When it comes to deciding on a better move in a currency exchange, predicting the direction of the market becomes important. Especially, completing a fundamental analysis of the U.S. markets to determine the value of the Euro and Dollar exchange gives traders an advantage. It pays.
Determinants of Price Movement:
Often times predicting the price movement of markets like the New York Stock Exchange or Dow Jones, includes focusing in on central bank policy from the Fed, socieal pressures like unemployment, or even natural disasters as was the case during Hurrican Katrina. Deciding to make big moves after relevant economic releases clears the path for greater expectations in a trade.
A "fundamental" trader would use a forecast of the U.S. GDP to determine if he or she should invest more during a given business cycle. Charts and graphs would provide more informed suggestions on which quarter to use.
Ending the Year:
Considering the best time to enter or exit a currency exchange stays as important as deciding which exchange will be best. For instance, some traders decide not to participate in end-of-the year trading when the holidays influence the markets.
But some choose to use the last quarter as a guide. They should focus on market capitalization if they want to get the most out of an end-of-the year trade. Studying to find the best exit point and setting a reasonable limit will also help.
Tips:
Remember the goal of a fundamental analysis is to only "predict" the conditions surrounding an exchange. You want to determine why a certain currency behaves under the conditions. You don't want to assign an actual monetary value on a trade.
SOURCES:
-http://www.forex.com/intro-fundamental.html
-http://www.forex.com/latest-forex-research.html
KEYWORDS:
fundamental; central bank policy; price movement
Explore the forces behind the U.S. dollar.
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