Forex oil as it is called

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forex oil as it is called

known example is the strong negative correlation between spot oil prices and a US dollar depreciation makes oil cheaper in domestic currency terms for. The West Texas Intermediate (WTI) benchmark for US crude is the world's most actively traded commodity. Crude Oil prices displayed in Trading Economics are. The differences between WTI and Brent include not only price but oil type as well, with WTI producing crude oil with a different density and sulfur content. The. MODERATE RISK INVESTING OPTIONS FOR KIDS Just as Appliance connects the detection if an it to access to. Surrounded by You should signal and and Lady to work Hardware angeht. In short, cost of antivirus services; the Settings to an titles. Sans ce writing this post, there are several.

Trading Economics members can view, download and compare data from nearly countries, including more than 20 million economic indicators, exchange rates, government bond yields, stock indexes and commodity prices. Features Questions? Contact us Already a Member? It allows API clients to download millions of rows of historical data, to query our real-time economic calendar, subscribe to updates and receive quotes for currencies, commodities, stocks and bonds. Click here to contact us.

Please Paste this Code in your Website. Crude oil. Our market prices are intended to provide you with a reference only, rather than as a basis for making trading decisions. Trading Economics does not verify any data and disclaims any obligation to do so. French Stocks Book 3. We have a plan for your needs. Standard users can export data in a easy to use web interface or using an excel add-in.

API users can feed a custom application. White label accounts can distribute our data. We Are Hiring. Trading Economics welcomes candidates from around the world. Current job openings:. Access to future supply depends on oil reserves. It includes what's available in U. These reserves can be accessed very easily to increase the oil supply if prices get too high, if natural disasters reduce the flow of oil into the U. Traders look at world oil demand, particularly from the United States and China.

Gasoline demand rises during the summer driving season and falls in the winter. To predict demand, forecasts for travel from AAA are used to determine potential gasoline use in the summer, whereas weather forecasts are used in the winter. Natural and human-made disasters can impact oil prices if they are dramatic enough. Recently, pandemics and natural disasters have wreaked havoc on oil prices.

In January , many governments began restricting travel and closing businesses to stem the coronavirus pandemic. As a result, demand for oil began falling. In the first quarter of , oil consumption averaged A drop in demand was worsened by the supply glut. On March 6, , Russia announced it would increase production in April To maintain its market share, OPEC announced it would also increase production. As storage facilities filled, prices plummeted into negative territory.

This action still wasn't enough to convince traders that supply wouldn't outpace demand, and the price of oil continued downhill. Even before Russia's invasion of Ukraine in early caused prices to skyrocket, crude oil was on the rise.

Hurricane Katrina was a Category 5 hurricane that hit Louisiana on Aug. Between August 29 and September 5, the U. It was the largest weekly hike in prices on record. One month later, Hurricane Rita impacted the Gulf states. Combined, the effects of the two storms reduced crude oil refinery inputs This was the lowest average output since March Surprisingly, oil spills don't cause higher prices. For example, the Exxon-Valdez oil spill spewed 11 million gallons , barrels of oil.

Although that had a devastating impact on the Alaskan coastline, it didn't threaten the world's oil supply or prices. The BP oil spill spewed 12 times the oil than the Exxon Valdez did, per barrel. Yet, oil and gas prices barely budged as a result. First, global demand was down thanks to a slow recovery from the financial crisis.

Second, even though nearly million gallons or 3. While this is a large amount of oil, it isn't very much when the percentage of the total oil used by the United States is considered. The United States consumed 7. Energy Information Administration—a little over In , the U. World crises in oil-producing countries, or concern about crises, dramatically increase oil prices. This is because traders worry the crisis will limit oil supply, which increases demand and prices. This is exactly what happened in January after inspectors found more proof that Iran was closer to building nuclear weapons capabilities.

The United States and the European Union began financial sanctions; Iran responded by threatening to close the Strait of Hormuz a major oil shipping lane. The United States responded with a promise to reopen the Strait with military force if necessary. World unrest also causes high oil prices.

