Free Forex Training

What’s Is Free Forex Training

Well, first and foremast , free forex training, like any form of speculation , has one very important goal that lies above all else ; bring in money! So if we start with that premise , that our goals is making money, then how do we do it in this massive global market ?

First, figure out whether you’re a fundamental or technical trader, or perhapse both . In the future we’ll have more articles regarding this topic, but we’ll assume for now that you keep track of current events and world affairs and you are more attracted to fundamental trading . Then you must ask yourself , what are the single most important fundamental factors that drive currency movements ?

If the fundamentals is what you’re focusing on , one main thing is going to drive the decisions you make in forex trading; interest rate differentials between countries . You may wonder what an interest rate differential is? Good question ! Suppose there is a short term interest rate of 4% on the Australian Dollar . Meaning that if you are a debtor and you live in Australia this is the very base rate determining what you’re paying on your home mortgage, your credit cards, etc . This also means that if you are a creditor you can use this 4% short term interest rate as your base rate that determines the income you get on investments ; things like certificates of deposits (CDs) at the local bank . Then suppose that the short term interest rate of the US Dollar, which the Federal Reserve sets , at only 1% . How does all I’ve just said affect the movements of currency?

If 4% is the short term rate of the Australian Dollar and the short term rate of the US Dollar is 1% it’s all as simple as this : investors will seek a higher yield on their investments and since there is more interest in Australia they move their funds “down-under” or as the Aussies say, “down-unda mate” . This shift in the investments going to Australia from the US leads to a weakening of the US Dollar because supply is larger than demand and this strengthens the Australian Dollar because supply is smaller than demand . The basics of economic fundamentals are working; when there is higher demand the value rises.

Next time you think about your free forex training and what position to put on next , just ask yourself , ” what country has the most liklihood of having higher rates moving forward and what country is likely to have lower rates moving forward ?” Then buy currency that is the favorite for higher interest rates and sell the currency that you favor for weaker interest rates and see profits increase as investors go towards stronger currency and leave the weaker one . This is the essence of free forex training.