By James Smith
Taking advantage of the recent differences between two of the world’s largest economies might seem like a daunting task, but it is certainly becoming a lot easier. As of late the relations between the two countries have grown more close to one another in terms of both political and financial ties, and this has created a real tendency to allow the US Dollar to make some gains. If there were to be any strain on this symbiotic trading relationship we would certainly see it in the stock market. A drop in the stock market would create a need for more liquidity due to people cashing in on stocks, and this would send the US dollar through the roof. Such a development would not be a good thing for those who are looking to make money from their stock investments.
But…for those of us who are prepared to trade currencies on Forex charts such volatility can be a very, very good thing. Staying in tune with what is occurring in the US stock market can seem like a daunting task for many traders, but for those who take it on correctly there is a lot of money to be made. Being able to gauge and anticipate these changes can be a real challenge for many who are used to using indicators in “real time”, this is when having a handle on fundamental indicators and their impact is very important. There can be no underestimation of just how vital it is to utilize this particular tool, without it you will be prone to the victimization of while price movements you could not see coming. Overall sentiment and prior trends have no control over what can be delivered at an FOMC meeting or some other financial decision.
Being able to profit from these swings is best left to examining the market’s anticipation for the news, while there might be a very clear trend in the daily charts you will notice that the hourly charts will range somewhat. Right before the news breaks go ahead and place a limit order with a trailing stop outside of the range before the news breaks. Once it does you can collect your pips and get out as soon as possible without getting into trouble, such a move will make sure that you are able to collect the money you need to. This is a channel breakout technique combined with fundamental indicators.
The author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to stay up to date with the latest forex quotes