Document Sample
How Powered By Docstoc
         How to Profit from Currency Trading

The main factors influencing exchange rates are the balance
of payments of a country, the state of the economy,
implications drawn from chart analysis as well as political
and psychological factors. In addition, fundamental
economic forces such as inflation and interest rates are
constantly influencing currency prices. Faith in a
government’s ability to stand behind its currency also has
an impact on currency price. Activities by currency
managers, generally on behalf of an investment fund, have
also become a factor moving the market. While they may
behave independently and view the market from a unique
perspective, most, if not all, are aware of important
technical chart points in each major currency. As major
support or resistance levels are approached, the behavior of
the market becomes more technically oriented and the
reactions of many currency managers are often predictable
and similar. These market periods may result in sudden and
dramatic price swings as substantial amounts of capital are
invested in similar positions. Well advised individuals can
profit from these fluctuations by buying a specific currency
when it is weaker and selling it when it is stronger. The
flexibility of the Forex Market also allows for an individual
to “sell short”, or benefit from a market moving down in
value. Spot transactions may last for only a few minutes,
or as long as a maximum of 2 days.

Shared By: