Last update 2121.01.05
If you are considering to trade forex, it is important to include fundamental analysis in your trading strategy. Thus, interest rates appear as one of the most relevant factors. So, Interest is what we pay when we borrow money. It is the cost of credit, and because of its compounding effect on loans, there are numerous lending services and credit products in the financial market.
💹 When trading forex, we suggest you consider long term results.
What you can learn ahead 🎓
- Explaining Interest Rates
- Why interest rates are so important in forex
- How to invest with AI without concern about fundamental analysis.
Explaining Interest Rates 🧐
One very important interest rate is how much the governments pay for loans. In the US, this interest rate is known as the Federal Funds Rate and is set by the Federal Open Market Committee (FOMC) of the Federal Reserve.
Changes in interest rates can have both positive and negative effects on the markets. Central banks often change their interest rate targets in response to economic activity: raising rates when the economy is excessively strong and lowering rates when the economy is slow. In the USA 🇺🇸, when the Federal Reserve Board (FED) changes banks’ lending rates, it has a ripple effect across the economy.
Why interest rates are important 🔬
- Interest rates determine the number of resources needed for related credit expenses, such as paying minimum loan payments towards outstanding debts.
- The Fed Funds Rate is the main mechanism to implement monetary policy between the government authorities and the market.
- In modern economies, have a well-controlled monetary policy that is public and transparent provides the flexibility of a free market without overly restricting commerce and trade.
Inflation is the rising of prices related to the cost of economic goods, including property, and wages, and is connected with the capital markets.
If companies are growing and the economy is expanding, there can be risks of prices increasing too fast relative to wages, which can have negative consequences.
By raising interest rates, governments can slow down the rate of growth so that it is more sustainable, along with helping to keep prices in line with wages.
On the other hand, price deflation and too much of a slowdown of economic growth can hurt jobs and the local economy, requiring stimulus and interest rates to be lowered.
By lowering interest rates, the cost of credit becomes cheaper, making it easier for consumers and companies to borrow money, which in turn, can stimulate economic growth.
Monetary policy and forex trading
To control inflation and deflation, monetary authorities use interest rates to keep various economic indicators such as the unemployment rate, within certain ranges. One of the biggest impacts of monetary policy changes can be on the country’s national currency.
In other words, when the US Federal Reserve changes interest rates or announces important updates or decisions, the effects on the forex market can be significant and lasting.
We discussed relating themes in the article titled “Fundamental Factors that Affect Forex.”
Therefore, while trying to carry out the monetary policy to manage the prices in real economies, exchanges rates are an important element in the equation:
“The variables of adjustment will be the exchange rate of national currency related to other currencies worldwide.”
Here is our point of contact between Interest Rates and Forex Pairs:
We see a low level of interest rates in the major economies continuing to persist. Therefore, all market participants watch carefully what’s going to be the next movement from the Fed, and within the markets for US Government bonds.
One example is the Treasury bond (T-bond) which are fixed-interest.
T-bonds are U.S. government debt securities with a maturity of between 10 and 30 years. They are considered a very low-risk asset, and almost equivalent to holding cash, and are commonly used as a benchmark against other assets.
Our view as of early 2020 is that US dollar tends to lose value facing other currencies. However, this forecast has changed due to the Covid-19 and news on trade war. Despite that, our AI has hit an impressive accuracy on live-trading.
The best way to trade forex
There are two ways to invest with our AI in forex without concern about fundamental analysis and analyzing interest rates.
1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.
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 $100.
- 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.
Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.
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, 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.
- Subscribe to a Wise-Plan.
- Open a Brokerage account. Check this article about the best forex Brokers.
- Set an amount and a position size on our Wiseinvest dashboard.
- Our AI will send you real-time trading alerts by email and Telegram.
- Copy the signals and paste them 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 by clicking here.
What is the AI performance in forex trading?
The Win Rate of our AI shifts as indicated by the period and can reach up to 95%. The performance depends on the proficient wilderness estimation metric, which implies that our model is beneficial at whatever point the Win Rate is more prominent than 60%. All techniques of our AI Trading framework look for stable returns and adequate outcomes to accomplish a normal return of 40% every year (APY), without the utilization of high influences.
We comprehend that what is important in forex trading is the conclusive outcome. Along these lines, the financial specialist needs to consider that Win Rate isn’t generally the best measurement to gauge execution in forex, as other signals suppliers unveil. For example, out of 100 exchanges, it is conceivable that lone 1 exchange is sufficient misfortune to make the 99 exchanges not productive. For this situation, the Win Rate would be 99%, yet the conclusive outcome would be unfeasible (negative).
We center around the arrival of 40% of APY and not simply on Win Rate.
It is basic to see that forex brokers may charge spreads, commissions, and overnight expenses in your trading account, and these elements can influence the AI execution. You can check our forex trading history to see more about AI Trading execution by clicking here.
How much do I need to trade forex with AI?
You can begin in forex trading with free AI signals or AI Trading records and make a store from only $100 in the brokerage. It is likewise conceivable to test utilizing a hazard-free practice account with our AI Trading framework. In any case, to do a proficient hazard the board in genuine records, we recommend you start from at least $100. Notice that some forex brokers require diverse starting stores to trade forex.
What is the trading strategy of our AI?
Our AI procedure is the mix of various AI Trading frameworks, with more than 100 features that characterize 40 distinct techniques which at the same time consider: Quotes of the 28 forex symbols, Supports, and Resistances in various time periods, Trends and Counter-patterns, Cross-markers, Index of each pair, Economic Calendar, Investors Sentiment.
Our AI examines those fundamental, technical, and sentiment factors that influence forex trading, and all models are assessed continuously utilizing various loads. In the wake of finishing the investigation, the decision of the signal emanation technique is made considering the improved probability of momentary benefit and the sum accessible for speculation.
Using technical analysis, our calculation considers not just the examples of different patterns, including backing and obstruction levels and cross-pointers, yet our AI is likewise ready to make its own ongoing record for every money pair, that is utilized to distinguish what is the best course and target.
Comparable to fundamental analysis in forex, the AI makes a connection inside the financial schedule to discover news information that can influence explicit cash sets.
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.