How To Trade Foreign Currency Exchange In The Most Profitable Way

Foreign Currency Exchange

If you want to make a lot of money in foreign currency exchange, then find a major trend and just become an expert in all of its wiggles, squiggles and jiggles. Use a momentum indicator (like “Stochastic RSI”, “SMI Ergodic Oscillator”, “Awesome Oscillator” or “Momentum”) to watch the ebb and flow of funds pulsing their way through the pair. If you do not trust yourself to pick a top or bottom correctly, then slap some “Bollinger Bands®” on your chart. If you still do not trust yourself, add a “Know Sure Thing” indicator and only trade when it confirms what all the other indicators are saying. For 2013, it’s going to be hard to beat the USD/JPY as a guinea pig for this kind of exercise – courtesy of the US Federal Reserve’s “taper” decision which will raise US interest rates across the board.
Beware of the end of calendar quarters (particular in December). Tax considerations loom large. Fund managers remember that their bonuses are tied to profits. Volatility increases.

Getting Started With Currency Pairs For Foreign Currency Exchange

One of the biggest problems that beginners face, in forex, is deciding which currency pairs to trade. Since specialising in 1 or 2 currency pairs is paramount if you really want to be a very successful trader, this decision can provoke an early identity crisis. If you enjoy buying more than selling, pick the AUD/USD, the AUD/JPY and/or the USD/JPY. All are positive interest rate carries, which makes them cheap to hold. On the other hand, if you enjoy the “risk-off” environment that usually precedes a selling spurt, then trade the EUR/AUD or the GBP/AUD. Because a short in either of these pairs is tantamount to a long AUD position, they’re not expensive to short for a long time period.

Trade Foreign Currency Exchange At The Right Time For The Best Results

At the end of every calendar quarter, many funds and indexes are re-balanced. In many instances, this leads to a situation whereby the euro suffers against other major currencies. In addition, the European Union has to pay the UK a “refund” at the end of every month and this “cheque” needs to be changed over to pounds – putting the value of the EUR under pressure. An astute trader would get ready to sell the EUR/AUD and/or the EUR/GBP near every month end, using a chart that was crammed with every major momentum indicator on the planet. Generally, such fund flows are spread out over a couple of days, but there almost always transacted through London. This is called “positional trading”.

Basic Tips For Trading Foreign Currency Exchange

Stay away from trading on Mondays, Fridays, weekends and holidays. Trade volumes are lower, spreads are not so tight and price spikes (which can toast your stop losses) are more frequent. Start out with a little “day trading” on Tuesday and Wednesday mornings, using a pair of 10- and 20-period weighted moving averages on a 15-minute chart that also has a “Know Sure Thing” (“KST”) momentum oscillator on it. Trade only big moves that are confirmed by very wide – and dramatic – swings in the KST. Realise that even the best currency pairs only trend strongly about 20% of the time, so be patient and wait for that “20% of the time” to occur. Use a leverage ratio of 50:1 or lower.




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