the currency rallied from 102 to a high of 121.40 before ending at 117.80. The more you know about the Who, the better off you will be in understanding how accurate the news. Getting to Know Interest Rates, knowing where interest rates are headed is important in forex trading and requires a good understanding of the underlying economics of the country in question. If, however, the Federal Reserve decides at its meeting to leave rates unchanged, the.S. Yield and Return, when it comes to trading currencies, the key to remember panneau forex dimension is that yield drives return. But information is king when it comes to making successful trades. Lets take a look at some of the basic concepts that all forex investors need to understand. The internet is the obvious winner in our book, as it provides a wealth of options, at the speed of light, directly to your screen, with access from almost anywhere in the world.
Lucky for you, most economic news thats important to forex traders is scheduled several months in advance. The Bottom Line While the massive size and liquidity of the foreign exchange market ensures that new information or news is generally absorbed within minutes, its unique features may result in new information being absorbed over a longer period in some situations. Lets assume that New Zealand has an interest rate of 8 and that Japan has an interest rate.5 In the currency market, interest rates are calculated in basis points. Thats 94 dollars in interest after only 10 days, 940 worth of interest after three months, or 3,760 annually.
Therefore, the spread between.S. You don't have to be a daily trader to take advantage of the forex market every time you travel overseas and exchange your money into a foreign currency, you are participating in the foreign exchange, or forex, market. Generally speaking, countries that are performing very well, with strong growth rates and increasing inflation will probably raise interest rates to tame inflation and control growth. No wonder youre here to get some education! You could even throw a little BBC in there. Are we talking analysts or economists, economist or the owner of the newest forex blog on the block? By strictly focusing on these eight countries, we can take advantage of earning interest income on the most creditworthy and liquid instruments in the financial markets. As easily as it increases profits, it can just as quickly cause large losses. In the event of new information, the adjustment process for such speculative positions is likely to be almost instantaneous. This is what we call an expanding interest rate spread. The forex market also offers tremendous leverage often as high as 100:1 which means that you can control 10,000 worth of assets with as little as 100 of capital.
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