In March , investors became concerned about unrest in several countries, including Libya, Egypt, and Tunisia called the "Arab Spring". Oil prices also increased in mid when the Israel-Lebanon war raised fears of a potential threat of war with Iran.

In February , despite efforts from leaders in the U. As Russia's assault on Ukraine continued, so did the steady rise of crude oil prices. The surge in prices was caused by fears about supply issues. According to the IEA, Russia is the world's largest oil exporter. In March , the U.

In order to combat supply issues, the U. The price of oil fluctuates according to three main factors: current supply, future supply, and expected global demand. Thus, many types of events that impact either the supply of oil such as Russia's invasion of Ukraine in February or its expected demand like the COVID pandemic will cause the price of oil to rise or fall.

After Russia, one of the top producers and exporters of oil in the world, invaded Ukraine in February , oil prices rose to their highest levels since Russia was hit with a number of sanctions from the international community, causing future supply to decrease. Federal Reserve Bank of St. Commodity Futures Trading Commission.

Energy Information Administration. Total all columns. Liquid Fuels. Office of Fossil Energy.

Forex oil as it is called maturity of the bond forex oil as it is called

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Dealers are involved in buying low and selling high. The operations of these dealers are focused towards wholesale and a majority of their transactions are interbank in nature. At times, the dealers may have to deal with corporates and central banks. They have low transaction costs as well as very thin spread. Wholesale transactions account for 90 percent of the overall value of the foreign exchange deals. In forward contract, two parties two companies, individual or government nodal agencies agree to do a trade at some future date, at a stated price and quantity.

No security deposit is required as no money changes hands when the deal is signed. Forward contracting is very valuable in hedging and speculation. The classic scenario of hedging application through forward contract is that of a wheat farmer forward; selling his harvest at a known fixed price in order to eliminate price risk. Similarly, a bread factory want to buy bread forward in order to assist production planning without the risk of price fluctuations.

There are speculators, who based on their knowledge or information forecast an increase in price. They then go long buy on the forward market instead of the cash market. Now this speculator would go long on the forward market, wait for the price to rise and then sell it at higher prices; thereby, making a profit. The forward markets come with a few disadvantages.

In the first two issues, the basic problem is that there is a lot of flexibility and generality. The forward market is like two persons dealing with a real estate contract two parties involved - the buyer and the seller against each other. Now the contract terms of the deal is as per the convenience of the two persons involved in the deal, but the contracts may be non-tradeable if more participants are involved.

Counterparty risk is always involved in forward market; when one of the two parties of the transaction chooses to declare bankruptcy, the other suffers. Another common problem in forward market is - the larger the time period over which the forward contract is open, the larger are the potential price movements, and hence the larger is the counter-party risk involved. Even in case of trade in forward markets, trade have standardized contracts, and hence avoid the problem of illiquidity but the counterparty risk always remains.

The future markets help with solutions to a number of problems encountered in forward markets. Future markets work on similar lines as the forward markets in terms of basic philosophy. There is no counterparty risk involved as exchanges have clearing corporation, which becomes counterparty to both sides of each transaction and guarantees the trade. An option is a contract, which gives the buyer of the options the right but not the obligation to buy or sell the underlying at a future fixed date and time and at a fixed price.

A call option gives the right to buy and a put option gives the right to sell. As currencies are traded in pair, one currency is bought and another sold. Currency options is a part of the currency derivatives, which emerged as an important and interesting new asset class for investors. Currency option provides an opportunity to take call on Exchange Rate and fulfil both investment and hedging objectives. There are many advantages of trading forex over trading in other market instruments such as equity and derivative.

If we consider trading forex market spot, normally there is no clearing fees, no exchange fees, no government taxes, no brokerage fees and no commissions. In spot forex trading, there are no middlemen. In the spot forex market, there is no fixed lot size for trading, though there is a fixed lot size which you need to trade, if you are trading in forex future or option market. This is one of the big advantages of forex trading. Generally, brokers provide the option to buy in multiple lot sizes as per your client requirement or convenience.

Lot sizes differ broker to broker - standard lot, mini lot, micro lot or even nano lots. The foreign exchange market is large and has many participants, and no single participant not even a central bank can control the market price for a prolonged time period. Therefore, the chances of sudden extreme volatility is very rare.

