As you probably well know, the actual exchange rates that form the foundations of the forex market are calculated through simple supply vs. demand. In actuality, it isn’t ‘simple’ at all, seeing as there are various factors that influence supply and demand, and accounting for them and trying to predict the fluctuations that could occur can be immensely difficult.
But if you do really want to trade forex on any serious level, you’re going to have to start being more aware of the things that are going on around you — because a lot of them will end up playing some role in the fluctuations of the exchange rate.
That’s right: You’re going to need to start gaining forex insights from the news.
Mostly, the insights that you can gain from the news come from anything to do with the economical or political situation of a country whose currency you’re trading in. Naturally this would vary from trader to trader, and so you’re going to need to keep an eye out for what relates to you, personally.
Remember this: A strong economy, both in terms of policies and trade, as well as a strong and stable political situation are the keys to a high exchange rate. Other factors play a role too, but these are the ones you’re going to be able to get a firm handle on by observing the news.
For example, if there was an election recently and the government of a certain country was replaced by one that has planned economic reforms and a strong economic agenda, then chances are there’ll begin to be a demand for that country’s currency.
On the flipside, if a country dissolves into political instability, the economy will be one of the first things that is adversely affected and thus you’ll find that the demand for that currency reduces dramatically.
End of the day, predicting exchange rate fluctuations with deadly accuracy is still close to impossible, but by paying attention to what’s going on in various countries, you might be able to spot a currency that is about to rise in value, or identify one that is about to drop steeply.
Once you’ve made out something like this, you can take advantage of the fluctuation and translate it directly into a profit.
Armed as you are with the internet right at your fingertips, keeping track of the world news really isn’t something that is too difficult. Gone are the days when people had to wait for newspapers – now everything is just a click of the button away.
So as you can well expect, you should be able to know about something as it is actually happening, and take advantage of it immediately, rather than have a delayed reaction that is probably going to be too late.
Pay attention to the news – it could help you make a killing on the forex, and could also help you avoid massive losses at the same time too if you’re careful!