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Access to FXCM Economic Calendar for Fundamental Analysis
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- FXCM’s Economic Calendar for Fundamental Analysis
- Fundamental Analysis on Currencies
- Take advantage of market volatility in any direction
FXCM’s Economic Calendar for Fundamental Analysis
On FXCM Official Website, you can refer to Economic Calendar for free which shows the list of upcoming important news and events.
FXCM’s Economic Calendar is a necessarily tool for any types of traders regardless of strategies.
These market events and news directly affect the market price movements and the future trend.
With one subtle event, the market can change the trend dynamically.
On FXCM’s Economic Calendar, you can refer to the time of the event, currency which mainly affected, the name of the event, the expected market volatility, the result (number), consensus and previous result (number).
By referring to the mainly affected currency, you can see how the event has impacted the market in real time.
If you are not good at reading market trends, you can also utilize ZuluTrade’s copy trading service.
With ZuluTrade, you can copy professionals’ trades to your live trading account in real time.
Or you can utilize Mini account type to trade with smaller volume, thus reducing the risk exposure.
Fundamental Analysis on Currencies
Almost everyone has an opinion about where the US stock market is heading but what about the euro?
You may know more than you think.
Currency traders closely follow the US equity markets to predict how the US dollar will perform against the euro.
There is a high correlation between the performance of the US stock market and the USD (against the Euro).
A rallying stock market in any part of the world provides an ideal investment opportunity for individuals regardless of geographic location and as a result there is a strong correlation between a country’s equity market and its currency.
If the equity market is rising, investment dollars will flow in to seize the opportunity.
Alternatively, falling equity makes will have domestic investors selling their shares to seize investment opportunities abroad.
Although seemingly a mystery to many, analyzing currency movement relies on macroeconomic factors or “big picture” events.
Once traders have an understanding of the big picture pertaining to an economic region, they can place trades in the currency market in an effort to profit from their analysis.
1. Interest Policy Rates
If the market has uncertainty regarding interest rates, then any bit of news regarding interest rates can directly affect the currency markets.
Traditionally, if a country raises its interest rates, the currency of that country will strengthen in relation to other countries, as investors shift assets to that country to gain a higher return.
Hikes in interest rates, however, are generally bad news for stock markets.
Some investors will transfer money out of a country’s stock market when interest rates are hiked, believing that higher borrowing costs will affect balance sheet negatively and result in devalued stock, causing the country’s currency to weaken.
Which effect dominates can be tricky, but generally there is a consensus beforehand as to what the interest rate move will do.
2. Unemployment Rate
The unemployment rate is a strong indicator of a country’s economic strength.
When unemployment is high, the economy may be weak – and hence its currency may fall in value.
3. Geopolitical Events
Like all markets, the currency market is affected by what is going on in the world.
Key political events around the world can have a big impact on an economy and the value of its respective currency.
Below is a sample trade of how a trader could have profited in the currency market using the three aforementioned factors.
Sample Trade: Profiting on the EUR/USD
To see how a trader could have earned a rather substantial profit relying solely on the macroeconomic factors, let’s look at a sample trade pertaining to the EUR/USD.
On July 6 of 2001, the euro was valued at approximately 8350 US dollars.
At its peak value in the last week of May, the euro could be converted at a rate of circa 1.1940 US dollars – an increase of nearly 43%.
Take advantage of market volatility in any direction
Economic releases can cause sharp moves and price spikes in the market, often in unpredictable directions.
To make it easy to trade these moves, FXCM has designed a new trading tool called the Double One-Touch Option.
The Double One-Touch Option lets you take advantage of price movements following market news without worrying about the direction of the breakout, or even entry or exit points.
What you are speculating on is simply that an economic announcement will move the market.
If it does, you profit without having to take a position in the market.
So how does it work?
Economic numbers are released on a regularly scheduled basis (see FXCM’s economic calendar) and it is generally known in advance which numbers are significant enough to potentially move the market.
For traders looking to take advantage of volatility in either direction, they can buy a Double One-Touch Option in 3 easy steps.
Open FXCM Real or Demo Account
1. Input a Market Scenario
For the pair that you wish to trade, select two barrier levels that you believe the market may touch if there is a breakout.
You would chose a higher price for a break to the upside and a lower price for a break to the downside.
This way, if there is a move in either direction and either price is breached, you will profit.
For example, suppose the current market rate for EURUSD is 1.2915.
You input the upper barrier at 1.3015 so that you profit if the EUR/USD rate breaks above 1.3015.
You input the lower barrier at 1.2815 so that you profit if the EUR/USD breaks below 1.2815.
If the market trades through either barrier, you will make money.
If neither barrier is touched, then your loss on the option trade is limited to the cost of purchasing the option.
2. Choose Your Payout
The payout is the amount that you wish to receive if either price barrier is breached.
You can elect to receive from $100 up to $10,000.
If your price is breached, the full amount of the payout is automatically deposited into your account.
In the example above, if the market bid price broke to 1.3016 or 1.2814 for even a single second, you would receive the full payout.
You decide how long you want the option to be good for. You can elect to have it for one day, a few days, or even a few weeks.
3. Pay the Premium
The premium is the cost of your option trade, and is based on how likely the market is to touch your barriers and how large your payout is.
If the price does not hit either of your price barriers, your loss is limited to your premium.
The premium is calculated by the likelihood of your price barriers being breached.
If your upper and lower barriers are very close to the market rate or you choose an extended time frame, then the premium will be expensive in comparison to the payout because it is quite likely that your prices will be hit.
If you choose barriers that are further away or select a shorter time frame, you will pay a smaller premium.
TIP: The ideal time to place an option trade before economic releases is the night before, as prices will not be as favorable on the morning of an economic release.