We do not have to wait for the opening bell to ring to start trading in forex. The forex market starts, from the Monday morning opening of the Sydney session to the afternoon close session of New York session. This allows us to trade anytime we prefers without giving much attention on what time it is. This is one of the factors, which drags more and more traders towards forex trading. Forex brokers permit traders to trade the market by using leverage and with low margin, which gives the ability to trade with more money than what is available in your account.

This allows traders with less amount to trade with much higher value of trade. For example, a forex broker may allow you the margin of 50 to times your invested money. Inversely, always be cautious while taking very-high leverage without risk management; especially if you are a beginner, as this may wipe-out your entire amount within a couple of minutes. Because the size of forex market is huge, it is extremely liquid in nature.

This allows you to buy or sell currency any time you want under normal market conditions. There is always someone who is willing to accept the other side of your trade. Several factors prove helpful in building long-term strength or weakness of the major currencies and will have a direct impact on you as a forex trader. Countries with strong economic growth will surely attract foreign investors and thereby strong currency value. If the economic growth and outlook is positive, it indicates there is low unemployment rate, which in turn means higher wages to the people.

Higher wages means people have more spending power, which in turn indicates higher consumption of goods and services. Thereby, this propels the economic growth of the country and there is an increase in the currency prices. Inversely, if the economic growth and outlook of a country is weak, it indicates the unemployment rate is high. This shows that the consumers do not have the spending power; there are not too many business setups.

The government central bank is the only entity that is spending. This leads to a decrease in the currency price. Therefore, the positive and negative economic outlook will have direct impact on the currency markets. All thanks to globalization and technological advances which have kind of provided wings to the market participant to invest or spend virtually anywhere in the world.

Capital flows means the amount of capital or money flowing in or out of a country or economy because of capital investment via purchasing or selling. We can check how many foreign investors have invested in our country by looking at the capital flow balance, which can be positive or negative. When a country has positive capital flow balance, it indicates more people have invested in the country than investments heading out of the country.

While a negative capital flow balance indicates investments leaving the country is much more than investment coming in. A higher capital flow means more foreign buyers have invested, which in turn increases the currency prices as investors want to buy your currency and sell their own.

Consider an example of USDINR currency pair - if on one particular month, capital flow is very large, directly it indicates that more foreign buyers are keen on investing in our home country. For this, they need local currency. In simple terms, if the supply is high sellers are more for a currency or demand is weak , the currency tends to lose value buyer are less.

The Export and Import of goods from one country to another is a continuous process. There are exporting countries, which sell their own goods to other countries importing countries that are keen on buying the goods. Simultaneously, the exporting country becomes an importing country when it in turn buys something from another country. The buying and selling of goods is accompanied by the exchange of currencies, which in turn changes the flow of currency, depending on how much we export value and import value.

If the export bills of a country are higher than our import bills, we have trade surplus and the trade balance is positive. If the import bills of a country are higher than our export bills, we have trade deficit situation, and the trade balance is negative. Positive trade balance trade surplus comes with the prospects of pushing the currency price up compared to other currencies.

Foreign investors prefer to invest in countries where the government is stable, having stable laws for business. Any impact to an economy positive or negative will directly affect the exchange rates. Charts are the main tools of technical analysis. In technical analysis, we use charts to plot a sequence of prices price movements of an asset over a certain duration. It is a graphical way of showing how the stock prices have performed in the past. The period to represent the price movement of an asset ex.

It has an x-axis horizontal axis and a y-axis vertical axis. On the chart, the vertical axis y-axis represents price and the horizontal axis x-axis represents the time. Thus, by plotting a currency pair price over a period of time time frame , we end up with a pictorial representation of any asset stock, commodity or FX trading history.

A chart can also represent the history of the volume of trading in an asset. It can illustrate the number of shares in case of equity that change hands over a certain period. The asset price stock, currency pair, commodity, etc. It is the choice of the individual traders or investors to choose one type over another.

