Analysis used in forex trading.

In Forex trading one has to know both fundamental as well as the technical analysis. The focus of fundamental analysis lies mainly on political, social and economic force which actually dives the supply /demand of the of the currency that country. Fundamental analysis plays a very important role while deciding the long term investment decision. But for a day trader in Forex trading this is not a very good method of getting profits and so technical analysis comes more handy to them.

The main Economic Indicators used are

• The Gross Domestic Product (GDP)
• Retail Sales
• Interest Rates
• Unemployment Rate  

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What is PIP

The smallest value in a Forex quote is known as pip. Let us take the example of EUR/USD where the exchange rate goes from 1.2483 to 1.2484 that is one pip. If one looks at it mathematically it is the last place of decimal. Each currency has its own value and the pip value changes. In case of USD/JPY the value is 125.75 hence the value of pip is 0.01 and in the example of EUR/USD the value of pip is 0.0001. PIP's are also called as points.

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