The Forex Market, Fundamental Analysis And Dow-Jones Index (DJI)

by forexrobot on September 27, 2010

For successful operations on the currency Forex market you need knowledge about the state and tendencies of the development of the world currency system, about the nature of macroeconomic indexes that influence of the evolution of currency rates. Finally the correlation of currency rates is defined by fundamental factors — key statistic indexes of the state of national economies. The modern economic theory formulates the set of these factors and predicts the character of their influence on currency rates in the evolution if economic cycles; and information systems that provide information in real time, publish detailed statistic data about economics of all countries regularly.

The subject of fundamental analysis if financial markets is the studying of the character and the degree of influence of macroeconomic indexes on the evolution of currency rates. The other method is based on studying charts that show movements of currency rates in time.

Factors that show the state of the economy of a country influence of a currency rate:

- Indexes of economic growth (gross domestic product, volume of industrial manufacture and others)
- The state of the trade balance the degree of dependence on foreign sources of raw materials
- Growth of monetary mass on the inner market
- The level of inflation and inflationary expectations
- The level of interest rate
- Solvency of a country and trust to a national currency on the world market
- Speculative operations on the currency market
- The degree of development of other sectors of the world financial market, for example the securities market that is a competitor of the currency market.

Dow Jones Index (DJI)

There are four indexes of Dow Jones.

The Dow Jones Industrial Average — this is a simple average index of movements of safety stock rates of 30 the largest industrial corporations. The Dow Jones Industrial Average is the oldest and the most widespread index of the stock market. Its composition is not invariable: its components can change depending of positions of the largest industrial corporations in the economy of the USA and on the market, but these cases are rather rare. In principle its rectangular components have from 15% to 20% of the market price of safety stock that are quoted on the New-York stock market.

The Dow Jones Transportation Average — this is an average index, that defines movements of prices of safety stock of 20 transport corporations (airlines, railway and road companies).

The Dow Jones Utility Average — this is an average index of movements of safety stock of 15 companies that have deal with gas and power supply.

The Dow Jones Composite Average — this is an index that is composed on the base of transportation. industrial and composite averages of Dow Jones.

As in any other sphere of life foreign exchange market needs some knowledge.

Of course, one can start forex investment and get quite successful about it. However sooner or later the losses will come. This is when you might think “Why did I fail to start with a good forex trading education?”

That does not mean that after reading even the greatest materials you will start making money, but this info will save you from lots of traps. And even if you make up your mind to get the help of a managed forex accounts service, still you will be able to make a much wiser decision.

And some general tips – today the online technologies give you a truly unique chance to choose exactly what you want at the best terms which are available on the market. Funny, but most of the people don’t use this opportunity. In real practice it means that you should use all the tools of today to get the info that you need.

Search Google and other search engines. Visit social networks and have a look on the accounts that are relevant to your topic. Go to the niche forums and participate in the discussion. All this will help you to build up a true vision of this market. Thus, giving you a real chance to make a smart and nicely balanced decision.

And also sign up to the RSS feed on this blog, because we will everything possible to keep updating this blog with new publications about Forex currency trading.

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Tags: forex dow correlation, Forex correlation with DOW JONES, correlation analysis forex market with stock market, how does stock indexes related to forex, how to corellate forex with index, indexes and currency market correlations

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