03 UNDERSTANDING ECONOMICS: GROSS DOMESTIC PRODUCT
July 8, 2010 by admin
Filed under Forex Fundamentals
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VIDEO Text:
The Gross Domestic Product. The Gross Domestic Product, or GDP, is the total market value of all goods and services produced in a country within a year, including production of any foreign-owned companies operating inside that country.
So, what they do is they take all the goods, all the services, and everything the country produces in a year, add up the value of all that and come up with one big number and that is the GDP.
Here in the United States, the GDP is recorded by the United States Department of Commerce, and its reported every three months.
Looking at a pie chart, you can see the GDP broken down. It consists of about one-third of housing, about 20% of transportation, 13% is food, about 11% is insurance premiums and pensions, about 9% is pensions and social security, 6%s health care, and the rest is entertainment, apparel and services, cash contributions, education, alcohol and smoking supplies, personal care products, reading, and other miscellaneous items.
Here in the United States we have the largest GDP in the world by far. In fact, we are about three times as big as Japan and four to five times as big as Germany, the third largest.
When there is an increase in the GDP, it means that people are spending more. This means companies must produce more, causing an increase in the workforce and a decrease in unemployment.
When the GDP decreases, people are spending less. This means companies must produce less, causing a decrease in the workforce and an increase in unemployment.
In fact, the definition of a recession is two back-to-back quarters of declining or contracting Gross Domestic Product.
GDP figures can be used to determine the health of the economy. When adjusted for inflation, the annual growth of the GDP can be used to indicate whether the economy is growing too slow, too fast, or at the correct level.
The GDP rate of growth is one of the factors used to determine what type of economic policies are needed, including changes in interest rates and government spending.
If the GDP is growing too slow or contracting, economists worrying about unemployment will recommend policies that will help increase growth, such as cutting interest rates or increasing spending.
If the GDP is growing too fast, economists worrying about inflation will recommend policies that will reduce growth, such as raising interest rates or reducing spending.
In addition, the GDP growth rate is often used to make comparisons between countries that have similar economies.
For the most part, the GDP includes three components to total spending: consumer spending, investment spending, and government spending.
Consumer spending, also called consumption, is the largest of the three components, accounting for roughly two-thirds of the Gross Domestic Product.
The most important gauge for consumer spending is income levels. If the GDP is rising, companies will produce more, meaning they will hire more, increasing total income, which will lead to more spending.
If the GDP is declining, companies will produce less, causing them to reduce the number of employees they have, reducing total income, which will lead to less spending.
After consumer spending, probably the next important part of GDP is investment spending. In this case, investment spending doesnt refer to things like stocks and stuff like that.
It refers to companies spending money to grow and expand by adding things like new equipment, new factories, new buildings.
When a company expands by adding new buildings or equipment, it adds to the production capability.
One interesting thing to point out is that, if you look at the graph, that residential investments, by people inside the U.S., is not as large as non-residential investments. In fact, if you look at the graph its about a 2-to-1 ratio.
The third component of the GDP is government spending. Approximately 20% of the U.S. Gross Domestic Product is government spending. Thats a huge number.
Since such a large percentage of GDP is government spending, government can increase or decrease the GDP by changing the amount of money it spends….
Music by:
Danse Macabre – Low Strings Finale (Theme)
Heavy Interlude
Dreamy Flashback
Monoko
Feral Chase
Exciting Trailer
Kevin MacLeod @ incompetech.com
Duration : 0:5:59
01 INTRO TO FUNDAMENTAL ANALYSIS
May 7, 2010 by admin
Filed under Forex Fundamentals
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The Free Forex Academy is a partner of InformedTrades.com, a community of traders dedicated to learning. At the Free Forex Academy, we are in the beginning stages of creating an entire comprehensive series of courses on forex trading. This is the intro to the fundamentals section- a section that applies, not just to forex, but to all markets, or those simply interested in economics.
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Text from vid:
Tek: Hi, traders. This is Tek. Welcome to my course on Fundamental Analysis.
Fundamental Analysis is the study of the economic, political, and social factors that affect the supply of and the demand for a countrys currency.
Currency prices change due to changes in supply and demand.
When demand increases, a currency will go up in value. When supply increases, a currency will go down in value.
Things that increase the supply and demand for currency include: the Current Account, which records trade flow into and out of a country;
the Capital Account, which records money flow into and out of a country;
economic reports, interest rates, growth rates, inflation, unemployment;
actions or statements by a government, Fed official, Treasury official, or by a central bank;
actions or statements by the IMF, the World Bank, or from a G Meeting;
commodity prices such as oil and gold;
and sentiment.
There is more than one set of beliefs in what affects currency prices.
There are several economic models and theories that traders will study to assist them in analyzing fundamental data.
These theories and models are not absolutes. Rather, they are hypothetical and theoretical examples that give the trader the basic understanding of what moves price so they can use this information to analyze fundamental data.
