Part 3 Fundamental Analysis – Announcement of NFP news

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Trading FX with NFP Announcements

NFP = non farm payroll (USA)

Why is NFP Important for CFD Trading?

Non-Farm Payroll or NFP is a critical economic news print, here’s a quick guide on understanding and trading NFP with CFDs. The great recession was another name given to the 2008 Global Credit crisis that caused a massive sell-off of the stock market. The reason the recession was named so was that, while not technically a depression, the global loss of jobs, many of which were in finance, brought back memories of the Great Depression of the late 1920’s and majority of 1930s with many unemployed standing in bread lines and being forced to sell nearly all their possessions to make ends meet.

The selling of stocks saw one of the sharpest rises in the US dollar as risk-sentiment went south in a hurry and caused most investors big and small to buy the safest investment they could find, US Treasuries through the US Dollar. When investors and non-investors alike looked around the global economic landscape to find a symbol to hold on to that the global economy was recovering, they landed on two specific items, employment and inflation. Since then, we’ve found employment and inflation economic readings like Non-Farm Payrolls to be a critical component to central bank rate announcements and press conferences to help people understand the progress or regressing of the economy since the 2008 downturn.

Fundamental, Technical and Sentiment Analysis

In order to maximise gains and reduce losses, traders typically turn to fundamental, technical and sentiment analysis. While fundamental analysis tells traders about intrinsic market values, technical analysis relies on past performance of a financial instrument. The third branch, sentiment analysis, is used to determine the general attitude of traders, which shapes the overall market mood, within a specific timeframe.

Of course, there’s no absolute way to tell which way the markets will go – and due to high volatility, losses are always a possibility. But, it helps to do your research.

Fundamental Analysis

When it comes to forex trading, fundamental analysis is all about examining factors that could have an effect on currency prices. A lot depends on the central bank of each country and the expected interest rates released by them. Interest rate hikes could increase the value of a currency over the long-term. Other factors, such as GDP, inflation rate, production growth, NFP releases, and so on hold importance for commodity traders as well. The aim is to identify which economy is booming and which isn’t. The day-to-day news releases are important for fundamental traders.

Technical Analysis

Technical analysts believe that what happened in the past will influence future market movements. Forex traders rely heavily on trend and chart analysis to figure out potential price actions. Forex, being a 24-hour market, provides a huge volume of data for technical traders, who then use it to predict future activity.

Support and resistance levels are used to determine whether to buy or sell a currency. The charts usually represent historical price movements, visually. The movements on the charts, created by price actions, provide clues about the supply and demand levels of specific currencies. There are other indicators, such as oscillators, volume and trend indicators, which help in identifying price trends.

However, many traders believe that indicators do not give foolproof answers, unless combined with market fundamentals. There is no guarantee that past performance will have an effect on future results.

Sentiment Analysis

The market is not only driven by fundamentals, but also short-term sentiments, which makes currencies volatile on a day-to-day basis. It is often seen that despite long-term fundamentals showing an uptrend, a currency remains down, due to an overall ‘bad mood.’ This bad mood means that the vast majority of traders are committed to a down position, due to some reason. Such sentiments often help traders assume a particular position.

Sentiment analysts are often referred to as contrarians. These traders invest against the majority view of the market, since they believe that the markets always tend to move against the existing sentiment, sooner or later.

Sentiment trading by itself is quite risky, since it involves uninformed trades. Uninformed traders may be moving the market prices away from fundamental values. However, used in combination with other forms of analysis, it can help in getting a clearer picture.

All three approaches are important. The best approach will be based on your risk tolerance, time restrictions and goals.

