What affects currency prices?
In equity markets it is relatively easy to understand what affects stock prices. If the sector that the state of our choice belongs doing well, if revenues meet expectations, our stock will usually do well. In currency markets, on the other hand there are many more aspects that have an impact, whether there is a labor strike in France, if a bomb exploded in the Middle East, if the ECB to reduce interest rates if the weather in South America is bad, and anyway there are so many factors that affect rates currecncy that it is not possible for an individual trader to keep track of all of them will go crazy. We must therefore adapt to the credo, "Anything can happen at any time and I will have to adjust accordingly."
What we need is the ability to predict the price over the next few days / weeks. You have probably noticed how sometimes even the best news can not lift the dollar and the slightest hint of bad news put a nosedive and vice verca .... In those situations you need to know where the sentiment is and economic funamentals have very little meaning.
The problem that most traders will encouter is the lack of appropriate literature. The real world is inhabited by real people. And real people make unexpected decisions. Welcome to the world of currency trading
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Saturday, June 11, 2011
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