contribute in generating the price formations and structures of currency pairs. Most of them will possess their own objectives and some will even have sizeable budgets. Their influences rise especially to the fore during the posting of major national economic indicators that are classified as of high importance.
To understand the processes involved, you must first attain a good definition about what exactly are economic news releases. Essentially, they are important indicators disclosing the latest insights into a country's economic health either directly or indirectly. They normally classified into three types: economic, political and financial.
You will discover that financial and economic news postings have the largest influence and are eagerly awaited by all serious investors because of the impacts that they can produce on the directional movements of currency pairs. As already mentioned, this is especially so should the released values differ by a sizeable amount from their predicted figures. Consequently, all major data is kept under strict control and under utmost secrecy until the exact moment of their release because of their potential impacts on the markets.
If you plan to trade Forex using fundamental analysis, then one of your top priorities is to know when all major data releases are imminent. You can do this by attaining access to the global economic calendar that lists the exact times and dates of all data releases. You will find that your Forex broker will readily supply you with this information using a format similar to that shown in the following diagram:
You will find that the best sources of this information will also allow you to use a filter so that you can hone into those events of particular interest. You should definitely focus on all events classified as of high importance regardless of their country of origin. You will also need to monitor all releases, rated as high and medium, produced by the USA because they can generate significant price surges.
If you are serious about performing fundamental analysis proficiently, then you should also locate a source of real-time commentary that can provide you with expert analysis of all pending economic and political postings. The following diagram illustrates such information:
Political events can also seriously influence Forex, such as G-7 and OPEC meetings, national disasters and government elections, etc. You should be able to deal better with those that are scheduled well in advance. You will, however, experience increasing difficulties coping with any that are random in natures. Examples are terrorist attacks which can generate sudden and traumatic price movements.
One problem that you must learn how to deal with is responding too rapidly to the headlines of a data release. Traders, who have developed the habit of doing so, can often contribute to an initial knee-jerk reaction that is capable of propelling price by an extensive distance in a particular direction. However, such actions are then totally and quickly reversed after the same people have taken the time to analyze the details of the relevant posting in depth.
In addition, some data releases comprise multiple items. Consequently, you will find that complications can arise when some components of such a news release closely match their forecasted figures while others do not.
Without question, trading Forex using fundamental analysis is exciting. In addition, you will also gain the opportunities to acquire serious profits.
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