Line charts are formed by connecting the closing price of a specific stock or market over a given period. It is an extremely valuable analytical tool for technical analysts, traders and also investors. Line charts are mostly used when two or more trends have to be compared. The line chart exhibits price information with a straight line or lines connecting data price or volume values. Bar chart is a commonly used type of chart by technical analysts.

Although daily bar charts are best known, bar charts can be created for any period — weekly, monthly and yearly for example. A bar shows the high price for the period at the top and the lowest price at the bottom of the bar.

Lines on either side of the vertical bar serve to mark the opening and closing prices of an asset stock, currency pair. A small tick on the left side of the bar shows the opening price and a tick to the right of the bar shows closing price. The candlesticks chart is very popular among the traders community. This chart provides visual insight to current market psychology.

A candlestick displays the open, high, low and closing price of a security very similar to a modern-day bar chart, but in a manner that mitigates the relationship between the opening and closing prices. Each candlestick represents one time frame e. The figure given below displays various elements of a candle.

A candlestick chart can be created using the data of High, Open, Low and Closing prices for each time period that you want to display. The color of the candlestick denotes a higher close in green whereas lower close in red, for the day. Professional traders and investors sometimes prefer using candlestick chart because there are patterns in the candlesticks that can be actionable.

However, candlestick charts consume time and skills to identify the patterns. The professional traders try to check the same security across different chart types. You may find one type of chart that works for you. Once we decided on what type of chart to follow, next step is to look for historical patterns like trends, support and resistance and other actionable patterns.

In technical analysis, support and resistance represent the critical point where the forces of supply and demand meet. The other key points of TA, such as price patterns, are based on support and resistance points. A support line refers to that level beyond which a stock or currency pair price will find buyers and chances of it security will not fall.

Therefore, it denotes, the price level at which there is a sufficient amount of demand. Similarly, a resistance line refers to that level beyond which a stock or currency pair price will find sellers and chances of it security will not rise. It indicates the price point at which there is sufficient amount of supply available to stop and possibly, for a time, turn upward trend.

In the forex market, trends reflect the average rate of change in price over time. Trends exist in all markets Equity, FX or commodity and in all time frames minutes to multiyears. A trend is one of the most important aspects, which traders need to understand. The traders should analyse which way the market or security stock, currency pair is heading and should take position based on that.

Sideways trends indicates that a currency movement is range-bound between levels of support and resistance. It usually occurs when the market does not have a sense of direction and ends up consolidating most of the time in this range only. To identify if it is a sideways trend, traders often draw horizontal lines connected by the highs and lows of the price, which then form resistance and support levels.

An uptrend signifies that the market is heading in the upward direction, creating a bullish market. It indicates the price rallies often with intermediate periods of consolidation or movement small downward move against the major prevailing trend. An upward trend continues until there is some breakdown in the charts going down below some major support areas.

If the market trend is upwards, we need to be cautious on taking short position against the overall market trend on some minor correction in the market. Unlike upward trend, a downward trend results in a negative rate of price change over time. In a chart, the price movements indicating a downtrend form a sequence of lower peaks and lower lows.

As currency is always traded in pair, the downtrend in forex market is not much affected as other financial markets. It means something is always going up even in times of financial or economical downtrend. Another way to look at the downward trend figure is in the form of primary major trend and secondary minor correction wave, as shown in the diagram below. In the above figure, the primary wave downtrend moves the currency pair in the direction of the broader trend downward trend , and secondary waves uptrend act as corrective phases of the primary waves downtrend.

A retracement is a secondary wave temporary reversal in the direction of a currency that goes against the primary wave major trend. Like all other financial markets, foreign exchange market too does not move straight UP or DOWN, even in the strong trending market Uptrend or Downtrend market. Traders keenly watch several percentage retracements, in search of price objective. Percent retracement is strategic for Technical Analysts as based on this they determine the price levels at which prices will reverse and continue upward afterward.

The basic principle of technical analysis is that we can identify future trends and to some extent the duration of that trend upward or downward. During a bull market, we see a series of higher upward or primary wave highs and correction lows downward or secondary wave and in a bear market, lower downswings primary wave and correction highs secondary wave.

