‘retirement’ Tagged Posts

What Is Momentum Investing? How It Can Make You Rich?

Investment is always long term whereas trading is always short term. Day trading always has got a short term perspective and requires quick reflexes...

 

Investment is always long term whereas trading is always short term. Day trading always has got a short term perspective and requires quick reflexes. Now day trading is not possible for many investors. Many people have a long term perspective. They feel more comfortable thinking about their long term financial goals and matching them with their investment strategies over months and even years.

An investor might have to wait for a long time before realizing a return on his or her investment. Many investors can learn a few tricks from day traders that can help them make a quick profit in a matter of days orn weeks instead of months or years. Now a company’s stock may have a good long term prospects supported by strong fundamentals. But the stock may stay still for a long time before it catches the attention of the media and the investing public before it’s price get’s bid up.

Many investors when they fall in love with their investments on the long run forget this cardinal rule of trading that you have to cut your losses. Market least care who you are and how long you have been in it.There is a general problem with so many investors. They fall in love with their investment after doing so much research and committing so much time for the position to work. Now, day traders are always hit and run types. They have developed an innate sense of discipline among themselves that teaches them when to commit money to a trade and when to cut and run.

Now as a momentum investor, you need to look for securities that are going up in prices especially if accompanied by the underlying growth. What this means is that instead of buying low and selling high, what you will be doing is buying high and selling even higher.

When investing, you try to buy low and sell high. In momentum investing, you buy high and sell even higher! One of the tricks that you can learn from day traders is momentum investing. In momentum investing, you look for securities that are expected to go up in prices accompanied by the underlying momentum. Now, when the price of a stock or security increases because of strong demand, it is said to have momentum behind it.

How to you find that a security has got momentum behind it? You can use these technical indicators like the MACD ( Moving Average Convergence and Divergence), RSI (Relative Strength Index) or the Stochastic. A swing trader is also looking to ride a trend as long as it lasts. A trend lasts as long as it has got momentum behind it. Momentum investing is similar to swing trading.

Momentum investing can also lead to bubbles like that happened in the dot com bubble in the last few years of 1990s. It is always a good idea to do some fundamental research on the companies before doing momentum investing.

Mr. Ahmad Hassam has done Masters from Harvard. Read this shocking 40 page PDF FREE FRWC Brutal Truth Report on trading robots!Turn $200 into $100K in just 3 months with this FREE Penny Stock Report.

How To Avoid a Personal Bailout

 

As we begin 2009, the U.S. economy is in ruins. It has become, as a result, increasingly more important to protect your assets, as well as your identity. In order to make 2009 a better year for your money in these harsh economic times, here are some ideas and suggestions to get your financial health in line.

1. Make sure you know the difference between your needs and your wants. Financial security depends on you spending money in the smartest possible way. For instance, gasoline is a need while ordering a pizza is a want. Frugality is absolutely a necessity. Clip coupons and watch for sales or deals on things you will be needing soon.

2. Have a cash stash that is equal to approximately 6 months of living expenses. Average out your utilities, food and other expenses and save some for a rainy day. Put a little back each payday in an account that you cannot touch or dig into. This is your emergency fund and shouldnt be touched unless it is absolutely necessary. If you DO dig into the fund, that money needs to be replaced as soon as possible.

3. Pay off all of your DEBT. Begin paying off your debt by starting with the highest interest bearing debt like credit cards and personal loans. Sometime the interest rates on these can be as high as 39%. Do this before you begin saving. It will help to save you money in the long run and is one of the most important steps to gaining financial independence.

4. It has become increasingly more important to protect your identity. Identity theft is becoming the favorite crime among criminals. It is estimated that it costs victims of identity theft over 5 billion dollars a year to pay for identity theft. However, identity theft protection is now offered with services like Life Lock. Life lock guarantees the protection of your credit backed by a $1,000,0000 payment to you fit they don’t. They will help reduce the number of credit card offers you receive and will actively monitor you credit.

5. To discourage dipping into your savings needlessly, put your savings into CDs, money markets or other tax deferred accounts. If you dont have access to the money, you wont deplete it needlessly.

