Read any semi-sophisticated financial mag or publication and you’ll see the same terms used over and over. The same five to ten catch phrases are used daily to explain a wide variety of market movements. The classics? “Reserve diversification” explains the forex market’s gyrations, “inflation fears” are to blame for falls in stocks and rises […]
Posted in Forex on November 5th, 2006 1 Comment »
With interest rates on currencies ever changing, so do the spreads on the interest rates, as well as the exchange rate between the currencies. When making a carry trade, you want the highest yield spread possible, and the most stable exchange rate possible (conditions favoring the currency you are buying are even better of course.) […]
For newbie forex traders, a mere mention of the term Non-Farm Payrolls (NFPs) brings delusions of grandeur. Fifty points or pips made in 50 seconds, that kind of thing. For stock traders, NFPs stand for fear perhaps more than anything else, as huge market swings can occur before the market open. This leaves most equities […]
Traders are often overly sensitive to words springing from the mouths of politicians and government economists. This is no different for those tracking the New Zealand (or “kiwi”) Dollar, where last month Finance Minister Cullen talked down the country’s currency and caused a 150-pip drop. Those buying up kiwi-denominated assets for their attractive yields were […]
Central bankers, especially in the US and Eurozone, try to be as methodical as possible. The market, however, tends to overreact to near-term news and get out of line with real central bank expectations. Weeks ago, the markets had priced in that the Fed would not hike again, and might even pause prior to the […]
Posted in Business, Trading, Forex on October 25th, 2006 No Comments »
In a world where a charting package is considered inadequate if it doesn’t have 200+ indicators, I find that basic charting and observation of price action simplifies the process. The most basic ideas allow information on the market participants’ sentiment to shine through. Reading market sentiment is the essential premise behind technical analysis, and basic […]