Fundamental Analysis Considerations
Currency exchange rates can be floating, in which case they change continually based on a multitude of factors, or they can be pegged (or fixed) to another currency, in which case they still float, but they move in tandem with the currency to which they are pegged. Fundamental Analysis involves analyzing the economic, social, and political forces that may affect the supply and demand of the asset we are trading. Our Trading Plan involves currency pairs, thus we are interested in the factors affecting currencies.
We are interested in the factors causing:
1. Volatile market conditions 2. Appreciation/Depreciation of the currency to high degrees causing trends. 3. The degree of severity and impact of a factor.
High demand for a currency or a shortage in its supply will cause an increase in price and vise versa.
> Charts and Analysis: Leading indicators
-Relative Strength Index (RSI), Stochastic oscillator, Commodity Channel Index (CCI), Accelerator Oscillator.
> Charts and Analysis: Lagging indicators
-Simple Moving Average (SMA) or (EMA), Moving Average Convergence Divergence – MACD, Average Directional Index – ADX, Bollinger Bands, Parabolic SAR, Alligator Indicator etc.
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Risk Warning: CFDs are highly leveraged over-the-counter derivatives and due to their degree of complexity, trading CFDs carries a high level of risk and may not be suitable for all investors. Please be aware that this educational material does not constitute investment advice and does not take into account your investment objectives, financial situation or specific needs. This content is for educational purposes only and we accept no liability whatsoever for losses or damages resulting either directly or indirectly from the use of the information contained in this website. You take responsibility for your own trading decisions.