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Definition and Economic forecasting

  • Fundamental analysis can be defined as the study of country’s economic and financial performance in order to determine the fair market value and future direction of its currency.
  • Fundamentals focus on factors that determine exchange rates, such as countries’ economic health, political stability and environmental events.
  • A popular way to gauge the health of countries’ economy is through looking at its economic indicators and data releases, which is why every trader should be familiar with them and how they influence the value of a currency.
  • If the European economy is doing better/worse than American economy then we expect EURUSD price to go up/down.
  • Our target is to evaluate how well the economies in question are doing, and find which currency will appreciate/depreciate.
Macroeconomic Indicators
  • Interest Rates
  • Inflation
  • Gross Domestic Product – GDP
  • Unemployment
  • Trade Balance

Pic 1 - Major Indicators which can move the currency pairs

Interest Rates

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Anetta_Kliueva avatar

Oh great artice!! Thanks=)))

_shokolad_ avatar
_shokolad_ 25 Aug.

Good job!))

krabik avatar
krabik 15 Sep.


LoockasFX avatar
LoockasFX 19 Sep.


klintons avatar
klintons 9 Mar.

Gute Artikel

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As the global oil and energy prices plummeted in 2015, so did the inflation and growth rates. This left most central banks in quandary as inflation and growth rate numbers ran far below their targeted levels.
This article looks at the successes and failures of the current expansionary monetary policy regimes in the world with particular emphasis on the economies employing the negative interest rate policy.
What is Negative interest rate policy?

A negative interest rate policy is a monetary policy tool whereby nominal target interest rates are set with a negative value.
Rationale for Negative Interest Rate Policy

During periods of economic downturn and deflationary pressures, central banks often lower rates to stimulate growth and to raise the inflation rate. The main objective of negative rates is that they provide an incentive for private banks to make loans. With the negative interest in place, storing money at the central bank in the form of reserves or holding lots of cash will become unattractive and projects that were not worth funding even in a low-interest-rate environment might now look worthwhile.
In some cases, central banks turn to negative rates to lower…
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juraj avatar
juraj 3 Aug.

Ilolor- it does not matter what the CBs state on their website, important is what they actually DO and how they make their decision.

Fed never even declared its 2% target in the way ECB did, yet we are presuming they want to achieve 2% inflation. Their models are based upon PCE numbers and when you look at the history it becomes clear that FED always acted as if they were targeting core PCE. They were ok with headline inflation of 3%+ yet core PCE was at roughly 2% so they did nothing. Back 3 years ago when headline surpassed 2%,

juraj avatar
juraj 3 Aug.

Fed was in no hurry to lift the accommodation  because core PCE was still well below 2%.

If ECB officials declined to cut rates and step up QE saying core inflation was still positive and much better than headline, then they are de facto targeting core and not headline.

And if BoJ is refusing to step up easing for 2 years because core inflation is faring well, even though headline is back below 0 then they cannot be targeting headline inflation, no matter what their website says.

And lastly there are good reasons why you should overlook supply shocks (food&energy)

juraj avatar
juraj 3 Aug.

I am finished here- the comment system is a piece of... limiting me to under 600 characters which makes it impossible to express my intricate arguments.

Take care, it was a nice talk to you.

Mattie avatar
Mattie 3 Aug.

More often than not, it is for political reasons that the Fed Banks raise or lower rates. 

FXRabbit avatar
FXRabbit 26 Aug.

Very interesting article!

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1. Perspectives économiques pour 2016.
Le FMI prévoit pour 2016 une croissance économique faible. En cause, selon cet organisme, le ralentissement de l'économie chinoise, du commerce international en général et de la remontée des taux aux États-Unis en décembre 2015. Ce dernier point risque de pénaliser les économies des pays émergents dont les institutions et entreprises sont endettées en dollar. Une seconde augmentation des taux US pourrait fragiliser davantage ces économies par des coûts de financement devenus ingérables. Toujours selon le FMI, les économies des pays développés auront besoin de politiques monétaires accommodantes.
Toutefois, le FMI avait publié en octobre des prévisions de croissance du PIB à 3,6% pour 2016. Ce dernier discours laisse entrevoir des prévisions à la baisse pour la prochaine publication.
  • Prévisions de croissance du PIB ( Variation trimestrielle annualisée en % ) Source: FMI

  • PIB réel et volume du commerce mondiaux ( variation trimestrielle annualisée en %) Source : FMI

2. Aux Etats-Unis.

On notera des divergences de vue avec le discours de FED en décembre 2015 qui anticipe un redémarrage de son économie qu'elle envisage de faire suivre par un re…
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alias1980 avatar
alias1980 22 Feb.

very good job , an excellent article . Sumptuously!

salamandra avatar
salamandra 22 Feb.

good work ... use in its analysis

CharmingRimma avatar

nice thoughts, thanks for sharing!