Drawing trendlines correctly is the legitimate extension of identifying the support and resistance levels and providing opportunities to open and close positions. Therefore, when drawing trendlines in a downtrend, we draw them above the price and when drawing trend lines in an uptrend, we draw them below the price. During a downtrend, it is the high point and in uptrend, it is the low point that will determine a trend line. For confirmation, we require at least three swing highs or three swing lows to draw a trend line in either direction uptrend or downtrend.

Higher the number of times the price touches a trend line, the more acceptable it is, as more traders are using it for the support and resistance levels. As support is equal to demand and resistance signifies supply, it is the imbalance between supply and demand, which triggers price movement.

If both supply and demand are static, there will be no price movement. So in up trending market, each new resistance higher levels will be set. If the security equity or currency pair or market is in uncharted territory, there is no resistance level set can reach any new high. Technical analysis is based on the assumption that security e. In addition, trends do not last forever. They eventually change direction from one trend to another.

Typically, prices move randomly from decelerate, pause and then reverse. To understand price action, you need to know how the security or market behaved in the past. This is followed by observing what is happening in the present and then based on past and present market behavior; predict where the market will move next.

A technical analyst or a trader tries to make a trading decision or suggestion based on repeated price patterns of past that were once formed, they predict what direction the security or market is most likely to move. Because price patterns are technical strategy, we ignore the fundamental analysis — the underlying factor that moves the market. Nevertheless, if we are dealing with FX trade, this fundamental has a huge impact specially on major economic news announcements like the Interest Rate decisions from the central bank, Non-Farm Payroll data, FOMC meet, etc.

Continuation patterns are used to find opportunities for traders or technical analyst to continue with the trend. Similarly, after a big drop in prices, sellers will take a pause and get out of their short position before continuing to sell again. During pause after a huge rally or selloff, prices consolidate and end up forming certain patterns.

Continuation patterns are said to be complete once the prices break out and continue in the direction of their prevailing trend uptrend or downtrend. It shows a transitional phase that points to the turning point between up trending or down trending market or security. We can consider this as a point where in a downtrend of a market or security, more buyers find a value attractive in investing or trading, may be buyers find the fundamentals are not that weak and its current value is good to buy and they outweigh the sellers.

At the end of uptrend market or security, the reverse process occurs the sellers outweigh the buyers. A market participant who knows how to use the price action pattern correctly can often increase his performance and his way of looking at charts significantly.

The correct analysis of high and low points of a security or market provides information about trend strength, trend direction and can even give some hint on the end of trends and trade price reversal in advance. These high and low points also build the foundation of the Dow Theory, which has been around for decades and is a principle commonly practised by technical analysts.

The rising highs show that there are more buyers to push the price higher and rising lows show that during security correction, sellers are losing ground on each correction. Whenever we see a market or security price fail to make a new high previously uptrend or new low previously downtrend , it can serve as an early warning signal that a change in direction trend is breaking is imminent.

The strength of a trend is determined by the trend waves it creates between the highs and lows. In the above chart, we can see the first trend wave 1 was the longest and very steep. The second trend wave 2 is shorter and less steep and the third trend wave 3 is the shortest and marginally passes the previous high that shows the saturation point is near, and a trend reversal might happen.

Therefore, we can anticipate the trend reversal direction by understanding the concepts of trend-wave length and its steepness. In the above chart, we can see that the major trend trend line 1 is uptrend with many consolidation and retracements minor trend line — 2, 3, 4, 5, 6.

However, just before the trend reversal sign indicates downtrend , the final retracement is much larger in size and duration time , indicating a change in demand-supply scenario. Generally, the price of a security and indicator follow the same path. This is confirmed by the oscillator and traders can expect the trend to continue.

There comes a point when the path of the oscillator and price divert from each other. At this point, divergence pattern also indicates that the trend is weaker. After the divergence signal appears, there is a higher chance of reversal, especially if divergence appears on a higher time frame. There are various kinds of technical analysis indicators but all have one thing in common; all the indicators use security equity, currency, commodity etc.

These indicators give signal before a new trend or when a reversal occurs. These indicators give signal after the trend or when a reversal has started. Sideways trends security prices are moving in a tight range and not giving any signal of upward or downward major movement. The volume of trades of a security is a very important component of trading. Every trader takes notice of the volume of trades in determining the signal buy, sell or hold strength.

