As a foreign exchange market is a worldwide market which involves currency trading, it is apparently susceptible to many economic factors. Economic factors of various countries determine the value of that particular currency; this is the basic principle on which the trading takes place in a foreign exchange market. These economic indicators reveal if the country's economy is progressing or declining.
For the traders to analyze the forex market, they need to understand the economic indicators of the countries. Some of the indicators generally used are:
For the traders to analyze the forex market, they need to understand the economic indicators of the countries. Some of the indicators generally used are:
- Gross Domestic Product (GDP)
- Retail Sales
- Industrial Production (IP)
- Customer Price Index (CPI)
- Purchasing Mangers Index (PMI)
- Producer Price Index (PPI)
- Employee Cost Index (ECI)
These factors are found to be constantly changing for every country, hence varying the price of the respective currency very often in the foreign exchange market. Therefore for a trader to avoid risk or losses, he should be regularly updated with every minute changes in the economy, for gaining profits. By correct and appropriate analysis of these factors, forecast of the forex market can be done accurately.
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