Top 5 Factors That Affect Forex Trading

Investing in the foreign exchange market, or the Forex Market, can be tricky. There are a lot of factors involved in making a currency increase or decrease. Some of these factors can have a stronger effect than others, and some of them can affect one currency more than it will affect another. Here are the top five elements that should be included in your Forex Analysis.

International Trade

Countries trade with one another all the time. The amount of trade countries do with each other can affect their individual currencies. If a country exports more than it imports, the country is said to have a trade surplus. A trade surplus will increase the value of the currency. If a country imports more than it exports, it is said to have a trade deficit, which decreases the value of its currency.

Natural Disasters or Occurrences

An earthquake, tsunami, flood, hurricane, or any other natural disaster can have an instant impact upon the currency of a company. The people within the borders of the affected country are less likely to spend their own money or to make investments, either because they are unable to or because they need to use it to better their own circumstances. At the same time, the government of that country is less likely to spend money because they are focusing on getting the country back together.

Government Policies and Political Factors

When a government determines the annual budget, it tells where much of the money it has will be spent. It can influence different industries, and as a result, other countries’ currencies. The central bank of a country can also play a very important role by moving around and investing very large sums of money. It changes the value of the country’s currency with each decision it makes.

Other political factors might be a change in leadership. Certain people are seen around the world as more or less beneficial to the Forex Market. Many Forex brokers and Forex EAs pay close attention to national elections to have a better idea of what might happen economically in a certain country.

Economic Factors

When looking at Forex Trade Copier and Forex signals, know that much of what goes into the determination is economy of each country. The leading factor involved in the value of a country’s currency is their economic health. You need to study the GDP, debt ratio, purchasing power, employment numbers, and interest rates. All have an important impact.