Basics

How CPI, GDP and Interest Rates impact forex trading


There’s an old maxim that says, “money goes where it is treated best.” The Consumer Price Index (CPI), and the Gross Domestic Product (GDP) of a country are important indicators of the economic health of a country. This is the strength behind a given currency.

However, what really treats investor money well is interest rates.

What you will learn ahead

  • What is the most important economic news for forex
  • How these economic events affect forex trading
  • How to trade forex efficiently using AI trading

If you think of interest rates as a good treatment for money, then that maxim is a good way to explain the flow of forex currencies. When the interest rate that a central bank pays on a country’s currency increases, or is relatively higher than similar currencies, then investors want to own that currency so that they can collect the interest it will pay. Higher interest rates increase the demand for the currency.

You can think of interest payments on currencies similar to dividend payouts on shares of stock. Shareholders of record get dividend payouts when the issuer of the stock determines it is time to pay a dividend.

But unlike stocks where dividends are paid out according to a monthly or quarterly schedule, interest payments on currency are paid out daily.

 

Anyone who is holding an interest-paying currency at the beginning of a trading day (that’s 17:00 EDT / 22:00 GMT / 09:00 JST), gets a payment added to their forex trading account. However, anyone who is short an interest-paying currency must pay out of their account.

This is an important fact for forex traders to understand if they hold positions overnight–especially a leveraged position. Traders need to understand what kind of interest will be added or subtracted from their balance on a daily basis.

So consider the example of a trader who has a $6,000 account and holds a long position of one standard lot of the forex pair USD/JPY pair for just over 24 hours.

This trader receives the interest paid on the base currency (USD) and pays out the interest paid on the quote currency (JPY).

Even though their account balance is only USD 6,000, they are paid interest on the entire standard lot size. It is as if they had a $100,000.00 balance.

If there were a 1% annual difference between these currencies, then a long position might pay out $1000 (annual rate) / 365 (days in a year) or $2.73 for one day.

If they held that position short, however, they will expect to have money taken from their account if the trade remains open. (Note this rate changes often, but Oanda has a nice calculator for this amount on any given pair here).

Most of the time, these charges are incidental to forex traders, however large commercial banks know and understand these interest rate charges and take advantage of them.

It is not hard to imagine how a large commercial bank could earn millions of dollars or euros overnight by simply holding positions billion-dollar positions, enough to cover their reserves.

That’s why traders need to understand this impact and anticipate how trends might change if interest rates change.

For now, Wiseinvest.ai users can expect that the algorithmic signals generated on their dashboard will take these costs into account.

That means they don’t have to worry about losing money overnight on leveraged positions unless the AI algorithm has calculated that it is worth the risk—and the potential reward.

The best way to trade forex

There are two ways to invest with our AI in forex:

1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.

automated trading with ai bot

By trading forex automated with AI, you will save time and improve your performance without monitoring the market and managing trading platforms.

With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account every time that our AI system identifies a new worthy trading opportunity. You can monitor the AI trading performance in real-time directly on our dashboard.

Automated AI trading benefits

  • Setup in 3 minutes.
  • Totally hands-off, from anywhere.
  • Invest from just $1.
  • APY of 40% over the past 13 years*.
  • Lightning-fast execution & no slippage.
  • No commissions, no management fees.
  • Portfolio with 40 different automatic strategies.
  • No MT4/MT5 or other platforms required.
  • Test with a risk-free practice account.
  • Trading results directly on our dashboard.

Would you like to open a forex broker account? Our AI is integrated to trade automated with the brokers Oanda and FXCM. Click here to open an account with FXCM or here to open with Oanda. Those are some of the best forex brokers in the world.

2. Manually with AI forex signals.

Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5, and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.

There are five unique variables for each AI signal, and each must be copied exactly, in order to match the performance of the signal as close as possible.

Each AI forex signal alert consists of the following five data points:

  • Symbol (forex pair)
  • Direction (long or short)
  • Position size (number of units or lots)
  • Take profit (price level to exit with maximum gain)
  • Stop loss (price level to exit with maximum loss)

Check out how to trade with our AI forex signals.

  1. Subscribe to a Wise-Plan.
  2. Open a Brokerage account. Check this article about the best forex Brokers.
  3. Set an amount and a position size on our Wiseinvest dashboard.
  4. Our AI will send you real-time trading alerts by email and Telegram.
  5. Copy the signals and paste into your Brokerage account.

All forex signals are sent every time that our AI trading system identifies a new trading opportunity. Our trading strategies are developed on a variety of time frames such as 4 and 8 hours.

Wiseinvest AI forex signals are Market Orders and you do not need the entry price. You can copy each signal while it is available on our dashboard. We do this way to assure that traders will just place signals while they are good to be traded.

You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.

When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate pips and change the leverage in your forex broker account. Learn more about leverage in forex trading clicking here.

What is the AI performance in forex trading?

The Win Rate of our AI varies according to the period and can reach up to 95%. The performance is based on the efficient frontier measurement metric, which means that our model is profitable whenever the Win Rate is greater than 60%. All strategies of our AI trading system seek stable returns and sufficient results to achieve an average return of 40% per year (APY), without the use of high leverages.

We understand that what matters in forex trading is the final result. Thus, the investor needs to consider that Win Rate is not always the best metric to measure performance in forex, as other signal providers disclose. For instance, out of 100 trades, only 1 trade may be enough loss to make the 99 trades not profitable. In this case, the Win Rate would be 99%, but the final result would be unfeasible (negative).

We focus on the return of 40% of APY and not just on Win Rate.

It is essential to observe that forex brokers may charge spreads, commissions, and overnight fees in your trading account, and these factors can affect the AI performance. You can check our forex trading track record to understand more about AI trading performance clicking here.

How much do I need to trade forex with AI?

You can start in forex trading with free AI signals or AI trading account and deposit just $1 in the broker. It is also possible to test using a risk-free practice account with our AI trading system. However, in order to do efficient risk management in real accounts, we suggest you start from at least $100. Notice that some forex brokers require different initial deposits to trade forex.

What is the trading strategy of our AI?

Our AI strategy is the combination of different AI trading systems, with more than 100 features, that define 40 different strategies which simultaneously consider: Quotes of the 28 forex pairs, Supports & Resistances in different time frames, Trends and Counter-trends, Cross-indicators, Index of each pair, Economic Calendar, Investors Sentiment.

Our AI analyzes those fundamental, technical, and sentiment factors that affect forex trading, and all criteria are evaluated in real-time using different weights. After completing the analysis, the choice of the signal emission strategy is made considering the increased likelihood of short-term profit and the amount available for investment.

Using technical analysis, our algorithm considers not only the patterns of various trends, including support and resistance levels and cross-indicators, but our AI is also able to create its own real-time index for each currency pair, that is used to identify what is the best direction and target.

In relation to fundamental analysis in forex, the AI makes a correlation within the economic calendar to find news data that can affect specific currency pairs.

Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.

The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. FXCM warns that 74.74% of retail forex traders lose money trading CFDs.

The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.