Forex Exchange Update
Friday, August 14, 2009 14:53Successful Forex Trading is certainly possible and if you are willing to take the time to do your homework and follow the politics and economy of the currencies you are looking to invest in can be very lucrative. A good example is a trade that was made in New Zealand where they have the highest interest rates in the developed world, having the highest interest rate in the developed world New Zealand is a place where a lot of capitol flow or foreign investment takes place to yield high returns. The Japanese love to invest in debt in a high yielding currency in a bond called Uridashi bonds. The primary reason the Japanese are so interested in Uridashi bonds is the high rate of return versus the 1% or less available for investment at home in Japan.
To show you how Uradashi bonds can lead to good and profitable Forex Trading we saw that there were a lot of Uridashi bonds being purchased in New Zealand dollars which meant the capital flow would increase and so would the currency. The next step was to decide is when the New Zealand Dollar increased or went long which would be the best currency to pair with it to go short the United States Dollar or the Japanese Yen. The Forex Trading pair that looked the best was the NZD/USD and we bet on this based on the Uridashi purchases and made a very good trade and the pair raised over 40 points in a day.
Another key factor to understanding and making good Forex Trades is to watch mergers and acquisitions as it will not change currency value long term but can certainly effect it short term and make for profitable Forex Trades. The way that mergers and acquisitions can affect the Forex Trading market is that typically a company from one region like Europe is looking to purchase a Canadian Company or its equities and assets. When a company is being purchased by a foreign company typically they have to purchase the currency to make the acquisition which is usually in the billions which can raise the currency for days or even weeks at times. If you follow the interest of acquisitions and international mergers you can make good short term Forex trades, a good example is in late 2006 there was a lot of interest in buying Canadian companies assets and equities and assets by Asia, Europe, and the Middle East and the economy was weak in Canada but the currency stayed strong due to foreign investment interest. In November 2006 after a Canadian government announcement by Stephen Harper a newly elected conservative that Canadian income trust which currently had certain tax advantages would be taxed like all other Canadian securities much of the foreign investment interest went backward and the money started flowing out of the country and then caused the Canadian currency to decline and investing on Canadian currencies decline was also a very profitable opportunity for Forex trading. To show you how profitable we made 45 points in a few hours betting on a strong United States Dollar over the then weakening Canadian Dollar based on this change in the market.
As I stated international mergers and acquisitions can be a good short term way to make profitable Forex Trades as to buy capital assets or equities countries have to first buy currency which temporarily increases the value, but when as in the Canadian merger situation when the interest in acquisitions changes the currency will drop as fast as it went up and you can make money in both directions if you watch the trend and trade accordingly.
Forex Trading can be very profitable and tricky to accurately predict at the same time, the key factors that change currency value are as I have stated interest rates, economic growth, politics, trade and capital flow, and international mergers and acquisitions. To be truly successful at Forex Trading you need to understand how to see when the five factors will change the currency at the same time, for example a currency may look strong due to interest rates and be kept from increasing due to political situations. Another good example is a currency may look as though it may increase due to economic growth and stay at current value due to trade flows or acquisitions. If Forex Trading was easy then everyone would be doing it, it is a little like a game of chess, you need to understand the game and be a few moves ahead of the market by doing your homework and watching for coming events or moves in the world market.
Forex Trading is a lot like chess and you can either learn to play by spending hours or sometimes years studying the game and trends, or you can look for a good qualified and successful Forex Trading Analyst to guide you in making good and profitable Forex Trades.
Popularity: 1% [?]
Related to Forex Exchange Update
Forex trading can be a very good investment but to invest successfully you need to do you homework and consider the main factors that effect ...
ECONOMIC GROWTH AND HOW IT CAN LEAD TO PROFITABLE FOREX TRADING In doing successful Forex Trading you need to do your best to predict movements ...
Forex Trading can be very profitable if you are good at predicting economic and political changes, as many times this can increase currency which leads ...
Forex Trading can be very profitable as I have stated if done properly and if you are willing to look at the whole picture and ...
Forex Trading is more or an art like being good at chess rather than a science, and though analysis of data and looking at the ...