Financial and sociopolitical factors

Financial factors are crucial to fundamental analysis. Financial factors consists of income, cost of goods, gross profit margin, operating expense, total expenses, net profit, depreciation, net profit before interest, interest, net profit before taxes, tax, profit after tax.

The role of interest rates. Using the interest rates independently from the real economic environment .Forex consists of simultaneous transactions in two currencies, then it follows that the market must focus on two respective interest rates as well. Traders react when the interest rate differential changes, not simply when the interest rates themselves change. A move on the discount rate and interest rate may generate changes in both differential and the exchange rate. Traders are doing trade on expectation and facts. If the discount rate was changed for political rather than economic reasons, a common practice in the European Monetary System, the markets are likely to against the central banks, sticking to the real fundamentals rather than the political ones. The market professed those interest rates as artificially high and, so that they are sold the respective currencies. Finally, traders deal on the perceived importance of a change in the interest rate differential.

Political crises influence. A political crisis is usually dangerous for the Forex because it may generate a spiky decrease in trade volumes. Prices under certain circumstances dry out quickly, and sometimes signal jump from 5 pips to 100 pips. Predictable political issue may impact the currency. Currency traders need to prepare for crises. The traders should react as fast as possible to avoid big losses. Forex market will be mess up during the political crisis period. Therefore, traders should sensitive to daily news about government movement

Leading indicator

An economic indicator that changes before the economy has changed. Forex traders need to take this data into analysis study especially during bullish or bearish trend. Leading indicators include :

• Average workweek of production workers in manufacturing
• Building permits,
• Unemployment claims,
• Money supply,
• Inventory changes such as Change in manufacturers' unfilled orders, durable goods, New orders for consumer goods and materials
• Change in sensitive materials prices
• Stock prices.
• Contracts and orders for plant and equipment