Monday, December 29, 2008

Forex Charting in the Stock Market

Because our financial system is currently at the low end of the totem pole, millions of individuals are striving for ways to earn money.

Many of these people are investing in the stock market, trading, and in Forex market exchange. These people rely on charts.

forex stock is the top Foreign-American trading system. People that trade in these stocks will often use charts. Most traders invest in companies and will often use Forex strategies to choose when the right time to sell is or trade stocks, as well as when to buy stocks.
Forex charting however changes its patterns in the stock market exchange. Stock markets often have highs/low cycles, which at what time the markets is at the lowest, the stocks send indicators, which help traders, to know the best, time to buy or sell stocks, nor is it the best time to trade.
The stock market is different in a few ways from the Forex market. The patterns change, since when the market is low in Forex exchange, traders still have a potential of winning during the buy/sell, or trading phrase.
The Internet makes available FREE Charts in Forex, which you can download. Use these charts as a guide before you invest in stock markets. Download the charts. Monitor the charts closely to learn how Forex markets work. The Forex charts often pay close attention to foreign markets in addition to the American markets.
You will notice in the charts change in the market, which include the sell/buy, trade, asks/bids, etc. You will also see when investors are trading amidst companies and foreign countries.

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Thursday, December 4, 2008

Fundamental analysis tips


Fundamental analysis is one of the most often overlooked techniques of stock picking. Many investors eschew fundamental analysis in favor of the flashier technical analysis made so famous by chartists over the years. Stock market charts are now animated wonders, so who doesn't love looking at them, especially since it's a lot easier than actually pouring through SEC statements adding up the numbers. But fundamental analysis never really completely goes out of style, because many of history's greatest investors, such as the greatest of all, Warren Buffett have practiced fundamental analysis as strictly as a devout person practices religion.

The reason great investors believe in fundamental analysis is because it's a great model of how things work. Companies report on financial operations that are best explained by numbers. Analysing the numbers rigorously, and placing personalities aside, gives a stock analyst the chance to really get a feel for how the company is doing. Why listen to hyped up PR statements when you can clearly see what a company really did, as reported by them in their statement of operations. The true story of operations will always flow to the bottom line, and a gifted Fundamental analysis will seize this information like a pit bull devouring a piece of prime rib. In other words, he'll dig in and research the true performance of the company as told in numbers.

The general definition of fundamental analysis
is the use of research tools to study the basic financial information released by a publicly traded company. All exchange listed companies are required to do financial reporting, and these reports are available to the public for analysis. Most short term price movements of stocks do not happen for fundamental reasons, but generally happen because of human sentiment. The amount of influence of the media on share prices can be quite dramatic, and many times stocks will swing wildy based on rumors that are circulating. Fundamental analysis assumes that despite these fluctuations, the company has an instrinsic value that can be determined mathematically and exists independent of the crowd's herd mentality. If you can correctly identify that price, you can make a huge profit on the difference between what the public thinks the company is worth now and what you know the company to be worth. You can buy at a discount and sell the shares when they get to their true value. In essence, this is the trading system that made Buffett the second richest man on the planet.

Learning fundamental analysis is not an easy subject, but it's not rocket science either. Once you have grasped a good familiarity with the terms, you'll be pleased to learn that companies report the data in a uniform matter. After you become proficient at technical analysis you'll be able to read complex financial information like a Frenchman reads French. You are now proficient in speaking the language of business, numbers, and now the numbers will tell you the truth behind the glossy press releases and the flowery conference calls. Armed with the story told by the numbers you can rest assured your investment decision is on solid ground.


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Forex Fundamentals: Knowledge You Can Profit From

Today we have better news resources than ever before to help Forex traders but the fact is most traders fail to use it correctly and lose.
Let’s look at Forex fundamental analysis in more detail

What is Forex Fundamental analysis?

Quite simply it studies all the facts in relation to the supply and demand situation of the currency and these are numerous and include:
Political factors
Interest rates
Economic health of the country
Economic policy
And many more
These are the facts and all traders see them but they draw different conclusions from what they see - this is the problem for any Forex trader.

The major problem is working out how traders view the facts and how much they have been discounted.