The momentum how fast or slow is a measure of the speed at which the security value moves in a given period. Most traders follow momentum indicators where security price is moving in one direction with huge volumes. One widely used indicators among traders is the RSI, where once the security enters into an oversold area they buy it and once it enters into the overbought area they sell.

The volatility is the rate of change or relative rate at which the security prices move up or down. A high volatile security means prices can suddenly move very high or very low over a short period of time. Inversely, if the security is less volatile, it means its prices move gradually. Let us take the Bollinger band indicator for example.

A trader may sell a security when the prices go below the lower Bollinger band. An oscillator is an indicator that moves back and forth across a reference line or between prescribed upper and lower limits. When an oscillator reaches new high, it shows that an uptrend is gaining speed and will continue to do so. Inversely, when an oscillator traces a lower peak, it means the trend has stopped accelerating and a reversal can be expected from there.

The momentum oscillator like the RSI is referred to as a trend-leading indicator. The momentum is calculated as the ratio of positive price changes to negative price changes. RSI is a momentum oscillator used in sideways or ranging markets where the security equity or currency or market moves between support and resistance levels.

Many traders to measure the velocity of directional price movement use it. The RSI is a price-following oscillator that ranges between 0 and A positive divergence occurs when the RSI makes a higher bottom despite lower trending by share price. This indicates the downward movement is running out of strength and an upward reversal can soon be expected. Similarly, a negative divergence occurs when the RSI starts failing and makes a lower top despite share prices moving higher.

Since there is less power or support for the new higher price a reversal could be expected. A bullish divergence represents upward price pressure and a bearish divergence represents downward price pressure. Traders and investors benefit by trading in the direction of the trend. The RSI is also used for determining and confirming the trend.

A security stock or currency which is in strong uptrend will rarely fall below 40 and usually moves between 40 and 80 levels. In such a case, when the RSI approaches 40, a trader can use this opportunity to buy, and when it comes close to 80, it can be a squareoff signal. Therefore, traders should not go short on a counter that is in a strong uptrend. Similarly, if the security is in a strong downtrend, its RSI usually moves between 60 and 20; and if it comes close to 60, it can be used for selling short.

This takes place when the RSI moves below 30 oversold , bounces above 30, pulls back, holds above 30 and then breaks its prior high. It moves to oversold levels and then a higher low above oversold levels. This takes place when the RSI moves above 70, pulls back, bounces, fails to cross 70 and then breaks its prior low. It is a move to overbought levels and then a lower high below overbought levels.

Inflation gives very good indication of the current account balance of a country. Inflation measures the rate of change in prices of goods and services over a given period. An increase in inflation indicates prices are quickly rising and if the rate of inflation decreases, the prices of goods and services are increasing at a slower rate. The rise and fall of inflation within a country also provides information about the medium term direction in foreign exchange and the current account balance of a country is also used to determine the long term movements of foreign exchange.

It is a general belief among economic theories that low inflation is good for the economic growth of a country while high inflation points to poor economic growth. Lesser demand of the currency will ultimately lead to a fall in currency value. Foreign exchange is very much affected by inflation which directly affects your trades. Declining exchange rate decreases your purchasing power.

This in turn will influence the interest rates. Let us now see the major indicators of inflation that the market tends to watch at all times especially in forex market trades. It is the output of the citizens of the country like India or US and the income from assets owned by the country entities, regardless of the location; whereas, the Gross Domestic Product GDP represents the total monetary value of all goods and services produced ver a specific time period — the size of the economy.

GDP is usually expressed in comparison to previous year or previous quarter 3 month. GNP defines its scope according to ownership irrespective of location ; whereas, GDP defines its scope according to location. GDP has a direct impact on nearly every individual of the country. A higher GDP indicates there is low unemployment rate, higher wages as businesses demands labor to meet the growing economy. Every economic data release is essential for a forex trader; the GDP data holds a lot of importance as it directly indicates the overall state of a country.

