Currency Day Trading
FACT: Most traders don’t have a set out plan when they first enter a position – they know when to enter, but don’t know when to get out
FACT: Algorithmic trading, or computerised trading is growing at exponential rates and will soon eclipse alternative trading models.
FACT: Central Banks globally are intervening in their own currency markets more than ever, in an attempt to stabilise their economies
The Foreign exchange market is the largest and most liquid market in the world.
Theoretically, exchange rate movements are determined by economic fundamentals such interest rate differentials, GDP projections, a country’s political stature and basic demand/supply movements. However, in practice, speculation is what drives the foreign exchange markets and it is what the market “anticipates” will happen next, that determine the future price of a currency.
However, there also are many advantages of using foreign exchange to “neutralise” portfolio and diversify your assets.
1. Diversification
You can use currencies to balance your portfolio. For example, it you believe the dollar will drop in the future, you can buy one or more currencies that you think will rise.
One difference between stocks and currencies is that stocks move independently of each other while currencies move relative to each other. A trader for example, may buy the USD, which moves inversely with commodity prices to diversify their portfolio.
2. Hedging your portfolio
At present, there is a growing fear of a “double dip” recession. Economic uncertainty along with the global central banks concerns about domestic inflation and potential interest rate fluctuations are just some of the developments that are being closely tracked by currency traders.
The currency market allows you to select currencies based on how you perceive their relative values will change over time. You can bet both ways, either long or short depending on which direction you think a particular currency is headed. You can allocate your risk across the currencies of several countries, allowing you to profit from changing global macroeconomic conditions. Click here to find out how to hedge your portfolio using currencies
3. Capital Appreciation
Currencies, like commodities can offer the potential for capital appreciation. If the value of your currencies rises against the dollar, you will profit. If your currencies fall relative to the dollar, you will lose money. Click here to receive our latest foreign exchange recommendations
4. Real-time basis
Unlike stocks, the news that drives currency prices is available to everyone on a real-time basis. In theory, there are no "insiders" in the foreign exchange market which operates 24 hours a day around the world. Since currency valuations are driven by actual monetary flows and events that influence a country's economic health, you can do your own analysis of how these events might impact its currency. Click here to receive our latest market reports written by our global traders
5. Risk vs. Reward
Trading foreign exchange is hard work, and a large proportion of traders lose money trading the foreign exchange market. Why? Because they don’t have the tools and research that the other investment banks have.
Click here to gain access to our latest results and learn more about Currency Trading
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