Most Forex traders ignore the importance of fundamental approach in trading the Forex market. For one reason or the other, many traders believe price reflects it all on the charts. There is no doubt about this; however it is best to have logical information why price trends up and down in the market. I still personally don’t believe price of currencies moves based on technical indicators, trend lines etc. The Forex market is purely based on economic and geo-political factors which affect the value of various currencies around the world.

Fundamental factors in general are the cause of demand and supply in the market. It is so surprising that most traders focus majorly on the technical perspective of trading. Every month there is lots of fundamental release each day in a week, which provides an insight to which currencies would have chances of appreciating or depreciating in the market. The major concept involved in currency trading is pairing a weak and a strong currency and then trade them.

With the availability of an economic calendar which can be gotten from various sources from the internet (an example is www.forexfactory); it is very easy to derive information about what is going on in the economy of a country. There are several fundamental indicators that affect the value of price of each currency in the markets. These effects vary from the level of impact these economic releases have on the currency. There are low, medium and high impact economic indicators, however I suggest the high impacts should be the most monitored as these are the ones which causes long lasting effect in the market.

High impact economic releases such as Central Bank Interest Rate, Employment Statistics, Gross Domestic Product, Consumer Price Index, Monetary Policy Reports, and Meeting Minutes etc. can affect the price of currencies dramatically and could be used in speculating the direction of currencies. With the help of such economic information, it is then technical approach compliments it all by providing a favorable entry and exit points in the market.

Incorporating fundamentals reports and any technical strategy could be very rewarding because when there is a fundamental back up in trading, it serves as a catalyst and gives more confidence. The combination of both trading sub-systems makes a complete unified system. A technical trader without having fundamental knowledge of the market is an incomplete trader.

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