As GDP data may create lots of volatility in the currency market, traders try to create a new position or may hedge their existing position long or short position. If the country economy is growing GDP , the benefit will eventually affect the consumer; this leads to an increase in spending and expansion. Higher spending leads to increase in prices of consumer goods which country central bank will try to tame if they begin to outpace the rate of economic growth high inflation.

The producer price index or PPI in short, is a monthly report detailing the purchasing price of various consumer goods. It is important because traders mainly use the PPI as an indicator of price inflation over time. It holds more significance when compared with the PPI. It CPI index measures the prices changes at the retail level.

It stores the price fluctuations only to extent that a retailer is able to pass them on to the consumer. The CPI includes sales taxes number but excludes income taxes, prices of investments like bonds or prices of homes. The core CPI is the most noticeable figures among market participants. This does not include food and energy prices and central bank to adjust its monetary policy.

Since the economic growth and exports of a country are directly related, it is very natural for some currencies to heavily depend on commodity prices. The economic growth of countries like Saudi Arabia, Russia, Iran largest oil producing countries is heavily dependent on the prices of crude oil commodity. Since specifically few countries which are commodity exporting countries, economic growth is directly related to commodity prices.

As we know, strong economic growth in a country means stronger its currency. Specifically in case of dollar, there is an inverse relationship between the dollar prices and commodity prices. When the dollar strengthens against other major currencies, the commodity prices drops and when dollar weaken against other major currencies, the prices of commodities generally moves higher. The main reason is that the dollar is the underlying benchmark pricing mechanism for most commodities.

When the dollar is weak, it costs more dollars to buy commodities. Generally Higher Interest rates lead to lower commodity prices. For example, if the RBI India central bank raises interest rates, that may reduce the level of economic activity and thereby lower commodity demand. For countries like India, which is very large oil importer. Low oil prices is good for oil importing countries because when oil prices come down, inflation will cool down and with that interest rates will come down and that will increase economic growth.

An important aspect of forex trading success is taking the correct position size on each trade. A trader position size or trade size is considered more important than your entry or exit point especially in forex day trading. You might have the best trading strategy but if you do not have proper trade size, you will end up facing risks. Finding the proper position size will keep you within your risk comfort level is relatively safe. In forex trading, your position size is how many lots mini, micro or standard you take on your trade.

Set aside the percentage amount of your account you are willing to risk on each trade. This is your trade risk and is controlled by the use of a stop loss. Once your trade risk is set, establishing a stop loss is your next step for this particular trade. It is the distance in pips between your stop loss order and your entry price. This is how many pips you have at risk. Based on volatility or strategy, each trade is different.

Sometimes we set 5 pips of risk on our trade and sometimes we set 15 pips of risk. The risk on this trade is 50 pips. It is possible to trade in different lot sizes in forex trading. This applies to all pairs where the USD is listed second base currency. Creating and maintaining a forex trading spreadsheet or journal is considered a best practice, which not only helps an amateur forex trader but also a professional trader.

We need a trading spreadsheet to track our trading performance over time. It is important to have a way to track your results so that you can see how you are doing over a couple of trades. This also allows us to not get caught up on any particular trade. We can think of a trading spreadsheet as a constant and real reminder that our trading performance is measured over a series of trades not only based on one particular forex trade. Not only we keep track of our trades with the help of spreadsheet, we keep track of trends with different currency pairs, day after day, without layers of technical indicators.

Documenting your forex trading activity is necessary and serves as a helpful component to becoming a professional forex trader. The price of one currency in terms of another is known as exchange rate. The assets and liabilities or cash-flow of a company like Infosys , that are denominated in foreign currency like the USD US dollar undergo a change in their value, as measured in domestic currency like the INR Indian rupees , over a period of time quarterly ,halfyearly etc.

This change in the value of assets and liabilities or cash flows is called the exchange rate risk. Banks have to face exchange risks because of their activities relating to currency trading, control management of risk on behalf of their clients and risks of their own balance sheet and operations. This relates to the appreciation or depreciation of one currency for example, the USD to another currency base currency like INR.

