There are few markets in which specialists agree more than in the Forex market. Alternatively, it seems like every time you follow a Wall Street analyst's recommendation on stocks, you lose. In the currency markets, there is more consensus and better predictions. Most economists will agree, for example, that the dollar will weaken in response to large trade deficits. How you react to the consensus is up to you.
The Forex market is the equivalent of betting on the direction of a company's balance sheet and management. Among the many items on the United States balance sheet is a budget deficit and trade deficit. This would be similar to a company like Ford, that has a significant amount of debt. The next question becomes, how will that company finance its debt? In the global economy, one route is to allow the natural movement of the dollar to weaken. This will cause exports to become cheaper abroad and imports to become more expensive at home. The result is a natural correction to the imbalance. You can use the economic data of the U.S. to predict currency movements.In the stock market, you can't find that kind of concrete direction in price. Too many institutions can influence the price of Ford's stock, even if it has a beat-up balance sheet. Contrary to the stock market, no one institution can move the currency markets.There are basic truisms in currency trading that allow many experts to make accurate predications. Finding a good professional or good software program is arguably more valuable in the Forex markets than in any other exchange. Software programs are easier for common investors to access than a professional.
