Forex Trading Software
Welcome to ForexTradingSoft.com, your guide in the fascinating world of foreign
currency exchange.
Forex means simply 'Foreign Exchange' and the market is when one currency
is traded for another. At this moment Forex is the largest market in the world
with a daily turnover of over 1.9 Trillion US Dollar.
This huge turnover is mainly caused by the trade between countries, central
banks, large bank, multinationals, governments, currency speculators and other
financial institutions.
Private traders (individuals) are currently just a small percentage of the
market, but this number is constantly growing. Forex is hot! Traders use all
kinds of brokers and intermediaries to trade in foreign currencies and Forex
Trading Software is here to guide you to use the best and most clever tools
on your way to the biggest profits!
CurrencySource.com 1-877-627-4817 | 8/25/2008 |
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AUDFactors Affecting Currency Trading
Even if exchange rates are affected by numbers of factors, in the end, currency
costs are a result of supply and require forces. The worlds currency markets can
be considered as a massive melting pot: in a big and changing mix of current
events, supply and demand ingredients are constantly switching, and the cost of
one currency in relation to a second shifts accordingly. No additional
marketplace comprehends as much of what is proceeding in the community at any
given time as foreign currency exchange.
Supply and demand for any given currency, and thus its value, are not influenced
by any single element, but rather by several. These elements generally fall into
three categories: economic ingredients, political conditions and marketplace
psychology.
Perhaps the most difficult to define (there are no balance sheets or income
statements), market psychology influences the foreign exchange industry in a
variety of ways:
Buy the rumor, sell the fact: This industry truism can apply to numerous
currency situations. It is the tendency for the cost of a currency to reflect
the impact of a particular action before it occurs and, when the anticipated
event comes to pass, react in exactly the opposite direction. This may also be
referred to as a marketplace being oversold or overbought.
Flights to quality: Unsettling international events can lead to a flight to
quality with investors seeking a safe haven. There will be a greater demand,
thus a higher cost, for currencies perceived as stronger over their relatively
weaker counterparts.
Longterm trends: Very often, currency marketplaces move in long, pronounced
trends. While currencies do not have an annual growing season like physical
commodities, business cycles do make themselves felt. Cycle analysis looks at
longertrem cost trends that may rise form economic or political trends.
policy, some reports and numbers take on a talismanlike effect the number itself
becomes important to industry psychology and may have an immediate impact on
shortterm market moves. What to watch can change over time. In recent years, for
example, money supply, employment, trade balance figures and inflation numbers
have all taken turns in the spotlight.
These include economic policy, disseminated by government agencies and central
banks, and economic conditions, generally revealed through economic reports.
practices) and monetary policy (the means by which a governmentscentral bank
influences the supply and cost of money, which is reflected by the level of
interest rates).
Economic conditions include:
Inflation levels and trends: Typically, a currency will lose value if there is a
high level of inflation in the country or if inflation levels are perceived to
be rising. This is because inflation erodes purchasing power, thus demand, for
that particular currency.
Economic growth and health: Reports such as gross domestic product (GDP),
employment levels, retail sales, capacity utilization and others, detail the
levels of a countrys economic growth and health. Generally, the more healthy and
robust a countrys economy, the better its currency will perform, and the more
demand for it there will be.
Government budget deficits or surpluses: The market ususally reacts
negatively to widening government budget deficits, and positively to narrowing
budget deficits. The impact is reflected in the value of a countrys curency.
Balance of trade levels and trends: The trade flow between countries
illustrates the demand for goods and services, which in turn indicates demand
for a countrys currency to conduct trade. Surpluses and deficits in trade of
goods and services reflect the competitiveness of a nations economy. For
example, trade deficits may have a negative impact on a nations currency.
Internal, regional, and international political conditions and cases can have a
profound effect on currency marketplaces. For instance, political upheaval and
instability can have a negative impact on a nations economy. The rise of a
political faction that is perceived to be fiscally responsible can have the
opposite effect. Also, cases in one country in a region may spur positive or
negative interest in a neighboring country and, in the process, affect its
currency.
