Of the various vehicles of securities that are speculatively traded (such as actions and commodities), bargaining currencies are one of the latest types of commercial vehicles. Most people know the stock market and usually address this financial market of one […]
Of the various vehicles of securities that are speculatively traded (such as actions and commodities), bargaining currencies are one of the latest types of commercial vehicles.
Most people know the stock market and usually address this financial market of one of the two perspectives: either they are active traders who regularly buy different stocks, or they take a buying and maintaining strategy that is much more long in the reach. And can last years or even decades.
Commercial currencies are very different than commercial or other types of traditional titles, one of the main differences being a currency merchant will buy or sell a pair of two different currencies as opposed to the purchase and sale of ‘a single stock.
How to decide currency pairs Buy or sell
Most of the main currency pairs are paired against the US dollar and it is wise to stick with established currency pairs because they have the highest and smallest offer / demand liquidity. This does not mean that there are no viable bargaining opportunities with other currency pairs, as well as exotic currency pairs such as the Japanese yen compared to the New Zealand dollar can sometimes make good trades .
All major national economies have a specific set of fundamental economic indicators that can be used as a basic barometer for the force of some currency. Among these indicators are the percentage of the labor market and unemployment, raw national and national products and the current interest rate of this currency.
As a general rule, a very large amount of trading activity will take place during the morning that a significant fundamental economic indicator is released, such as the first Friday of each month when data from the non-agricultural labor are published in the USA.
Important considerations for currency pairs
Trading in the foreign currency market does not invest and it is not a game: it speculates or taking small risks calculated with the hope of gaining a profit.
Since negotiation on the currency market is highly speculative, it is wise not to exchange with what is called venture capital, which means the money you would be able to lose. The success of negotiation requires emotional and financial discipline and negotiate with any money other than venture capital can make it very difficult to maintain an emotional detachment of your business results.
It is also important that you formulate a sound trading strategy, even if it is only a basic basis. In the same way that you will not start a company without plan, you should not blindly exchange without a plan, because it only played and do not speculate. An example of a basic trading strategy would be to sell the euro if its labor market indicates lower growth than normal or buying the US dollar when interest rates increase.