THE FOREX TRADER’S GUIDE TO MAJOR ECONOMIES

Now, we’re going to make small travel around the world, but it will not take 80 days.
When you’re fast enough to keep up, we can probably get around in just 80 seconds!
…Not!
If, we make you sure that you learn about the nitty-gritty of each major economy and what makes its engine go.

FOREX AND GLOBAL EQUITY MARKETS

Have you ever heard that equity markets can also be used to help gauge currency movement? In a way, you can use the equity indices as some kind of a forex crystal ball.

With the thing idea, what you see on the television, what you hear on the radio, and what you read in the newspaper, it seems that the stock (equity) market is the most closely covered financial market. It’s definitely exciting to trade since you can buy the companies that make the products you can’t live without.

HOW GOLD AFFECTS AUD/USD AND USD/CHF

At first are going to detail the relationship between the com-dolls and gold before. Keep in mind the U.S. dollar and gold don’t quite mesh very well.
Generally, if the dollar moves up, the gold falls.
Here is a traditional logic that during times of economic unrest, investors tend to dump the greenback in favor of gold.
Dissimilar to other assets, gold maintains its intrinsic value or rather, its natural shine!

WHAT IS THE US DOLLAR INDEX?

When you trade stocks, you must be know all the indices available such as the Dow Jones Industrial Average (DJIA), NASDAQ Composite Index, Russell 2000, S&P 500, Wilshire 5000, and the Nimbus 2001. Oh wait, that last one is actually Harry Potter’s broomstick.
Good, when U.S. stocks have an index, the U.S. dollar can’t be outdone. For currency traders, we have the U.S. Dollar Index (USDX).
The U.S. Dollar Index comprises of a geometric weighted average of a basket of foreign currencies against the dollar.
Say whutttt!?! Okay before you fall asleep after that super geeky definition, let’s break it down.
This is very common to how the stock indices work in that it provides a general indication of the value of a basket of securities. Of course, the “securities” we’re talking about here are other major world currencies.

WHAT IS CARRY TRADE?

Have you ever heard there is a trading system that can make money if price stayed exactly the same for long periods of time?
Well there is and it’s one the most popular ways of making money by many of the biggest and baddest money manager mamajamas in the financial universe!
It’s called the “Carry Trade“.

NEWS MAKES THE FOREX MARKET MOVE

This is not sufficient to only know technical analysis when you trade. It’s just as important to know what makes the FOREX market move.

Similar to the great Star Wars world, behind the trend lines, double tops, and head and shoulder patterns, there is a fundamental force behind these movements. This force is called the news!

To assess the importance of the news, imagine this scenario (purely fictional of course!)

Say, on your nightly news, there is a report that the biggest software company that you have stock with just filed bankruptcy.

FOREX MARKET SENTIMENT

How’s Mr. Market Feeling?

Most time, FOREX traders will have an opinion about the market.
“this a bear market, everything is going to hell!”
“Things are looking too bright. I’m pretty bullish on the markets right now.”

Almost all traders will have their own personal explanation as to why the market is moving a certain way.
In trading time, traders express this view in whatever trade he takes. But sometimes, no matter how convinced a trader is that the markets will move in a particular direction, and no matter how pretty all the trend lines line up, the trader may still end up losing.
Most FOREX trader must realize that the overall market is a combination of all the views, ideas and opinions of all the participants in the market. That’s right… EVERYONE.
This comprises the feeling that market participants have is what we call market sentiment.
this is the dominating emotion or idea that the majority of the market feels best explains the current direction of the market.