Hyips & Forex

Why is it important to keep a track of the economic developments of a country whose currency you are planning to buy?

Every currency represents a country in the Forex market. And therefore, the economic status of each country or nation is valued into its exchange. But with so many currencies in the market to trade for, it can get a little challenging to keep a track of every countries economic growth and development.

This is the reason why Economic Indicators are used by the traders to assess the strength of an economy they are interested in. A trader should always remain vigilant and informed about when these indicators are due for release in the market. It is also equally important to be updated on all the news releases which are to be released and can make an impact on the market.

What makes some economic indicators more important than the others?

Every economic indicator has the power to influence the Forex market, it’s just the degree of influence that ranges from low to medium to high. Which ever indicator is carrying the news capturing most of market’s attention gets more significance than the other ones.

News carrying high GDP data of a certain country or information about high employment rate in another is bound to make greater news than others, as these factors are directly effecting, rather boosting the economy of those countries.

Does difference between the consensus and actual results cause price movement?

It is not correct to just keep yourself updated as a trader with the latest of economic, political and geographical news. What is even more important is to know what effect has the current news caused in the market and why?

One of the ways to find this out is by also keeping a tab of the expectations of the fellow traders in the market, from the different economic indicators and the news they were supposed to carry according to the.

A study of whether or not a news flash is matching the market expectations is a highly significant aspect, as each market forecaster is expecting different news from each indicator, news in their favour.

Therefore, apart from knowing the current news update, what needs to be kept in mind is the consensus number which is met successfully. A huge variation between the consensus and actual results can be a valid source for price movement.

Should technical investors also focus on news releases?

Keeping in mind a case of any monetary market, whenever a market is being dominated by the fundamental factors such as economic data, Technical analysis are generally not in use. This is because of the reason that most of market traders become sensitive to these economic and political developments.

Also, with so many speculations arising in the market, more and more importance is given to such developments as well as the essential news releases like increase in a certain country’s export figures, which have the power to spike up volume as well as volatility in the market.

Forex charts are a great, time efficient and proven way to make bigger profits but most traders don’t use them correctly and here we will give you some key points to help you make bigger profits…

Let’s look at some key points for more profitable technical analysis with forex charts.

If you look at any forex chart you will see big trends that can last for many months and trend following these can be very profitable and if you want to make money out of them you must understand this key fact:

Most big trends start and continue from breakouts to new highs and lows on the chart and you must go with these breaks - most traders don’t. They want to wait for the pullback and of course it never comes and they are left behind. While it appears like you have missed the first part of the move, the odds of continuation are high so go with them.

Always be patient when using forex charts. You don’t get rewarded for your efforts or how many times you trade but being right with your trading signal. I know traders who trade just a few times a month yet make triple digit gains - so wait for the right opportunities.

When you have a trend you want to hit always check price momentum is on your side and make sure that you use momentum indicators that show price acceleration in the direction you wish to trade. Two great ones, you can learn, in about 30 minutes are - the stochastic and RSI. These two combined will increase your odds of success by getting the odds more on your side.

Never believe anyone who tells you there is a mathematical formula for market movement - there isn’t. If of course there was, we would all know the price in advance and there would be no market. So forget trying to predict and only trade the reality of price.

Its probabilities that you need to understand and like a successful poker player, you won’t win every hand - but if you keep trading the odds, you will win long term. When using forex charts, the simpler your forex trading method the better, as simple systems tend to be very robust and have fewer elements to break, than complicated ones.

I have used a simple breakout method which uses trend lines, RSI and the stochastic and made money with it for over 20 years sure, it’s simple but it works. Forex charts give you the reality of price before your eyes and you can spot areas of over valuation and under valuation. Humans create trends and they also (due to their emotions) push trends to far up or down in either direction.

You can of course ride trends - but you will also see big price spikes and history tells you they don’t last long and taking trades contrary to the majority can be very profitable. Charting is an art not a science and you need to practice your art. The successful captain of a ship uses charts to navigate safely, but he also knows that use them wrongly and he will drown and it’s a very similar situation in forex.

The Good News

You can learn forex charting in around 2 weeks and soon be piling up big profits in around 30 minutes a day spotting and hitting high odds trades and enjoying great profits. The good news is forex trading and using technical analysis is a learned skill and one you can master with a little practice.

The rally in emerging markets and accompanying revival of the carry trade can be seen clearly in the Hungarian Forint, which can now claim the distinction of being the world’s best performing currency. You’re probably scratching your head and/or rolling your eyes, but bear with me.

Beginning last July, shortly before the peak of the credit crisis, the Forint began to fall rapidly. It quickly lost more than half of its value against the Dollar, but then again so did a bunch of other currencies. The more relevant comparison is with the Euro, against which the Hungarian currency also fared quite poorly. Despite a 13% rally over the last two months, the Forint is still down 27% from its high last summer.

This is understandable, since Hungarian economic fundamenals are commensurately poor. “Household consumption is shrinking due to a drop in wages and narrower borrowing opportunities, while investments are hit by a lack of funds and a global economic downturn.” Factor in an 18.7% annualized decline in exports, and the result is a 6.4% decline in GDP for the most recent quarter.

Hungary’s economic woes have not gone unnoticed. “The International Monetary Fund, the EU and the World Bank have pledged 20 billion euros ($27 billion) of emergency loans to support Hungary, the biggest aid package for a European nation alongside Romania.” While financial markets have stabilized, credit default swap rates indicate investors are still concerned about the possibility of default. Meanwhile, Hungary has now been officially rejected (for the second time) by the European Monetary Union, such that its doubtful that Forint will ever be absorbed into the Euro.

Why, then, is the Forint rallying? The answer is simple: high interest rates. The benchmark Hungarian interest rate is a lofty 9.5%. While other Central Banks have been busy lowering rates to try to boost economic growth, “The Monetary Council of the central bank voted unanimously on April 20 to keep rates on hold at 9.50 percent.” Given the precarious financial situation, its economic policymakers are concerned that a drop in interest rates could precipitate capital flight and a currency crisis.

An exasperated Deputy Central Bank Governor explained to reporters, “As long as Hungary is considered such a vulnerable country, our interest rates cannot be lower than South Africa’s or Turkey’s; it’s not the Czech Republic, Slovakia or Poland you should compare us to.” She has clearly been paying monitoring the forex markets and knows that now is not the time to gamble with investors’ sudden return to Hungary.

Analysts remain divided over whether the upward trend in the Forint is sustainable. For its part, “Deutsche Bank recommends investors sell the euro against the forint on bets the rate difference will help the Hungarian currency gain 10 percent to 260 per euro in two to three months from 286.55 today.” However, it will be difficult for the economy to stage a serious economy for as long as the currency is rallying, which is why a survey of analysts revealed a median forecast of a medium-term decline in the Forint.

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