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Trading Profitably on the Foreign Exchange Market
You may be asking yourself "how does one begin to trade
profitably as a currency trader?".
First, it is important to closely monitor foreign equity
markets to attempt to predict or model how their respective
currencies will perform against other currencies, ideally,
currencies that are not very closely related, nor proportional,
to the former currency.
For example, Mexico's economy is closely linked the the U.S.
economy, in some respects, but in other respects, they are not
very directly proportional since Mexico's economy is currently
improving as a consequence of increased consumer financing, an
increased number of remittances from family members in the U.S.,
and other factors.
Back to our original point, when you begin to notice that an
equity market is about to become bullish, it may be a signal that
the currency of the country in which the equity market you're
looking at is based may be about to rise. Conversely, if the
market turns bearish, that may be a bad sign for the country's
respective currency. Nevertheless, you may still be able to
capitalize on bear markets and economies by short-selling a
currency pair. That is one distinguishing feature in currency
trading: you may bet against a country's economy (including your
own!) by betting against that country's respective currency.
Other currency fundamentals to consider include a country's
interest rates, deficit, exports and imports, as well as, and
probably very importantly, oil prices. Look at how the recent
OPEC meeting affected oil prices and how that in turn had a
considerable effect on the DJIA.
Joshua M. Kunken is Currency Analyst for ForeignMarketWatch.com.
His articles have been featured at ForexTrack.com.
MORE RESOURCES updated Tue. March / 21 / 2023
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