This article written by José M Piñeiro was originally published in the September 2013 issue of Traders' Magazine.
Traders often underestimate the importance of personal interpretation of economic data in order to come up with a forex trading strategy. Without undermining the potential effectiveness of trading signals and automated trading, a trader’s personal intuitiveness and insight ‘beyond the numbers’ will ultimately make the difference between a successful and a bad forex trader. After all, if a particular trading strategy or a set of trading signals were absolutely effective, then everybody would be a successful trader. If such a successful trading strategy exists, it must be a very well-kept secret. Therefore, how do we improve our odds in forex trading?
- Jose M Piñeiro started in the forex industry in 2002 as an Operations Specialist and then Compliance Offi cer for FXCM in New York when the online retail forex market was still getting off the ground and expanding rapidly. He has spent the last seven years working for Web Financial Group (WFG), based in Madrid. He is now forex analyst for WFG’s forex website, fxmania.com.
Traders often underestimate the importance of personal interpretation of economic data in order to come up with a forex trading strategy. Without undermining the potential effectiveness of trading signals and automated trading, a trader’s personal intuitiveness and insight ‘beyond the numbers’ will ultimately make the difference between a successful and a bad forex trader. After all, if a particular trading strategy or a set of trading signals were absolutely effective, then everybody would be a successful trader. If such a successful trading strategy exists, it must be a very well-kept secret. Therefore, how do we improve our odds in forex trading?
First, Understand the Market
To start, forex traders should take a good look at currency trading symbols. Unlike stock symbols, for instance, there is an inherent meaning in the way currencies are quoted. Let’s take a look at the USD/ JPY, where the US dollar is the base currency and the Japanese yen is the counter currency. The symbol helps traders realise that there is a bi-dimensional relationship in every transaction. This is not so obvious in any other market.
In all transactions, there is a purchase of one item and a simultaneous sale of another item. The ‘USD/ JPY’ symbol shows that someone is buying US dollars and someone is selling Japanese yen or vice-versa. This relationship is not so evident when traders buy shares of Apple. The stock is not listed as APP/USD although traders are buying or selling Apple shares in exchange for US dollars.
Editors’ Picks
EUR/USD: US Dollar comeback in the makes?
The US Dollar stands victorious at the end of another week, with the EUR/USD pair trading near a four-week low of 1.1742, while the USD retains its strength despite some discouraging American data released at the end of the week. The pair edged higher on Friday, after the United States Supreme Court ruled against President Donald Trump's tariffs, although the advance is not enough to change the latest USD flow.
GBP/USD braces for more pain, as 200-day SMA tested
GBP/USD broke the previous week’s consolidation to the downside, as sellers returned with pomp, smashing the major back toward the levels last seen in late January. The pair tested bids below the 1.3450 barrier as the US Dollar strength largely played out throughout the week, while the Pound Sterling stepped back on expectations of divergent monetary policy outlooks between the Bank of England and the US Federal Reserve.
USD/JPY sticks to gains above 155.00, over one-week top ahead of US data
The USD/JPY pair gains positive traction for the third straight day and climbs to over a one-week top, around the 155.35-155.40 region. Data released early today showed that Japan’s key inflation gauge eased to the slowest pace in two years, tempering expectations for an immediate policy tightening by the Bank of Japan.
Editors’ Picks
AUD/USD retakes 0.7100 as trade tensions weigh heavily on USD
AUD/USD attracts buyers for the third straight day and climbs back above the 0.7100 mark during the Asian session on Monday as trade-related uncertainties continue to weigh on the US Dollar. Apart from this, the divergent Fed-RBA policy expectations contribute to the Australian Dollar's relative outperformance. However, a softer risk tone could act as a headwind for the currency pair amid relatively thin liquidity during a bank holiday in Japan and China.
EUR/USD: US Dollar comeback in the makes?
The US Dollar stands victorious at the end of another week, with the EUR/USD pair trading near a four-week low of 1.1742, while the USD retains its strength despite some discouraging American data released at the end of the week. The pair edged higher on Friday, after the United States Supreme Court ruled against President Donald Trump's tariffs, although the advance is not enough to change the latest USD flow.
Gold rises to near $5,100 as Trump’s tariffs boost haven demand, US-Iran talks eyed
Gold price edges higher to near $5,095 during the early Asian session on Monday. The precious metal extends the rally amid US President Donald Trump’s tariff threats and uncertainty, boosting safe-haven flows.
Week ahead: Markets brace for heightened volatility as event risk dominates
Dollar strength dominates markets as risk appetite remains subdued. A Supreme Court ruling, geopolitics and Fed developments are in focus. Pivotal Nvidia earnings on Wednesday as investors question tech sector weakness. Yen and aussie diverge; both pound and euro could recoup their losses.
Broadening drivers of growth: Unpacking GDP and looking ahead
This week’s data delivered a familiar theme with an important twist. The U.S. economy continues to be shaped by powerful forces in high-tech and AI-related investment, but recent releases suggest the growth story may finally be broadening. At the same time, trade flows are moving in a less supportive direction, reminding us that not all parts of the economy are pulling in sync.
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