Currency Trading Tips – A Simple Tip to Warn of the Big Moves

If you want to enjoy currency trading success, you need to catch and follow trends and spot turning points and this tool will help you – it’s an obvious tip in many respects but most traders simply don’t use it, so here it is.

It’s to look at other markets that impact on the currency you are trading and for the purposes of illustration let’s look at the US Dollar.

The dollar is a net importer of energy and high energy costs hurt it and the main one we are referring to here, is crude oil. In recent history when crude has hit high levels (and we have had recent tests of $100 a barrel) it has hurt the dollar and the retreat from this level has seen the dollar stabilize and rise.

Tops in the oil market recently have warned of dollar rallies.

Another major factor is interest rates.

Recently the dollar has been hurt by the perceived view that interest rates will be cut and you can get an idea of how much by looking at interest rate futures. When the interest rate futures rally too hard to fast and then fall, you can often see the dollar rally.

Why? Because traders get ahead of themselves – the recent rally in dollar euro was preceded by 100% consensus that interest rates will be cut by 50 bps (probably true) but gave 50 – 50 that rates would be cut by 75 bps (unlikely) the level of interest rate cuts factored into the market was overdone and prices in interest rate futures fell and the dollar rallied.

Tops in oil and interest rate futures can be used to warn of dollar rallies.

Another important variable is the stock market. Weak stocks hurt the dollar and strong stock markets support it – so watch it in fact if you want another tip:

If you are trading long term trends and only want to look at the prices of currencies once a day, do it just after the stock market closes. This closing price is always significant and while currencies trade 24 hours they are effectively thinly traded until Tokyo opens and the US stock market close sets the tone for the next day

Other currencies are also affected by outside influences:

The Canadian Dollar – Is a net exporter of oil and high prices of oil and other commodities are supportive of the currency

The Australian Dollar – Australia is a big producer of gold and when gold prices are high it supports the currency.

By looking at other markets that are important to a currency, you can often spot whether trends are going to continue or reverse. While it’s obvious that currencies don’t move in isolation, many traders do not bother to look at other markets for clues – if you do, you can get a trading edge.

A trading edge is what forex trading is all about and if you research this tip further, you will find it very useful as part of your forex trading strategy for bigger profits.

Currency Trading Tips: 2 Reasons Why Foreign Exchange Trading Can Help You Gain Financial Freedom

Over the last few years many so called “business gurus” have been sharing thousands of tactics to achieve financial freedom. An imperative thing to always remember is that several of these people you hear about are unique incidents and a lot of times what worked for them might not work for you.

In this section of my currency trading tips series I would like to discuss with you 2 reasons why I believe Forex can form a number of “unique” success stories and can allow you to achieve true financial freedom.

To tell you the truth I have realized that the less I trade (because I only take high probability trades) the more profits I produce.

I also know a number of other Forex traders who work on their trading at least 2-3 times as hard as I do and don’t make half the returns I earn. Why is that? Because they are chasing their own tail! Over trading and impulsive trading are the basic causes why most of the people never succeed as currency traders.

Remember; ensure that you always work smart instead of hard.

Foreign exchange can provide you the time freedom no other one investment can: The majority of individuals who invest stick to the standard investment vehicles such as mutual funds, stocks, bonds, or real estate. These are smart investments if you are OK with only creating a ROI of 3%, 5%, or 7 %( if you are lucky) per year. Nevertheless, if you want to earn some serious gains the currency market is what you should be investing funds in.

Trading the FX Market can allow you to earn enough capital to pay back your debt off, go on a vacation, put a down payment on a house, and far more.

As a FX trader you can trade from anyplace across the globe and at any moment you want. In the last number of years I have traded from several vacation destinations and countries.

Aside from that, quite a few times I am able to spend time with my family whenever I want. How many folks do you know that can take their family to the beach on a Tuesday afternoon? Not many.

This is the kind of time freedom the Forex market can give you. When you make a steady income stream from currency exchange trading you will be able to trade whenever you want and from where ever you want.

I hope you enjoyed this section of my currency trading tips and don’t forget to come back soon as I post useful articles very week.

Jay Molina
Pro currency trader & mentor