Money Advice Guide

You might look at the stock prices at the bottom of your television screen or, if you are trading currencies in the forex market, you might look at the exchange rates go up and down your computer screen. Prices move and you wonder whether their behaviour means something. Could the market be sending out signals that you can use to make your decisions? How, exactly, are you going to study the market?

For anybody to make money from the market, they must have a way of studying it. There are predominantly two approaches: fundamental and technical. Fundamental analysis focuses on value but this is the subject of another article. Technical analysis, on the other hand, focuses on price and its movement.

The movement of price has the following properties which traders can study to aid in their decisions:

Trend - its persistence to move in one direction,

Volatility - the magnitude of its fluctuations on a periodic basis,

Momentum - the rate of its acceleration and deceleration,

Cycle - its tendency to move in cyclical patterns, most especially in the futures market,

Market Strength - the number of transactions supporting its movements,

Support and Resistance - its tendency to rise or fall to a certain level and then reverse, repeatedly.

Analysts, using the technical approach of analysing the markets, have developed their own set of indicators, different to those used by fundamental analysts. These indicators are used to measure the properties of price movement. Fortunately for modern-day traders like you, you do not have to devise your own tools. You just need to learn how they work and how to use them.

Marquez Comelab is the author of the book: The Part-Time Currency Trader. It is a guide for men and women interested in trading currencies in the forex market. Discusses analysis, tools, indicators, trading systems, strategies, discipline and psychology. See: http://marquezcomelab.com.

Tags: currencies, currency, forex, futures, investing, shares, stocks, trader, tradingcurrencies, currency, forex, futures, investing, shares, stocks, trader, trading

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To someone who hasn’t ever followed currency prices or paid attention on CNN may be surprised that the value of the US dollar (or any currency for that matter) is always changing. That means that on a daily basis, everyone in possession of that currency is getting rich or poorer automatically.

If the US dollar goes though a downward trend, you will be steadily losing money even though you can’t immediately see the effects.

The average response to this is to buy gold. After all it’s touted as the perfect hedge against inflation. When the dollar is losing ground, gold is often gaining in price. The problem is you’re invested in gold though US dollars. Gold gains and the dollar loses. Guess what, you haven’t gained like you think. You’ve just broke even (maybe even lost).

The solution is to invest in other currencies. Very often while the dollar is falling, the euro or pound is gaining. Realize though that investing in currencies is not common for individuals. You won’t find information on this on the internet. The only thing you’ll find is thousands of pages on short-term currency trading. Investing is exactly opposite of that.

Ignore technical analysis. The fundamentals are the only thing you need to watch. How is this country’s economy faring against this economy? What has been the country’s central bank policy? What are they likely to do next?

Also looking at weekly charts is helpful to gain a bird’s eye few of where the currency has been price-wise, and what the current trend is.

Most currency traders trade with obscenely high leverage. You as an investor can’t afford to do that, or you will lose everything. Invest at a one-to-one ratio (meaning each dollar you invest has one dollar of buying power of the other currency).

Understand that this is no easy road to riches. It will require a descent amount of “homework” to determine what currencies are worth buying. However, the good news is your investment will be safe from the fluctuations of the stock market and the like. The country could suffer one of the worst economic downturns, and properly invested in foreign currencies, you would only feel a ripple at best.

Truly the best hedge is other currencies. Put in the work up front to learn what to invest in, and you’ll be rewarded with the safest hedging investment possible.

Nathan Pennington is author of the (sold-out) forex trading book “The Rubber Band Method”: How to Trade Against the Trend for Consistant Profits.

His current website is http://www.moneymakingforex.com/ which shows forex traders how to become winning traders.

Tags: euro, foreign currency, foreign exchange, forex, investingeuro, foreign currency, foreign exchange, forex, investing

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