Know what moves currency markets
Any country's macroeconomic is always depending on the economic data releases, policy decisions, and political events, it will have high impact on the currency. It is wise to know what 's happening around you.
Understand the strategies.
As a trader you must understand the three crucial trading strategies, which are used by the currency leaders,. the carry, momentum, and value trade. The carry strategy sees investors selling currencies with low interest rates and buying those with high rates; Momentum tracks the direction of currency markets and the valuation strategy takes a position based on the investor’s view of a currency’s value.
Decide on your trading strategy
Determine what is your job description; macro-driven or technician?, this plays vital role in terms of trading, A macro-driven guy is the one who sees the big picture, the on who call the shots that affect the currency pair, and the technician is the one who monitor at the changes to a currency pair and understand the means from a macro-perspective.
Manage risk
Be a risk taker, you must be prepared on the effect of being a trader. Do not risk more than you can afford to lose. Think about how you can mitigate your downside risk; make use of trading strategies such as stop losses or limit orders.
Stick to what you know
Concentrate small amount pairs and commit to thorough and deep research on those, rather than superficial research on the many. Some key pints to consider when analyzing a currency pair are its liquidity, transaction costs , and volatility. As a general rule, major currencies usually have better liquidity, tighter spreads, and lower volatility, versus emerging-market currencies, which have poor liquidity, wide spreads, and volatile movements.
Plan your trade, and trade your plan
When Trading always have a plan, do not to get caught up in the moment--the markets are fast moving and in the short-term can be unpredictable.
Research, research, research.
Always update yourself of the movement of th currencies once a week this are fast moving, so be ready for it. Research always innovate on what you've learn.
Keep your emotions in check.
Don't let emotion control over you, you may make a bad decision always calm down and rethink the possibilities on trades, review if it is for a good cause.
Don’t expect to win on every trade.
Trading is a long term goal, don't be upset if lose some trades, always look the positive way, look for ideas on what went wrong on that particular situation, write the things that would be better for the next trade, always innovate your strategy.
Don’t put all your (nest) eggs in the currency basket.
Be sure you are fully aware of the risks and rewards of doing so, because commitment to one asset-class is not recommended. The same applies for currency trading itself. Risk diversification allows you to mitigate your risk by spreading it out, that is, not placing all your faith in a single trade. Diversification is key, no matter what asset class you’re investing with.
n Monday, the stock market slipped as SandP managed to get near their bear market where both SandP 500 and NASDAQ are placed while investors abandoned their attempts to recovery. The industrial average of Dow Jones saw a fall of 0.5% and that of Standard and Poor’s 500 lost an index of 0.8%. Even NASDAQ lost 0.1%. Monday morning stocks saw a downward session and the investors were unable to leave their worries about the financial organizations before the start of earning report.
Based on Lehman Brothers, Freddie Mac and Fannie Mae ,the financial corporation, will be required to raise a total of $75 billion of capital in case the new accounting rules takes place. With the upcoming earning reports of the second quarter there are fears amongst the investors about the crisis in the credit market. According to the president of Windham Financial Services, Paul Mendelsohn said, “there’s a fear that banks will have to go to the well again and raise more capital and that they may have to sell mortgage-backed securities again. That played a tremendous role in terms of the volatility.”
The president of Fed bank Janet Yellen is strongly being cautious due to the weak of the economy. There was a comeback of stocks post 3 major gauges that hit bear levels and saw 20% decline in comparison to its recent highs. However, this was proved unsustainable while stocks falling. Bond prices organized while bringing down the yields. In comparison to euro, dollar saw a fall but saw a gain versus yen.
The sell off of oil prices did little to remove worries of inflation and consumer spending. However, the low prices of oil led to the fall of stocks for Chevron and Exxon Mobil.
Well, with the second quarter result of Dow, investors will be readying themselves for a new session of earnings.
source: www.caymanmama.com