Fundamental Based Forex Trading

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Fundamental Based Forex Trading

In recent weeks we have written about conservative and aggressive Forex trading, strategic trading and profitable tactics for trading online, and technical Forex trading. Previously we talked about trading BRICS currencies, the currencies of the emerging nation economies of Brazil, Russia, India, and China. While one may choose to trade major currencies with the use of technical Forex trading, the decision to trade the BRICs or other emerging nation currencies often has more to do with fundamentals. Fundamental based Forex trading is more adapted to the longer term than is technical trading.

Fundamentals of the Colombian Peso versus the US Dollar in 2012

As an example of fundamental based Forex trading, those interested in fundamental based Forex trading would have spotted the rise in value of the Colombian peso versus the dollar early in 2012. They would have consulted fundamentals and found that Colombia is coming out a prolonged period of civil unrest. The economy is starting to boom and a free trade agreement is now in place with the USA. Fundamental based Forex trading would have predicted that the peso would continue to rise throughout 2012, which it did. It would also have indicated that Colombia would probably start buying dollars to keep the price of the peso from going up to far, which they did.

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Fundamental Based Forex Trading

  1. 1. Fundamental BasedForex Trading By www.theforexnittygritty.com
  2. 2. In recent weeks we have written about conservative and aggressive Forex trading, strategic trading and profitable tactics fortrading online, and technical Forex trading.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  3. 3. Previously we talked about trading BRICS currencies, the currencies of the emerging nation economies of Brazil,Russia, India, and China.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  4. 4. While one may choose to trade major currencieswith the use of technical Forex trading,http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  5. 5. the decision to trade the BRICs or other emerging nation currencies often has more to do with fundamentals.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  6. 6. Fundamental based Forex trading is more adapted to the longer term than is technical trading.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  7. 7. Fundamentals of the Colombian Pesoversus the US Dollar in 2012http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  8. 8. As an example of fundamental based Forex trading, those interested in fundamental based Forex trading would have spotted the rise in value of the Colombian peso versus the dollar early in 2012.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  9. 9. They would have consulted fundamentals and found that Colombia is coming out a prolonged period of civil unrest.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  10. 10. The economy is startingto boom and a free trade agreement is now in place with the USA.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  11. 11. Fundamental basedForex trading would have predicted that the peso would continue to rise throughout 2012, which it did.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  12. 12. It would also have indicated that Colombia would probably start buying dollars to keep the price of the peso from going up to far, which they did.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  13. 13. Strategy and Fundamentalshttp://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  14. 14. Picking a trading strategy has to do with what approach you want to take in developing a successful Forex trading system.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  15. 15. In strictly fundamentalbased Forex trading, the trader looks at economics, monetarypolicy, politics, and world events.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  16. 16. He or she looks at thesefor both currencies in the pair traded.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  17. 17. In the case of trading BRICs currencies, the basic underlyingfundamental is that these nations’ economies areexpanding and have a lot of room to grow.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  18. 18. The trader is less interested in market sentiment along the way than where one currency is headed when traded against the US dollar or another currency.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  19. 19. The benchmark forfundamental based Forex trading is what therelative values of a given currency pair will be inseveral months or a year based on solid fundamental research.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  20. 20. Then the trader can look for price bargains that occur during the current time frame and buy low inexpectation of a nice reward when the market comes around to what fundamentals predicted.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  21. 21. The Value of Seeing the Futurehttp://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  22. 22. Most of the world wakes up to market news andsees a gap up or down in the currencies that they trade.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  23. 23. Fundamental based Forex trading can help put you in a profitable position in this regard.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  24. 24. Reading the fundamentals and being ready can be profitable.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  25. 25. If you are sure that a currency will rise but not sure how fast, options can be useful.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  26. 26. By a call on a currency that you believe is undervalued.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  27. 27. When the market jumpsto meet your predictions, execute the options contract or simply sell the now-valuable contract for a profit.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading
  28. 28. The beauty of combiningoptions with fundamental based Forex trading is that it limits risk and gives traders a bit of leverage as well.http://www.theforexnittygritty.com/forex/fundame ntal-based-forex-trading

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