The Fed’s future path still seems more bullish than the European Central Bank. If so, the yiel...
The Market No Trader Should Ignore
12/28/2011 9:30 am EST
Price movement, liquidity, and 24/7 access are among the primary reasons traders should consider world currency markets, says Robert Christy, identifying the best currency pair for new traders.
If you're a stock trader and you consider trading currencies, there are some things you need to be aware of.
Our guest today is Robert Christy to talk about why you need to be trading currencies. Robert, answer that question as to why we need to trade currencies?
Actually, you need to trade them today because for one, they're not stocks. That's the first and foremost reason.
The stock market has been really up and down. People are panicking in, and they're also panicking out.
Currencies give you the best of all worlds. Currencies trade at the intersection of politics and economics, and that's what's really driving the news today.
Here we have a global market that trades 24 hours a day from Sunday night to Friday night, so you have unlimited time to literally trade.
You can go anywhere in the world, and if there is an economic hotspot, you can go there. You have big-time liquidity, and again, the first and foremost reason is that it isn't the stock market.
Now currencies move pretty quickly depending on what pairs you're trading. What would you recommend starting with as a "get your feet wet" currency pair?
Probably the easiest pair to start to trade is the Canadian dollar/Japanese yen. It's called CAD/JPY.
It's really a commodity currency. It trades a lot like oil because Canada is a primary exporter of oil and Japan is a primary importer of oil. It also trades a little bit slower.
Are you recommending the spot market mostly, or how about the futures market for this?
You can do either, but I like the spot market because you have instant liquidity, and you have a pretty short-term time frame involved.
Alright, on currencies, I know with stocks I'm watching company earnings and things like that. What do I need to be aware of news wise on the currency side?
Basically their primary economic releases, which are really in everybody's daily newspaper. They're also on all the different types of sites as really just a news event. The events drive those particular markets. You have to be aware of the particular calendar.
One place that I look every day is WhiteHouse.gov because if President Obama is going to speak, I want to know what he's going to say and at what time, because he may move the market.
Vice President Biden in the past has moved the market, and then also we have over at the Federal Reserve, (Fed Chairman Ben) Bernanke moves the market, and so you have to know when these folks are going to speak.
On the CAD/JPY pair, specifically, should I be watching Canadian news and announcements and Japanese news and announcements?
Really just watch the oil market.
When you say look at the oil market, am I looking at the cash market, futures there, what should I be watching?
Really just the impact on the news; the oil market versus the news.
If the price of oil is going to go up, that's good. It's good for the Canadian dollar, it's bad for the Japanese yen. Conversely, if the price is coming down, you want to be short the Canadian dollar and long the Japanese yen.
Do you have any ideas on oil itself in terms of pricing and where that may be headed here?
I think we're headed a little bit lower first, and I think we're going to be stuck in a range for quite some time.
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