practical approaches to forex
TRANSCRIPT
By www.ForexConspiracyReport.com
Practical Approaches to Forex
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There are several practical approaches to Forex trading.
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These depend first of all on why you are trading currencies.
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http://www.forexconspiracyreport.com/practical-approaches-to-forex
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Second practical approaches to Forex depend on the depth of your knowledge about specific currencies.
http://www.forexconspiracyreport.com/practical-approaches-to-forex
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And, third it has to do with skill set that you have developed for technical analysis of Forex currencies.
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Hedging Currency Risk
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The Forex markets exist because of foreign trade.
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Trillions of dollars-worth of currencies are traded daily to pay for goods and services produced in one nation and consumed in the next.
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When a Japanese airline purchases jets from Boeing they need to pay in US dollars.
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It takes 83 days to build, test and deliver a Boeing 787 Dreamliner.
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If your company is not first in line it may take a year or more to get your jet after signing the contract.
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And some airlines stagger their purchases to take delivery of a few planes each year.
http://www.forexconspiracyreport.com/practical-approaches-to-forex
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A problem arises in that the Japanese government is trying to devalue the Yen in order to boost Japanese exports.
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Because the price of the airplane is paid in US dollars, that could be a problem.
http://www.forexconspiracyreport.com/practical-approaches-to-forex
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One of the practical approaches to Forex in this case is to purchases Forex options, specifically calls on the US dollar with the Japanese Yen.
http://www.forexconspiracyreport.com/practical-approaches-to-forex
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The airline purchases a call option for sufficient US dollars to pay for a Boeing jet.
http://www.forexconspiracyreport.com/practical-approaches-to-forex
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When the time comes to pay one of two things will happen.
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If the Yen has fallen against the dollar the airline will execute the options contract and purchase dollars at the old, lower price and pay for the jet.
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If the Yen has risen against the dollar the company lets the contract expire and buys the jet with the now-stronger Yen.
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Anticipating Fundamentals
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There are fundamentals that eventually determine the value of one currency versus another.
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Balance of payments, strength of an economy and central bank policy all help determine how much traders will pay in US dollars for the Euro, British Pound, Yen etc.
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Currency traders who are well versed in the fundamentals that drive currency prices can swing trade currencies and profit over a few days, weeks or months.
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This is one of the practical approaches to Forex.
http://www.forexconspiracyreport.com/practical-approaches-to-forex
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It requires that the trader do his homework and keep up with the market.
http://www.forexconspiracyreport.com/practical-approaches-to-forex
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A fundamental approach to trading currencies is probably more effective than a technical approach when trading minor currencies because of the low volume inherent in the currencies of small countries.
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Technical Trading: The Past Predicts the
Future
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Hundreds of years ago traders in Japanese rice markets and Dutch tulip markets found out that certain price patterns repeated themselves.
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It was possible to trade solely on the basis of the pattern of the previous several days.
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Forex trading volume is significantly higher for the major currencies than the minors.
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Thus anyone trading US, Canadian or Australian dollars against the Swiss franc, British pound or Euro can expect good liquidity and accuracy of the technical tools that are critical to profitable technical trading.
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For many day trades this is the best of the practical approaches to Forex.
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Traders are in the market for only minutes at times, executing trades and leaving with profits.