GingerLily avatar

Someday I will understand this)

Alesya_Isaeva avatar

good job

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Petróleo Barato, antesala de recesión mundial o final de la 3ª revolución industrial?
Mis comienzos en el Trading, se centraron en la operativa del petróleo, su precio se determina por multitud de factores, pero los más importantes son: oferta y demanda, el valor del dólar USD y el sentimiento de mercado. Este último factor es generado por la reacción de los participantes, provocando variaciones en el precio a corto plazo, el motivo es la percepción de obstáculos o mejoras en el flujo de entrega o producción de petróleo. El sentimiento de mercado es el que produce la volatilidad en el mercado y donde buscaba oportunidades para entrar diariamente, en principio use como indicadores técnicos, CCI y Bandas Bolinger, pero con el paso del tiempo me aficione a usar ICHIMOKU, que es el que utilizo actualmente con muy buena satisfacción. Con la información obtenida del mercado de petróleo, operaba también cruces de forex donde el dólar canadiense estuviese presente, debido a la vinculación que existe.
Estrategia Trading: En mis operativas uso el indicador ICHIMOKU (9,26,52) en gráficos Diaro y 4 Horas, a fin de apoyarme en las decisiones uso como oscilador RSI 9 Opero en Compra cuando obse…
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taimasik avatar
taimasik 30 Dec.

thanks for it))

SalviLeana avatar

good !

Bernny avatar
Bernny 12 Jan.

nice job

GammaBurst avatar
GammaBurst 19 Jan.

We should be preparated to a new big global crisis on 2016, and if this will occurs, it should be the end of the euro.

MaziarE avatar
MaziarE 24 Jan.


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The media is going ‘crazy’ over the Chinese stock market shaving off trillions in a couple of weeks. The Chinese government meddling in the markets to save it is being compared to burning a ‘holy book’ - in that it shouldn’t have done it.
What were those communists thinking? No one ever intervenes in a free market, not even the president of the land of the free in 2008 on an interview with CNN. (Irony Intended)
Here is a video.
Listen carefully for the following:
Look. I obviously have made a decision to make sure the economy doesn't collapse. I have abandoned free market principles to save the free-market system.

This is what happened to the market after “abandoning free market principles in order to save the free market” – in the US and China.
From the above it is clear China is simply replicating what the United States did to its stock market.
The Shanghai and Shenzhen exchanges are not of great interest to me. My real interest lies in the dinosaurs that lived through the 1929 stock market crash. These dinosaurs are doing great right now! Or are they?
While history repeats itself, only a few are attuned to signs of it repeating itself – the rest of us live in the moment and trus…
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pipx avatar
pipx 28 July

driven Thank you and yes, the governments’ interference in free markets will eventually lead to disaster. George W. Bush saying “I have abandoned free market principles to save the free-market system.”  was the start of interference by the government which will not stop anytime soon. Just as China did, instead of letting the markets correct themselves they will keep pumping in more money.

lelipuzik avatar
lelipuzik 29 July

wow! really interesting

Milian avatar
Milian 30 July

interesting article)))

Margoshka avatar
Margoshka 30 July


Kivetat avatar
Kivetat 31 July

good job(Y)))))))))

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United Kingdom economy has been struggling ever since the financial crisis was triggered there with the bank run on Northern Rock in 2008. The Bank of England had to adjust to an expansive monetary policy in order to avoid further slowdown of the economy. It has introduced the quantitative easing program in 2009 and since March 2009 the interest rates have been at it’s historic record low of 0.5%. On the 9th of July 2015 the Bank of England has kept interest rates and asset purchasing program unchanged at 0.5% and 375 billion pounds respectively. Analysts predict that the earliest date for a rate hike could be August 2016.
Last week we saw the GBP/EUR drop by 0.98% (biggest weekly drop since June 5th) and the GBP/USD by 0.4% (3rd consecutive weekly drop). But more importantly last week the GBP/USD has broken the upward trend line on which it embarked on at the beginning of April and is currently below it.
Last week 10 year UK bonds prices depreciated (yields rose by 0.08 percentage points to 2.08%) amid less demand for safe haven assets due to the improvement in negotiation talks between Greece and it’s creditors. Lower demand was also due to the fact, that the planne…
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ivanbgd avatar
ivanbgd 28 July


al_dcdemo avatar
al_dcdemo 28 July

Useful information and very well written. Great article!

Milian avatar
Milian 28 July

good work!))

piter44 avatar
piter44 29 July

superb +1

Margoshka avatar
Margoshka 30 July


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There are a lot of Forex strategies all over the
Internet. In the following series articles I am going to present briefly the most
important factor-strategies for consistent winnings.
1st Article - Strategy 1 –
Market Sentiment
The forex market is nothing more
than the compressed display of emotions at any one time emanating from
currency speculators around the world. How can you better understand the
market, and use that knowledge as one of your trading weapons? This is the
question that every trader should ask to himself. In order to give an answer to
that question we firstly need to give an answer to “What is the market
Market sentiment is simply what
the majority of the market is perceived to be thinking or feeling about the
market – it is the most important factor that drives the currency market. This is so because traders tend
to act based on what they feel and think of certain currencies, regarding their
strength or weakness relative to other currencies. I will assume that when you trade
currencies, you don’t blindfold yourself to simply pick any pair to buy or
sell, leaving it to randomness to determine your profit/loss statement at the
end of the day or month. …
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AdrianWS avatar
AdrianWS 9 Jan.

hey great article, take a look at my profile and check out my articles I think they can help you

doctortyby avatar
doctortyby 10 Jan.

Very informative article about Market Sentiment, I would have Liked to see some charts and some Images.I believe Market Sentiment can be Better spoted on range Bars Charts(Price Movement, volatility charts). The volumes in those charts give better signals. check out my range Bars Charts Articles and Analysis.+3 And good luck this month. Waiting for your next article.

ritesh avatar
ritesh 19 Jan.

Market sentiment is above all indicators. :) +1

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