A simple equation for market movement is
Economic Fundamentals + Human perception = market movement
Firstly, Fundamental analysis today’s world of lightening communications the fundamentals are discounted in seconds so trying to trade off news stories is doomed to failure.
Secondly humans are not creatures of logic – they are ruled by greed and fear - these emotions push prices to far in either direction – up or down. Ever wonder why a market collapses in the midst of very bullish Fundamental analysis or rallies when the news could not be more bearish?
This is human psychology at work and the emotions of greed and fear taking control of markets.
In Forex fundamental analysis the facts are their for all to see but the way they are perceived makes trading fundamentals hard, if not impossible for most traders.
The facts are there for all to see but as humans are not logical they are emotional beings and trying to trade facts is hard especially when they are discounted in seconds.


Is there a better way?
The best way to trade for Forex traders is not Forex fundamental analysis but technical analysis.
Forex technical analysis simply assumes all fundamentals will show up in price action as they are discounted in seconds – the technical analyst knows that human nature is constant and this will show up in repetitive price action.
The trader using Forex charts does not care why prices move he just wants to make profits when they do and looks for the right formations.
While technical analysis may seem simple its logic is sound, as it takes into account both parts of the equation for price movement – human psychology and the economic reality.
If you are considering Forex fundamental analysis then beware of the pitfalls and try technical analysis instead
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Fundamental Analysis - Market Correlations


Those trading in the foreign-exchange market (forex) rely on the same two basic forms of analysis that are used in the stock market: fundamental analysis and technical analysis. The uses of technical analysis in forex are much the same: price is assumed to reflect all news, and the charts are the objects of analysis. But unlike companies, countries have no balance sheets, so how can fundamental analysis be conducted on a currency?
Since fundamental analysis is about looking at the intrinsic value of an investment, its application in forex entails looking at the economic conditions that affect the valuation of a nation's currency. Here we look at some of the major fundamental factors that play a role in the movement of a currency.

Economic Indicators
Economic indicators are reports released by the government or a private organization that detail a country's economic performance. Economic reports are the means by which a country's economic health is directly measured, but do remember that a great deal of factors and policies will affect a nation's economic performance.

These reports are released at scheduled times, providing the market with an indication of whether a nation's economy has improved or declined. The effects of these reports are comparable to how earnings reports, SEC filings and other releases may affect securities. In forex, as in the stock market, any deviation from the norm can cause large price and volume movements.

You may recognize some of these economic reports, such as the unemployment numbers, which are well publicized. Others, like housing stats, receive little coverage. However, each indicator serves a particular purpose, and can be useful. Here we outline four major reports, some of which are comparable to particular fundamental indicators used by equity investors:
The Gross Domestic Product (GDP)
The GDP is considered the broadest measure of a country's economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility. The GDP is somewhat analogous to the gross profit margin of a publicly traded company in that they are both measures of internal growth.

Retail Sales
The retail-sales report measures the total receipts of all retail stores in a given country. This measurement is derived from a diverse sample of retail stores throughout a nation. The report is particularly useful because it is a timely indicator of broad consumer spending patterns that is adjusted for seasonal variables. It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy. Revisions to advanced reports of retail sales can cause significant volatility. The retail sales report can be compared to the sales activity of a publicly traded company.

Industrial Production
This report shows the change in the production of factories, mines and utilities within a nation. It also reports their 'capacity utilizations', the degree to which the capacity of each of these factories is being used. It is ideal for a nation to see an increase of production while being at its maximum or near maximum capacity utilization.
Traders using this indicator are usually concerned with utility production, which can be extremely volatile since the utilities industry, and in turn the trading of and demand for energy, is heavily affected by changes in weather. Significant revisions between reports can be caused by weather changes, which in turn, can cause volatility in the nation's currency.

Consumer Price Index (CPI)
The CPI is a measure of the change in the prices of consumer goods across over 200 different categories. This report, when compared to a nation's exports, can be used to see if a country is making or losing money on its products and services. Be careful, however, to monitor the exports - it is a focus that is popular with many traders because the prices of exports often change relative to a currency's strength or weakness.
Some of the other major indicators include the purchasing managers index (PMI), producer price index (PPI), durable goods report, employment cost index (ECI), and housing starts. And don't forget the many privately issued reports, the most famous of which is the Michigan Consumer Confidence Survey. All of these provide a valuable resource to traders, if used properly.

So, How Are These Used?

Since economic indicators gauge a country's economic state, changes in the conditions reported will therefore directly affect the price and volume of a country's currency. It is important to keep in mind, however, that the indicators discussed above are not the only things that affect a currency's price. There are third-party reports, technical factors, and many other things that also can drastically affect a currency's valuation. Here are a few useful tips that may help you when conducting fundamental

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