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Timing Forex Trades
The most reliable route to profitable currency trading is accurately timing Forex trades. Fundamentals and varying market sentiment drive prices. The degree that you can forecast changes in fundamentals, timing Forex trades will be profitable. And to the extent that you can use technical analysis of Forex pairs you can commonly profit from short term swings in pricing caused by market inefficiency. With making money as a motive here are a few thoughts about timing Forex trades.
Long Term Market Movement
Long term economic trends drive currency rates. The steadily increasing American debt served to drive down the US dollar versus the Yen for years. This happened despite the economic stagnation in Japan following the collapse of their hidden debt bubble more than two decades ago. Timing Forex trades is this case was simply a matter of converting dollars to Yen and waiting to convert back until one needed to use some the profits.
Swing Trading Currencies
The Russian ruble is doing poorly. This is a result of economic sanctions imposed on Russia by the EU and USA. The root cause is Russian interference in the affairs of Ukraine, a neighboring nation. Things have gotten so bad that Russia has annexed Crimea, a part of Ukraine and has covertly and overtly supported Russian speaking rebels in the eastern and southern regions of Ukraine adjacent to Russia. While Ukraine just had its first free elections after overthrowing a corrupt strongman the breakaway regions of Ukraine have held their own elections and rebels there are looking for independence and continue to fight, with Russian backing, to control more of Ukraine. We have written about part of this in our article, Forex response to Russian Invasion of Ukraine. Meanwhile Russia may play a pivotal role in getting Iran to back off of its quest to become a nuclear power. This sort of give and take in international affairs often leads to the resolution of issues such as with Ukraine. Another plus for Russia is the recently signed contract to let natural gas from Russian fields flow into Ukraine and onward to Europe. For most of this year the smart thing to do was sell and stay out or the Ruble. However, if fences are mended between Russia and the EU and North America swing trading of a recovering Ruble could be profitable.
Minute by Minute Market Adjustments
Nothing is perfect and that certainly includes pricing in the Forex markets. Some of the best profits in currency trading happen in the middle of days with moderate volatility in very transparent situations. Smart traders simply use technical trading of major currency pairs with statistical analysis based tools. Scalping is a common approach in which a trader recognizes a short trend, enters a trade and quickly exits with a profit. He does this repeatedly throughout the day. By taking advantage of repeated, minute by minute market adjustments pro