subject: How The Economy Affects Forex Trading [print this page] For those who are just beginning to participate in Forex trading, you need to know how important the economies of different countries are in changing the exchange rates. Depending on how a country's economy does day to day will affect how you trade and make a profit. You'll need to know how to read these economic trends in order to make educated decisions about trading.
One of the best ways to predict the economic trends that affect your Forex trading is to look at different economic calendars provided by Forex trading experts. Search around the web for these kinds of calendars, they'll tell you what has been going on and what is about to go on in some of the major countries of the world. This will give you an idea of how to trade your money. Make sure that you don't research and invest all your trust in just one calendar. You should make use of a few different calendars in order to have a full view and knowledge of what things are going on.
One of the factors that give you an idea of how a country's economy is doing is their employment data. In the U.S. this data is only released once a month but viewing the trends and how they change from month to month will show you which country's economies are improving and which ones are dropping or hitting a plateau. If there is a steady high employment rate, it could mean that inflation is in the future for that economy and the currency won't be worth as much.
Interest rates and inflation are also two major things that affect a country's economy. The interest rates matter most in terms of the major banks of that country and how they lend money to people. The more inflation that occurs in a country, the less its currency will be worth. Oil prices in each country also affect the value of their currency. A country's currency can have a lower value if its oil prices aren't what they normally are. In the same sense the price of gold in a country has the same effect.
In addition to Forex economic calendars, you can also find news briefs every day on what the economies in different countries are experiencing. For example, you could find that a country's oil prices are lower today, so their currency is worth less. But like the economic calendars, you should make sure that you don't rely on information from just one source.
After reading the economic trends and data, you should begin to trade in a practice environment. Forex trading offers different demos that don't cost any money and these will help you get your feet wet when beginning to trade. You can also watch live trades done by experts to see if your predictions for the trading day are correct. Make a list of the things you would trade if you were investing money, and then watch the live trades and see if they trade how you predicted.
