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Part I of this book offers a look at the “big picture” in foreign exchange (forex)
trading, that is, what forces influence currency price movements. These forces are
accepted by economists around the world as responsible for changes in the value
of currencies. The person learning to trade forex or trying to improve his or her trading
will benefit from a gain of knowledge of these fundamentals. In fact, as you will see,
fundamental forces act as leading indicators of currency movement.
U.S. and global interest rates, economic growth, and market sentiment toward the
dollar are the key ingredients that shape trading opportunities. Part I provides basic
knowledge on how these factors impact forex prices and how they can be used in selecting
trading opportunities.


The Fundamentals
of Forex

We begin in this chapter with an exploration of the forces that move the prices:
the fundamentals. The reader will learn why fundamentals are important to foreign
exchange (forex) traders as well as what kind of economic activity are
most important in affecting price movements. These include interest rates, interest rate
differentials, economic growth, and sentiment regarding the U.S. dollar.
WHY FUNDAMENTALS ARE IMPORTANT
In many ways, forex trading is similar to playing a game. You have an opponent (the
market). In game of chance the key feature is that everyone faces the same odds
and therefore the same level of information. In these games, no player can change
the odds.
Playing forex, however, is not a game of odds. Participants in forex trading do not
share the same amount of information. In forex, this asymmetry of information results in
advantages and disadvantages to trades. Some players have more information than the
others. In forex, information about fundamental aspects of economies does not arrive
simultaneously to all participants. The real important question is what kind of knowledge
and information can improve trading performance. The search for an edge starts with a
fundamental understanding of the nature of the forex market. Having a foundation of
knowledge in fundamentals is a first step in evolving into a winning trader.


trading forex article:

foreign exchange markets the Fastest-Growing of Our Time




from : trading forex
http://sciencegate.blogspot.com/2011/05/trading-trading-forex-blog-trading.html

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