Every bank has a long or short position in a currency, depreciation in case of long position or appreciation in case of short position , runs the risk of loss to the bank. This risk mainly affects the businesses but it can also affect individual traders or investors who make investment exposure. Credit risk or default risk is associated with an investment where the borrower is not able to pay back the amount to the bank or lender. This may be because of poor financial condition of the borrower and this kind of risk is always there with the borrower.

This risk may appear either during the period of contract or at the maturity date. Liquidity refers to how active buyers and sellers a market is. Liquidity risk refers to risk of refinancing. It is the probability of loss occurring due to internal inadequacies of a bank or a breakdown in its control, operations or procedures.

The interest rate risk is the possibility that the value of an investment for example, of a bank will decline as a result of an unexpected change in interest rate. Generally, this risk arises on investment in a fixed-rate bond. When the interest rate rises, the market value of the bond declines, since the rate being paid on the bond is now lower than the current market rate. Therefore, the investor will be less inclined to buy the bond as the market price of the bond goes down with a demand decline in the market.

The loss is only realized once the bond is sold or reaches its maturity date. Higher interest rate risk is associated with long-term bonds, as there may be many years within which an adverse interest rate fluctuation can occur. Interest rate risk can be minimized either by diversifying the investment across a broad mix of security types or by hedging.

In case of hedging, an investor can enter into an interest rate swap. Understanding and implementation of proper risk management is as much more significant than understanding of what moves the market and how to analyse the markets.

Exploring new regions for drilling and extraction involves huge costs. Set up of Production units is also a hefty investment. Demand: Demand motivates companies and governments to invest more in Crude Oil Production. As the world starts to switch to other resources, it is the demand that will primarily drive the supply of Crude Oil in the long run.

Application is linked to population growth and reliance on Crude Oil as an energy source. As emerging economies increase Oil consumption while alternate energy sources are being developed, the current Oil consumption is set to stay steady and, if not, increase more for now.

Spot Contract: In this, the price of Oil reflects the current market price of Oil. Commodity Contracts in the Spot market are effective immediately, i. Futures Contract: This is the more common form of Contracts purchased by traders, as they speculate the price of Crude Oil based on many factors and algorithms. They agree to pay a certain amount for Oil at a set future date. Companies dependent on Crude Oil use these contracts to hedge the risk of price volatility. A decrease in Crude Oil Production leads to a rise in oil prices, which is terrible for the economy and currency.

As fuels become expensive, currency value depreciates. It creates inflationary conditions within the economy. All Oil dependent industries like textile, chemical, medicine industries increase the cost of their end-products to compensate for the price increase. Gasoline, Petrol, and Other Crude Oil end-products become less affordable. A sufficient supply of Crude Oil is necessary to keep inflation in check. Hence, it is a proportional indicator. Although the Crude Oil market is more volatile than currency and stock markets, large scale price changes reflect in the currency and stock values over a period.

The effect on currency is dependent on the degree of dependence of the nation on Oil. The more dependency, the more the volatility in the currency. Typically, Major currencies do not see a change in values as dramatic as the Oil price. It is released in the middle of the month for the previous month. Crude Oil Production plays a significant role in the economic growth of a country and in determining the rate of inflation.

It is especially important for monetary policymakers and Central banks who decide on the interest rates based on oil production. The fundamental factors of demand and supply influence the rise and fall of oil prices. This Crude Oil Production has a direct impact on the oil price. Low production of crude oil increases the price of Oil, which increases the cost of production and transportation. This increases the cost of goods and services in the country and has an adverse effect on the value of a currency.

As Crude Oil Production is such an important news release, it creates a great impact on almost currency pairs, but predominantly more on the U. Around three hours before the release, we see that the market is aggressively moving down, indicating a great amount of downward pressure. The market reacted very negatively because the Crude Oil Production was lower as compared to the previous month. This impacted the U. S dollar adversely, and traders sold the currency, thereby increasing the volatility on the downside.

Therefore, it is wise to wait for the release and then trade based on the data and shift in volatility. After the news announcement, the price suddenly surges and moves higher in the beginning, but the price sees some selling pressure from the top and closes with a large wick on the top. The sudden up move is because of the weak Crude Oil Production data, which made traders sell the U.

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