The foreign exchange forex market has grown to be the most liquid financial market in the world.

While that size ensures plenty of liquidity, it also is an indication that there are many experienced professional forex traders who know what to look for see " John Taylor: Definitely smart money ". While some trade forex based purely on technical analysis, Scott Boyd, currency analyst at Oanda, says that would be a mistake.

The Fundamentals Of Forex Fundamentals

You have to be both and [the Middle East] turmoil illustrates that," he says. Technical analysis can help with many trades, but there is a reason markets move when reports are released. So, to help any investor learning the ropes, we have compiled our list of the top five fundamental factors in the forex market.

Forex markets are complex and while there are many fundamental factors that affect their value, ultimately, interest rates and expectations of their direction are key. Investors are going to try and access securities with the best return, weighing the risk implications as well," Boyd says. Richard Regan, senior trader at TradeMaven, says even rumors of changes to an interest rate can produce dramatic moves in the forex market.

When you look at countries that are talking about raising interest rates, everybody watches that very closely because any indication that their central bank is even considering a change can cause a drastic move in the currency. Interest rate changes have taken on new meaning in the current economic environment and rate changes have been magnified in the forex market.

While interest rates are a general fundamental factor for currencies, they also provide the impetus for the carry trade where traders buy the currency from a country with a higher interest rate against the currency of a country with lower interest rates, earning the differential. The trade generally works, but can become oversubscribed, leading to massive reversals.

Understanding the dynamics of the carry trade is a growing fundamental factor that is important to understand. With the launch of the new web platform, Michael serves as web editor for the site and will continue to work on the magazine, where he focuses on the Markets and Trading features.

He also served as a member of the Wisconsin National Guard from to Free Newsletter Modern Trader Follow. We asked traders what FBI Director Comey's testimony means for stocks and other markets. Silver holding huge commercial short.

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Merger mania and the clearing bonanza: Trader's view of the world. US Federal Reserve oil bank forex Interest Rates Bank of Japan oil production employment Crude oil prices Futures Classroom fundamentals 98 Beginner Basics 69 bank actions 23 Oanda 17 John Taylor 16 bank decisions 14 Top 8 then oil prices 6 Richard Regan 5 Economic growth 4 rate banks 4 Geopolitical 3 Scott Boyd 2 TradeMaven 1.

The age old question Sortino ratio: Previous Avoiding forex disaster through non-correlation. Next Merger mania and the clearing bonanza: Related Terms US Federal Reserve oil bank forex Interest Rates Bank of Japan oil production employment Crude oil prices Futures Classroom fundamentals 98 Beginner Basics 69 bank actions 23 Oanda 17 John Taylor 16 bank decisions 14 Top 8 then oil prices 6 Richard Regan 5 Economic growth 4 rate banks 4 Geopolitical 3 Scott Boyd 2 TradeMaven 1.