6. Write out a budget and stick to it no matter what. This is so super easy to do. Label several jars with categories like “eating out”, “movie night”, or “entertainment”. Every payday, put $40 in each jar. That will be your allowance for that particular category. When the jar runs out, you have to wait until the next pay day to replace the money and your budget for that item. This sounds tough, but it can really be of benefit to your finances.

The current world economy is in bad shape. That is no big, sensitive secret. As a result, we have already seen government bailouts of major companies we thought would always be there. Dont let that happen to you in 2009. Follow a simple budget, look for deals and just spend smarter.

If you are cautious with your money, you will not need a bailout in 2009. Hey, maybe you may be the one bailing someone else out.

Linda Seamore is an expert on the subject of personal finance and has written lots of articles on it and on credit protection services like LifeLock. She suggests researching all credit protection services like www.lifelock.com before signing up.

Currency Profile Of Euro (Part I)

 

The European Union consists of 15 member countries that include Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, Sweden and the United Kingdom.

Out of these 15 countries, 12 common currency countries constitute the European Monetary Union (EMU). Except Denmark, Sweden and United Kingdom, all these above countries share the common currency Euro. These 12 countries share a single monetary policy dictated by the European Central Bank (ECB).

EMU has a highly developed and efficient fixed income, equity and the futures market. The EMU is the worlds second largest economic powerhouse after the United States. This makes EMU the second most attractive investment market for domestic and international investors.

In the past, the EMU had difficulty in attracting foreign direct investment or large capital inflows. The primary reason was the United States. Historically US assets have had solid returns. As a result, United States absorbs something like 70% of the total foreign savings.

However, with the EMU beginning to incorporate even more members in Eastern Europe, Euros importance is expected to increase. Induction of new members will further increase the size of EMU. The capital flows to Europe is expected to increase as well.

Demand for Euro is expected to continue rising with foreign central banks expected to diversify their Euro reserve holdings even further. EMU is in fact a trade driven and a capital flow driven economy. Trade is very important to the national economies within EMU.

EMU has significant power in the international trade arena because of the size of the EMUs trade with the rest of the world. EU exports comprise almost 20% of the world trade. While EU accounts for only 17% of the world imports! Unlike United States, EMU does not have large trade deficit or surplus.

International clout is one of the primary reasons in the formation of EU. The formation of EU allows individual member countries to group as one entity and negotiates on an equal playing field with the United States. United States is the largest trading partner of EU.

Leading import sources for EU are United States, Japan, China, Switzerland and Russia. Leading export markets for EU are the United States, Switzerland, Japan, Poland and China.

Manufacturing, mining and utilities account for around 20% of the EU economy while services account for more than 70% of the EU economy. EU is primarily a service oriented economy. While outsourcing most of their manufacturing to Asia, large numbers of EU based companies concentrate their research, design, innovation and marketing part of the activity in EU.

It is important for most of the countries to hold large amounts of reserve currencies to reduce exchange rate risk and transaction costs. Most international trade transactions involve the British Pound, the Japanese Yen and the US Dollar.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

Trading System Selection

 

When selecting a trading system, first try to paper trade it. You need to paper trade your trading system to get the bugs out. Paper trading is not a substitute for live trading but still you can assume that 75% of the results that you achieve in demo trading can be replicated in live trading.

Money management plan for your trading system is a must. A good money management plan will tell you how much you should risk on each trade with that trading system. For that to know you need two ratios. Win ratio and the payoff ration are two highly important figures to know for any trading system. Use the results of these paper trades to calculate your win ratio and payoff ratio. Determine what your personal win ratio and payoff ratio are in using that trading system over time.

Now in the case of a successful trader, it takes three to tango here. The trading system, your money management system and you yourself, all three of you have to gel together. The more profitable you will be over time, the stronger and more developed the relationship is between the three of you.

So for you to become a successful trader, a trading system is not enough. You need a good money management plan as well. Win ratio and the payoff ratio are required in developing a sound money management plan that will work hand in hand with that trading system. What can be the best parameters to selecting your trading system? When selecting your trading system, use these five parameters:

1) Trade entries in the trading system are defined by market price activity, key support and resistance levels, volume and volatility dynamics and not on random and spontaneous decisions.

2) The initial stop loss exit is determined before entering your trade.

3) Just like the trade entries, the trading system determines the trade exits by market price activity, key support and resistance levels, volume and volatility dynamics and fundamental rules, not on any arbitrary dollar loss that you feel comfortable with.

4) You must not underestimate the importance of paper trading though it is not a substitute for live trading. Your trading system has been adequately paper traded or live traded and you have determined your personal statistical performance. You need to know your win ratio and the payoff ratio.

Do not rely on the results that the other got with that trading system. Use the actual results that you attained while using that trading system in calculating your win ratio and the payoff ratio.

You can use a computer in testing the performance of a trading system. Again do not delude yourself by thinking that computer back testing can give you your win ratio or payoff ratio. Do not try to rely on computer back tested results. Your personal performance results are the real results that matter. You cannot depend on computer results and other traders results.

5) Your trading system should be mechanical and rule based. Your trading rules should be written out step by step in sequence so that the entries and exits are consistent, clear and above all quantifiable. This makes your trading mechanical and emotions free. This is very important.

One perfect example of a rule based trading system is the Turtle Trading System. Have you ever heard of the Turtle Trading System? You must read the story of the Turtle Trading Experiment. Turtle Trading System was developed for the commodities futures market.

You must know the story of Turtle Trading Rules. The story of Turtle trading rules is very interesting. The creators of that trading system had a discussion one day. One was of the opinion that great traders are born. The other said great traders can be made.

So a number of completely new traders were selected to teach them those rules and see if they could become successful traders. Many succeeded with this trading system and became highly successful traders.

Mr. Ahmad Hassam is a Harvard University Graduate. Know Forex Charts! Try This 1500 Pips A Day Forex Signal Service!

Euro Currency Profile (Part II)

 

In the past before the adoption of Euro as a single currency by EMU, it was necessary for many countries to hold large amounts of every individual European currency. As a result the currency reserves tended towards US Dollar. In 1990s, 65% of the global reserves were in US Dollar.

However, with the introduction of Euro, foreign reserve assets are shifting in favor of Euro. As EU becomes one of the major trading partners for most countries around the world, this trend is expected to continue.

The European Central Bank: The European Central Bank (ECB) is the governing body that determines the monetary policy for the EMU countries. The Executive Board of ECB comprises the president, the vice president and four other members. These individuals along with the governors of the member national banks comprise the Governing Council. The Executive Board implements the policies made by the Governing Council.

The policy meetings are biweekly. Although ECB meets biweekly and has the power to change the monetary policy in any of these meeting, it is only expected to do so where an official press conference is scheduled afterwards. New monetary policy decisions are usually taken by a majority vote. The president has the deciding vote in the event of a tie.

ECB has a strict mandate based on inflation and deficit. So, the EMUs primary objective is price stability and growth. ECB tries to keep the Harmonized Index of Consumer Prices (HICP) below 2% and M3 (money supply) annual growth below 4.5%.

ECB is supposed to coordinate its policy decisions with the respective central banks. You should understand that the ECB and the European System of Central Banks (ESCB) are independent institutions from both national governments and other EU institutions. This operational independence is granted to them as per Article 108 of the Maastricht Treaty. Without this independence, meaningful monetary policy is out of question.

There are many factors that have to be taken into consideration while setting the targets for inflation and growth. There was EMU criteria that were used as a precondition for any EU member state joining the EMU. How ECB achieves its policy targets of price stability and growth? The primary tools the ECB uses to control monetary policy are the Open Market Operations. ECB has at is disposal four categories of open market operations that it can use to manage interest rates, control liquidity and signal monetary policy stance.

Bulk of refinancing for the financial sector is done through these main refinancing operations. These refinancing operations are conducted weekly with a maturity of two weeks. These operations are regular liquidity providing reverse transactions.

Longer term refinancing operations are liquidity providing reverse transactions with a monthly frequency and a maturity of three months. Fine tuning operations are executed on an ad hoc basis with the aim of both managing the liquidity situation in the market and steering interest rates.

Structural operations involve the issuance of debt certificates, reverse transactions and outright transactions. ECB uses these operations to adjust the structural position of the Eurosystem vis–vis the financial sector. The ECB minimum bid rate is the key policy target for the ECB. It is the level of borrowing that ECB offers to the central banks of its member states.

ECB does not usually have the exchange rate target but can factor in exchange rates in its policy deliberations as exchange rate impacts price stability. Therefore ECB is not constrained from intervening in the forex markets if it believes that inflation is of concern.

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

Position Trading Explained (Part I)

 

Position trading is all about taking a directional market position and holding it as long as the trade makes sense from the trend standpoint. This means that positions are held for longer term. Now there are four style of trading: Scalping, Day Trading, Swing Trading and Position Trading.

Position trading may mean keeping a trade open from one week to a month to as long as a year or possibly more in the fast moving world of forex trading. Most individual and retail traders do not have the patience for position trading.

This is somewhat unfortunate as most retail traders dont have that patience to become successful position traders. Only those position traders who have the patience to stick with the trend and let their profits run are generally able to capitalize on these longer term price moves. Position trading can be one of the most profitable styles of trading due to the fact that many currencies tend to trend well on long term basis.

Position trading is unlike day trading or swing trading that relies almost exclusively on technical analysis and is based on short time frames. Due to its long term time frame, position trading tends to rely heavily on fundamental analysis along with longer term technical analysis.

As a forex trader, you must be aware that there are two type of analysis that is done to analyze the market forces, fundamental and technical. Fundamental analysis concerns itself with the economic forces that drive the major market movements. Fundamental analysis is geared towards longer term price forecasts rather than the swing to swing movements that are primarily the focus of technical analysis.

Technical analysis is based on the study of price action to predict the short term futures direction of the price action. Technical analysis is always short term in nature. The general direction of change in the currency value over the long run is what interests the position traders. This can be only done through the fundamental analysis. The economic forces that determine the long term trend of a currency include interest rates, inflation, GDP, unemployment. Fundamental analysis helps to determine the value of the national currency overtime.

Trading with the trend is what the trend traders do. Position trading and trend trading both follow almost similar approaches. However, position traders often rely on fundamentals along with the technicals; trend traders are almost exclusively technical in nature.

Carry trading can be considered a form of position trading as carry traders hold interest positive positions to benefit from both regular interest payments and exchange rate profits. How do position traders decide which position to take?

Forex position traders weigh strength and weaknesses in currencies by taking various fundamental and technical factors into account. They then establish positions on currency pairs according to their views.

Lets take an example. Suppose that a position trader has performed fundamental analysis on economic conditions surrounding the major currency pairs that involve the US Dollar on either side of the pair. The position trader is of the opinion keeping in view the present recession in the US economy that the US Dollar is indicating fundamental weakness going forward.

The position trader thinks that the Euro is showing significant fundamental strength at the same time that the US Dollar is showing weakness going forward. This opinion may have been based on the recent rate of economic growth, comments by the Federal Reserve Board (FED) Chairman or the President of European Central Bank (ECB), the state of ongoing recession, on the state of inflationary/deflationary pressure in the economy and so on.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

Currency Profile Of Euro (Part III)

 

Forex market participants widely watch the comments by the members of the Governing Council of ECB. These comments frequently tend to move the Euro. ECB publishes monthly bulletin detailing analysis of economic conditions. This bulletin can give important signals to changes in the monetary policy.

Now EUR/USD cross is the most liquid currency. All major euro crosses are highly liquid. The movements of EUR/USD currency pair are used as the primary gauge to judge the health of both European and the United States health. Euro is also known as the anti-dollar since it is the dollar fundamentals that have dictated the movements in the EUR/USD pair from 2003-2008.

As they have tight spreads, make orderly moves and rarely gap, EUR/USD and EUR/GBP are great trading currencies. EUR/JPY and EUR/CHF are very liquid pairs too and are used to judge the health of the Japanese and Swiss economies. Always remember to understand and study each currency pair in detail. Each currency pair has a unique behavior that you need to understand before you plan to trade that pair.

However, Euro has unique risks. Euro was launched in 1999. It is still a new currency. There are number of risks unique to the Euro. The most important is the exposure to the economic, political and social development of 15 member countries.

It could affect the stability of the entire region although more countries are expected to join EMU if a member country drops Euro and reverts back to its original national currency because it believes that ECB actions are not in its best interests.

