There are so many Forex trading strategies out there that it’s not surprising so many people don’t know where to start. But actually, all of those strategies are some combination of two different techniques: fundamental or technical analysis.
A fundamental analyst looks at a nation’s entire financial picture to guide her trades, studying international macroeconomics and the forces that drive the supply of and demand for a currency. There are five of these factors:
is that country’s government in good financial shape or in the red, and what is their financial policy (pro-business, labor, etc.)
the balance of imports versus exports, which directly affects a nation’s money supply
the growth of that country’s real gross domestic product (GDP); in other words, that nation’s purchasing power
interest rate levels
inflation level; in other words, how high are prices
These last three are all relative, which means they are compared to those same measurements for other countries to determine their strength or weakness, rather than considered as stand-alone numbers.
