Trading Successfully with Foreign Exchange Rates For Better Profits

foreign exchange rates

Foreign exchange rates reflect economic and political reality on a dual country basis. This means that when you’re trading, you had better keep your eyes on news about both countries involved in a currency pair. For instance, if you are enjoying a “positive interest rate carry” by being long the AUD/JPY, then it behoves you to watch the actions of the central banks that are providing you that opportunity – the Reserve Bank of Australia and the Bank of Japan. Keeping up with the monetary policies of central banks isn’t that hard. Most global economic calendars note the dates of monetary policy meetings for the Bank of England, the European Central bank, the Bank of Japan and the US Federal Reserve. The banks, themselves, all have detailed websites. Beyond this, Reuters and Bloomberg do a pretty good job of getting any breaking news out; both have free websites.

Trading price channels is one way for forex newbies to get their feet wet. Oscillators, like “Stochastic RSI”, help define trade entry/exit points.

Improving Knowledge Of Foreign Exchange Rates

In forex, knowledge is power. Thus, it’s not surprising that most expert traders never stop learning. If they know a lot about Europe and all euro-related currency pairs, they turn their attention to Asia. If they know a lot about Asian and Australian-related currency pairs, they bone up on what’s cooking in Europe. “Obscure”, but very valuable, informational resources include the English website of “NHK” (the BBC of Japan), “Caixin Online” (an excellent Chinese, investment-oriented website, available in English) and the “Business” section of the Sydney Morning Herald (found at smh.com.au). For what major commercial bank research departments are thinking, try efxnews.com. The “Opinion” section of bloomberg.com is worth the time in pursuing; ditto with Mr. Evans-Pritchard’s comments at telegraph.co.uk.

Importance Of Analyzing Foreign Exchange Rates For Traders

The forex marketplace is global, with over $4 trillion/day in turnover. When faced with such a large market, moving millions per minute, the only way that you can make sense of such a phenomenon is to chart it – either on a weekly, daily or hourly basis. Short-term traders favour hourly charts; long-term traders will usually back off to using daily charts. All have their favourite indicators to help see trends and trading points. Short-termers like to use exponential moving averages because they are quite sensitive to changes in direction. Longer-term traders prefer channel indicators married with oscillators. Each currency pair trades a little bit differently, so you will have to do some experimentation to see what works best for you.

Increasing Trading Profits From Foreign Exchange Rates

Using a combination of technical trend channelling indicators (like Bollinger Bands®” or “Donchian” or “Keltner” channel indicators) on a daily chart, plus 1 or 2 oscillators, can help clearly define trends as well as trade entry/exit points. If you are a beginner, try 1 of any of the aforementioned channel indicators with 2 of the following oscillators, on the same chart: “Stochastic”, “Parabolic SAR”, “Relative Strength Index” (“RSI”) or “Stochastic RSI”. Now, take a good look at the chart, noticing when all indicators are giving you the same signal (buy or sell). If you are having trouble seeing such signals, make sure you have the “Parabolic SAR” oscillator turned on and look where the little dots switch their paths.

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