We can say Euro is a currency without a country. ECB has the power to determine monetary policy for its 15 member countries. With that comes the political pressure of 15 governments. This political pressure frequently tests the actions of ECB.

The present global financial crisis is unlike any in the past. It is deep and may continue for some more years. It started from the sub-prime markets in the US and then spread to the rest of the world. Many big banks became the victims of this financial crisis. However, the rapid response of ECB to the present global financial crisis in the shape of deep liquidity injections has transformed its reputation. The spread between 10 year US Treasuries and 10 year bunds can indicate Euro sentiment.

Another important interest rate that you must know as a forex trader is the Euro Interbank Offer Rate (Euribor). This is the rate offered from one large bank to another on interbank term deposits. Traders and investors tend to compare the Euribor futures rate with the Eurodollars futures rate.

Higher spreads between the two rates makes the European fixed income assets more attractive. Lower spreads make the European assets less attractive. Merger and Acquisition activities between US and European multinationals have important implications for EUR/USD pair. Large deals if in cash have often significant short term impact on EUR/USD.

Important indicators for Euro are Harmonized Index of Consumer prices (HICP), M3, German Unemployment, Preliminary GDP that includes France, Germany and Netherlands, German Industrial Production, Individual country budget deficit. The largest countries in EMU are Germany, France and Italy. Study of the economic data of these three large countries is also important.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

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Selecting Trading Window Frames (Part II)

 

What matters most to a trader or an investor is how to create a positive cash flow. It all depends on your trading strategies. The first step is to identify the type of trade into which we will enter.

Is it a day trade? Is it a swing trade or is it a long term positions trade? Once we acknowledge what our goals and objective are than we can narrow our expectations.

Suppose I am a day trader. My expectations are for X amount of a given range. I will expect that if I miss 20% of the bottom and 20% of the top then I can expect to capture 60% of the average daily range. I will generally be able to identify what the average range for the day is.

So how do I start? First I will have to structure my computer and charts to a format that is conducive to day trading. How many pips you want to make in a specific time frame like eight to six bars from entry? 30 pips or 40 pips!

If you trade Euro, Yen or Pound, then for day trading, use the 15 minute time frame for the dominant trend. Use the 5 minute time frame as a shorter time frame trigger to go with the 15 minute signal. Use the 5 minute time frame to exit a position in day trading.

The key to remember is when the 15 minute time period is in sell mode, take the 5 minute sell signals. Similarly when the 15 minute time period is in the buy mode, take the 5 minute buy signals.

As a day trader you can watch the 60 minute time period, but if you are in a trade based on the 15 minute and the 5 minute time, these are the time frames you need to monitor for that specific trade.

Keeping an eye on the 60 minute time period will help you identify the current trend and a potential change in the trend if a moving average crossover occurs. Keep in mind your profit targets and where you are in range.

If the Euro is already down 50 pips when a sell signal is triggered, the odds are that your profit potential is in the range of suppose 30 pips or less if the average true range (ATR) is 80 pips based on the past 14 trading days. How do you calculate these things?

You will have to subscribe to a good forex charting service. Free forex charts do not go into very fine details that you need to look into when making your trading decisions. Using good forex charting software will help you automatically calculate all the daily, weekly, monthly pivot points as well as the daily range, support and resistance, S-1, R-1 and other stuff.

For day trading use the 60 minute time period for calculating the monthly pivot points, 15 minutes time frame for calculating the weekly pivot points and the 5 minute time frame for calculating the daily pivot points.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

US Dollar (Part I)

 

US Dollar is the most heavily traded currency in the global economy. It is important for the currency traders to have a good grasp of the general economic characteristics of the most commonly traded currencies.

Some currencies tend to track commodity prices while others may move in complete contrast. Traders need to also know the difference between the expected and the actual data.

Expectations are what move the markets in the short term. Short term traders need to closely monitor the expectation of the currency markets. News or data that is in line with the expectations has less of an impact on currency movements than unexpected news or data. The correlation between the currency markets and news is very important.

United States is the worlds leading economy. US GDP is approximately three times the size of Japan, five times the size of Germany and seven times the size of UK. The US economy is now a service oriented economy with almost 80% of GDP coming from real estate, transportation, finance, health care and business services.