Thread: Impact on fundamental analysis

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Impact on fundamental analysis

Hi friends hope you all are fine good morning and have a nice day. According to my opinion Monetary policy is significant when talking about forex. Most central banks around the globe have an inflationary target rate. In Canada, for example, the Central Bank of Canada set a 2% target goal. Consequently, changes in the CPI might trigger policy aimed at correcting too much inflation or too little in order to keep inflation at a 2% rate.
The way central banks do this is by using different tools. Although, the most widely used and less damaging for the economy is changing the interest rate. Now, when it comes to interest rates and forex lower is not better. If the FOMC decides tomorrow to increase their interest rates, it will trigger savings across the economy as it is now more expensive to loan money or payback said loans. That means that large quantities of currency will, effectively, disappear from the market. This ‘sudden’ decrease in greenback, will lower the total amount of USD supplied to the forex market. However, the demand for American dollars has not decreased. Hence, the USD will strengthen to offset to lower supply of dollars. Best wishes. Thanx to all of you

The following 2 users say Thank You to Hanif318 for this useful post.

Yes, Uncle Samintul, I just checked that I already lost the balance. $ 1000 capital is actually safe, in my opinion, om, if you start from 0.01 and don’t double fold. The thing is I am also pioneering the marti system, which I call RUI MARTI with a capital of $ 5,000cent, so it is quite understandable about food security . eh, capital security means hehe. The point is if floating can be up to 50% of the balance then it must be evaluated & corrected whether it’s capital, multiple lots, or OP distance.
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The following 3 users say Thank You to Greend for this useful post.

Fundamental analysis that sometimes market of word very fastly and something download so when you have paragraph on fundamental analysis and chart and into heavier than you always moves with chart and analysis then that one is your Plus point in become a successful trader very easily Forex trading business so I advise you always work with fundamental analysis because that one is your precious time and precious moments in Forex trading business spend time over here then all these things to get to Forex and move forward with motivation

The following 4 users say Thank You to Kiranhussain for this useful post.

fundamental analysis is a very important and key part of the system which all traders and Investors should take seriously. this aspect of the System can cause a great movement of prices and if an investment or a trade is properly made at this time, the benefits will be very large but when a trade is not properly made then losses can come in a very devastating manner. so we should take fundamental analysis very seriously.

The following 3 users say Thank You to Poshentity for this useful post.

fundamental analysis is a way of looking at the forex market by analysing economic social and political factors that may affect the supply and demand of an acid if you think about it this make a lot of sense just like a economics classes and it is supply and demand that determine price in our cases currencies exchange rate.
Another word you have to look at different factors and determine economy have you understand the reason set an event like an increase in the unemployment rate affect our country economy and monetary policy which ultimately affect the level of demand for its currency.

The following 3 users say Thank You to Anwarkhan777 for this useful post.

Fundamental analysis is the farther of market always keep eyes on fundamental analysis nfp fomc repost are very dangrous fundamental data non farm payroll is very dangrous data of fundamental and also fomc news data is also dangrous don’t trade in nfp and fomc always trade after 30 40 m

The following 3 users say Thank You to VSA teacher for this useful post.

fundamental analysis is the analysis in which we get the information about market trend of Forex trading so in this we need to learn about the Forex trading and about fundamental trading also after getting it we will able to do trading in real account very wlll and then we will get better profit and extra bonus from this forum so be a good trader and enjoy your success

The following 2 users say Thank You to SABEEN1 for this useful post.

Hay dear friend how are you. Dear fundamental analysis is basic requirements of forex market. Forex market is world largest market. In forex market prices flows very fastly up and down. So for trading in the market first you go for chart of your selected trade. See the graph and analyze it strongly then you will make your decisions. Without fundamental analysis you can’t get profit from your trade.

The Following User Says Thank You to tahir ahmed For This Useful Post:

Their are two types of analysis and we need to learn about both analysis both the analysis are very much important fundamental analysis is the analyses in which we get to know about market trend is this forum is the business of market trend so in this way we need to learn more about market trend for that we need to get knowledge about fundamental analysis and get best result

The Following User Says Thank You to MariaMario For This Useful Post:

Fundamemtal analysis is very important type of analysis in which we get the idea about market trend and how to do market analysis. It is important that we know how to do market analysis and then before start to do trading you must do market analysis and then do better work and have good profits.

The following 2 users say Thank You to shaukat84 for this useful post.

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