What influences currency prices?
Written by Forex Expert
In equity markets it is relatively easy to understand what influences stock prices. If the sector that the stock of our choice belongs to is doing well, if earnings are meeting the expectations, our stock will generally do well. In currency markets on the other hand there are many more aspects that have the impact – if there is a labor strike in France, if a bomb explodes in the Middle East, if ECB reduces interest rates, if the weather in South America is bad, if Warren Buffet has cold ☺, anyways there are so many factors that influence currency rates that it is not possible for an individual trader to keep track of all of them, you would go crazy. Therefore you have to adapt the credo “Anything can happen at any time and I will have to adjust accordingly.”
In this course we will not be discussing economic theories, Fisher, price equilibriums, etc… They have no practical use when it comes to short term trading. 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 a bad news puts it into a nosedive and vice versa… In those situations you need to know where the sentiment is and economic fundamentals have very little importance…
Problem that most would be currency traders encounter is a lack of appropriate literature. Most of the books on the subject deal with macro economic theories. If you want to study economics you are better off enrolling in a university class. In the real world with such knowledge and 10 bucks you can buy a lunch. Real world is inhabited with real people. And real people eat little geeks for breakfast. Welcome to the world of currency trading.
find out more on www.fxtradingstrategy.com
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About the Author
Forex trading expert with 5 years experience in forex trading... I'm ready to share some knowledge... and what about you? :)
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