The Euro or EUR and the US Dollar or USD are two of the most profoundly traded currencies around the globe. This pair has created a noteworthy route last 2009. It had begun at 1.391700 and peaked at 1.512000. However it still traded at 1.434300 some time in 2009. So, it can be concluded that 2009 was the strong year of the EUR and the weak year of the USD. Nevertheless, what can be foreseen about these currencies this 2010? What will be the result of the EUR versus the USD?
Basically, the answers to the questions are unclear since nobody knows what will really happen. So, it is better if you decide for yourself based on your own beliefs and not based on the predictions of other people.
However, it may be helpful if you still try to think over the recommendations and suggestions of other people. For instance, some people believe that 2010 is the year, which opposes 2009. So, based on this belief, it might be claimed that the USD will go up in value and the EUR/USD will fall down. Trading Euros For Dollars
Such predictions are based on these three factors:
1. In 2009, the USD went bad because all traders had based their trading strategies on the financial and economic crises that struck America. So, the Euro had risen over the US dollar. However, such crisis is global. That is why, there is a very likely possibility that the Europe will soon experience the same crises and the Euro will go down some time mid 2010.
2. The Federal Reserve's head named Ben Bernanke has claimed that there might be several hikes on interest rates in America. And even if the increase is tiny, it can still have the ability to improve the value of the US dollar.
3. The European Union seems to be disunited. There are several countries that readied themselves for the upcoming crisis. But there are some countries, which have immensely suffered because of this. For example, Spain and Greece have undergone a decrease in their credit ratings; and both of them use the Euro.
Wednesday, October 13, 2010
Foreign Currency Hedging Example - Hedge Trading On The Forex Currency Market
Trading on the forex currency market can be a volatile yet exciting form of investment and certainly has the potential of bringing vast rewards if done so properly. Foreign Currency Hedging Example
However it should be accepted that forex currency trading could also be a very risky investment as the market can swing both in an upward and downward movement in a split second depending on the market conditions.
Some people, and indeed institutions, try to control these volatile market swings by hedge trading their investments.
For instance it is possible with some forex trading systems to hold both a long and short position on a currency pair, which means that you have both bought a lot of currency with a view to profiting from the rise and the fall of a currency pair.
For example a currency pair could be the Great British Pound as related in value to the US Dollar or GBP/USD, and the rise in this market would be referred to as a long position as opposed to a fall in this currency market, which would be referred to as a short position.
In practice what this would mean is that either way the market moves you are gaining on one position while you lose the equivalent amount on the other position.
The net result of this on first sight would suggest that you cant particularly loss money but also you cant gain any money so how can this be of any particular use in an effort to successfully trade on the forex. Foreign Currency Hedging Example
Well of course no money can be made until you close one of the positions, which would be the one that is losing money while leaving the other currency position open that is gaining profit to move further and gain you an overall profit.
You could for example close the losing position at a 20 pips loss and then close the profiting position at a 40 pips gain, giving you an overall profit of 20 pips.
Pips are the single value point movement of the currency and where the GBP/USD moves from 1.8800 to 1.8840 would be a 40 pips difference.
It should be remembered of course that a currency pair could well move in one direction and exceed your 20 pips level to close the position but then reverse in direction and never reach your targeted gain level of 40 pips so even hedge trading is not a guarantee of certain success.
The 20 pips loss level and 40 pips gain level are only used here as an example and if you use this method of trading you would be well advised to set your own levels that you feel are right and acceptable to your own currency trading experience and acceptable risk strategy.
All that can be said is that it does offer an alternative method of currency trading but should still be ventured into with predetermined loss limits and careful study of the currency market.
With most online forex currency trading sites a demo account can be opened first to help you experience what forex currency trading is all about and this is an ideal way to first get involved without any loss of real money
However it should be accepted that forex currency trading could also be a very risky investment as the market can swing both in an upward and downward movement in a split second depending on the market conditions.
Some people, and indeed institutions, try to control these volatile market swings by hedge trading their investments.
For instance it is possible with some forex trading systems to hold both a long and short position on a currency pair, which means that you have both bought a lot of currency with a view to profiting from the rise and the fall of a currency pair.
For example a currency pair could be the Great British Pound as related in value to the US Dollar or GBP/USD, and the rise in this market would be referred to as a long position as opposed to a fall in this currency market, which would be referred to as a short position.
In practice what this would mean is that either way the market moves you are gaining on one position while you lose the equivalent amount on the other position.
The net result of this on first sight would suggest that you cant particularly loss money but also you cant gain any money so how can this be of any particular use in an effort to successfully trade on the forex. Foreign Currency Hedging Example
Well of course no money can be made until you close one of the positions, which would be the one that is losing money while leaving the other currency position open that is gaining profit to move further and gain you an overall profit.
You could for example close the losing position at a 20 pips loss and then close the profiting position at a 40 pips gain, giving you an overall profit of 20 pips.
Pips are the single value point movement of the currency and where the GBP/USD moves from 1.8800 to 1.8840 would be a 40 pips difference.
It should be remembered of course that a currency pair could well move in one direction and exceed your 20 pips level to close the position but then reverse in direction and never reach your targeted gain level of 40 pips so even hedge trading is not a guarantee of certain success.
The 20 pips loss level and 40 pips gain level are only used here as an example and if you use this method of trading you would be well advised to set your own levels that you feel are right and acceptable to your own currency trading experience and acceptable risk strategy.
All that can be said is that it does offer an alternative method of currency trading but should still be ventured into with predetermined loss limits and careful study of the currency market.
With most online forex currency trading sites a demo account can be opened first to help you experience what forex currency trading is all about and this is an ideal way to first get involved without any loss of real money
Forex Trading Methodology Gene Ballard - Catch Every Major Move With This Simple Method
Many traders like to pick highs and lows and try and predict what will happen next but this way of trading is doomed to failure, as its simply hoping or guessing. If you use the timeless methodology enclosed, you will catch every major move and it's very simple to learn and make big profits with...
If you want to get the odds on your side, you need to forget prediction and trade the reality of price change. There is no better way of doing this than buying and selling breakouts. All you do is buy or sell a valid breakout to a new high or low, on a Forex chart. So what is a valid breakout?
A valid breakout is one that traders feel is an important level of support or resistance and general rules are:
- A minimum of two tests but the more tests the better Forex Trading Methodology Gene Ballard
- If these tests are in different time frames, the level will be more important
- If these tests are wide apart, it adds more validity to the breakout
You are looking for levels that are physiological and the more uncomfortable the trade feels to take the better. Most trades simply cannot follow breakouts and the reason is routed in human psychology. Traders see a break occur but they have they think, they have missed part of the move, so they better wait for prices to pullback and of course this doesn't happen and they miss the move.
The savvy trader doesn't mind he has missed a bit of the move, he knows the odds are on his side and the move will continue, so he makes money and that's all he's interested in. If you look at any chart of a currency, you will see every major trend start and continue from breakouts, so it's a smart way to trade and puts the odds on your side.
Breakout trading will work, as long as markets trend. So of you want to win, trade breakouts and you can enjoy currency trading success.
If you want to get the odds on your side, you need to forget prediction and trade the reality of price change. There is no better way of doing this than buying and selling breakouts. All you do is buy or sell a valid breakout to a new high or low, on a Forex chart. So what is a valid breakout?
A valid breakout is one that traders feel is an important level of support or resistance and general rules are:
- A minimum of two tests but the more tests the better Forex Trading Methodology Gene Ballard
- If these tests are in different time frames, the level will be more important
- If these tests are wide apart, it adds more validity to the breakout
You are looking for levels that are physiological and the more uncomfortable the trade feels to take the better. Most trades simply cannot follow breakouts and the reason is routed in human psychology. Traders see a break occur but they have they think, they have missed part of the move, so they better wait for prices to pullback and of course this doesn't happen and they miss the move.
The savvy trader doesn't mind he has missed a bit of the move, he knows the odds are on his side and the move will continue, so he makes money and that's all he's interested in. If you look at any chart of a currency, you will see every major trend start and continue from breakouts, so it's a smart way to trade and puts the odds on your side.
Breakout trading will work, as long as markets trend. So of you want to win, trade breakouts and you can enjoy currency trading success.
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