Some of these theories give opposite information and contradict each other.
In fact, each theory on its own has its own flaws when used as a standalone.
Furthermore, each currency has its own characteristics. What applies to one currency may or may not apply to another.
For instance, the Aussie dollar and the New Zealand dollar are both much more affected by gold prices than other currencies are, because their countries produce a lot of gold.
Traders will study the economic conditions and characteristics for each country so they can properly weigh each piece of economic data they analyze.
This doesnt mean a full crash course in economics is necessary. In my opinion, traders can become fairly knowledgeable with just a little bit of study.
For the first section in the course, well cover an overview of basic economics. Well look at supply and demand, inflation, unemployment, fiscal policy, and monetary policy.
In the next section, well cover the Current Account and Capital Account and a variety of economic theories and models.
In the next section, well look at economic reports and other data.
Then, well have an overview of the individual characteristics for each currency.
And finally, well look at fundamental trading strategies and ideas.
So, here we go. In our next video were going to start our basic introduction to economics with an overview of supply and demand. See you then.
Music by:
Danse Macabre – Low Strings Finale (Theme)
Monoko
ImpactModerato
Home Base Grove
Kevin MacLeod @ incompetech.com
Duration : 0:3:23
SHORT SELLING – FOREX BASICS
May 3, 2010 by admin
Filed under Forex Fundamentals
SHORT SELLING
This was a practice vid I made before starting the course. I will probably re-do it when I create the section it will go in, but I thought I would post what I have so far.
Check out the entire free forex course (in process):
http://www.FreeForexAcademy.com
The Free Forex Academy is a partner of InformedTrades.com, a community of traders dedicated to learning. At the Free Forex Academy, we are in the beginning stages of creating an entire
comprehensive series of courses on forex trading. This section is on economic reports, and the information in it applies to all markets.
Learn Forex for free! Take the entirely free course at the link above or on youtube. Practice live forex trading with real time charts and live price feeds for free while you learn. Get a totally free virtual trading account here-
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Music:
Danse Macabre – Low Strings Finale (Theme)
Kevin MacLeod
incompetech.com
Hour Glass- Deejay Domos
Duration : 0:2:24
11 UNDERSTANDING THE CAPITAL ACCOUNT
March 26, 2010 by admin
Filed under Forex Fundamentals
11 UNDERSTANDING THE CAPITAL ACCOUNT
Check out the entire free forex course (in process): http://www.FreeForexAcademy.com
The Free Forex Academy is a partner of InformedTrades.com, a community of traders dedicated to learning. At the Free Forex Academy, we are in the beginning stages of creating an entire comprehensive series of courses on forex trading.
This vid applies not just to forex, but to all markets, or for those simply interested in economics.
Music:
Danse Macabre – Low Strings Finale (Theme)
Kevin MacLeod
incompetech.com
Break Free
Hour Glass- Deejay Domos
Practice forex trading with real time charts and live price feeds for free while you learn. Get a totally free virtual trading account here-
http://clk.atdmt.com/FXM/go/166058821/direct/01/
Duration : 0:5:16
10 UNDERSTANDING THE CURRENT ACCOUNT
March 20, 2010 by admin
Filed under Forex Fundamentals
10 UNDERSTANDING THE CURRENT ACCOUNT
Check out the entire free forex course (in process): WWW.FREEFOREXACADEMY.COM
The Free Forex Academy is a partner of InformedTrades.com, a community of traders dedicated to learning. At the Free Forex Academy, we are in the beginning stages of creating an entire comprehensive series of courses on forex trading.
This vid applies not just to forex, but to all markets, or for those simply interested in economics.
Music:
Danse Macabre – Low Strings Finale (Theme)
Kevin MacLeod
incompetech.com
Manolo Camp – Hold on a sec
http://opsound.org/
Practice forex trading with real time charts and live price feeds for free while you learn. Get a totally free virtual trading account here-
http://clk.atdmt.com/FXM/go/166058821/direct/01/
Duration : 0:4:46
11 UNDERSTANDING THE CAPITAL ACCOUNT
February 15, 2010 by admin
Filed under Forex Fundamentals
11 UNDERSTANDING THE CAPITAL ACCOUNT
Check out the entire free forex course (in process): http://www.FreeForexAcademy.com
The Free Forex Academy is a partner of InformedTrades.com, a community of traders dedicated to learning. At the Free Forex Academy, we are in the beginning stages of creating an entire comprehensive series of courses on forex trading.
This vid applies not just to forex, but to all markets, or for those simply interested in economics.
Music:
Danse Macabre – Low Strings Finale (Theme)
Kevin MacLeod
incompetech.com
Break Free
Hour Glass- Deejay Domos
Practice forex trading with real time charts and live price feeds for free while you learn. Get a totally free virtual trading account here-
http://clk.atdmt.com/FXM/go/166058821/direct/01/
Duration : 0:5:16