United States has the worlds most liquid and deep equity and fixed income markets in the world. The manufacturing sector is still formidable and US Dollar is particularly sensitive to the development within the sector.

The import and export volume of US also dwarfs the countries. This maybe due to the sheer size of US as true import and export represent only 12% of the GDP. Foreign Direct Investments (FDI) into the US is equal to almost 40% of the total net inflows for United States. Investors from all over the world purchase US assets due to their liquidity and safety.

However, United States is running a large CA deficit for more than a decade now. US economy is facing the paradox of the twin deficits. One is the Budget Deficit and the other is the Current Account (CA) deficit. During the present financial crisis, the budget deficit has ballooned. Almost a trillion dollars have been added to the budget deficit. This is going to fuel inflation when the economy recovers. There are dangers of high inflation returning. Inflation can make the US Dollar weak in the long run.

The large CA deficit makes the US Dollar highly sensitive to changes in the capital flows. US need to attract a few billion dollars of capital inflows daily in order to prevent the decline in the value of US Dollar.

United States is the trading partner of many countries across the globe. US is also the member of the World Trade Organization (WTO). US trade is equal to roughly 20% of the world trade. A weaker US Dollar will help boost US exports whereas a stronger US Dollar makes the US exports expensive and US imports cheap.

Leading export markets for United States are: Canada, Mexico, Japan, EU and UK. Leading import sources for United States are: Canada, China, Mexico, Japan and EU. The growth and political stability in countries that are leading export markets for US are important. For example, should Canada growth slow; its demand for US exports will fall that will have a ripple effect on US growth.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!

US Dollar (Part II)

 

Role of monetary and fiscal policy in strengthening or weakening the US Dollar or that matter any other currency is important. The Federal Reserve Board (FED) is responsible for making the monetary policy of United States. Through its Federal Open Market Committee (FOMC), FED sets and implements the monetary policy. The voting members of FOMC are the seven governors of FED plus five presidents of the district reserve banks. Eight meeting of FOMC are held every year. These meetings are widely watched by the analyst for interest rate announcements and changes in growth expectations.

FED has the mandate for long run price stability and sustainable economic growth. FED has a high degree of independence in setting the monetary policy. FED uses the monetary policy to control inflation, unemployment and balanced growth. The most important tool used by FED is its Open Market Operations.

Open market operations involve FEDs sale or purchase of government securities that includes treasury bills, notes and bonds. In increase in FEDs purchases lowers the interest rates while selling of these securities raises the interest rate.

Federal Fund Rate is the key policy target of the FED. It is the interest rate at which the banks lend overnight to one another. The primary interest rate that is affected by these operations is the Federal Fund Rate.

Fiscal policy means the amount of taxes and government spending for a given year. The US fiscal policy is in the control of US Treasury. In fact it is the US Treasury that actually determines the US Dollar policy.

You should always try to watch the US Treasury views as changes to that view is very important for the currency markets. For example, US Treasury can give instructions to the New York Federal Reserve Board to intervene in the forex markets by actually buying or selling US Dollars if the US Treasury feels that the US Dollar is under or overvalued.

The heavily traded currency pairs in the global currency markets are EUR/USD, USD/JPY, GBP/USD and USD/CHF. These currency pairs represent the most frequently traded currency pairs in the global markets. So the most important economic data for the global currency markets is the US Dollar fundamentals. Over 90% of all currency deals involve the US Dollar. As you can see, all these currency pairs involve US Dollar on either side of the pair.

The relationship between Gold and US Dollar is very important for you to understand. There is an almost perfect negative correlation between the US Dollar and the gold prices. The US Dollar moves in opposite direction to the gold. This inverse relationship stems from the fact that gold is measured in US Dollars.

When US Dollar depreciates due to global economic uncertainty like the present, gold appreciates. Similarly when the US Dollar will appreciate on the news of US economic recovery, gold prices will go down. Gold is commonly viewed as the ultimate safe haven commodity by the investors all over the globe. You must know that the gold prices are going up right now and have reached very high levels. Gold trading and currency trading can be a very powerful combination.

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano’s Forex Signals free. Discover a revolutionary Forex Robot Trading System!