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Trade a Declining Yuan

Posted by TFNG Admin On November - 24 - 2011

An interesting new problem may have arisen for currency traders, how to trade a declining Yuan. The assertion regarding the Chinese currency for many years has been that the People’s Bank of China buys dollars in order to reduce the value of the Yuan and keep Chinese exports flowing. The continuing balance of payments deficits that the US, especially, runs with China, has led US and other lawmakers to demand that China allow its currency to float without any intervention. The theory is that by allowing the Yuan to float Chinese exports will become more expensive and less competitive. Now it appears that the Yuan is falling in value, and not because of currency manipulation. Today’s currency traders trade a declining Yuan as the global economic recovery weakens and the twin financial crises in North America and Europe threaten a second dip to the recession and substantially reduced imports from China. In addition an increase in Chinese imports may well erase the Chinese trade surplus, according to Chinese sources.

Those who currently trade a declining Yuan, have watched as Yuan forwards declined. Forwards are derivative contracts used to hedge currency risk or engage in currency speculation for profit. Unlike trading options on currencies no money changes hands when a forward contract is agreed upon. Also, unlike options contracts, both the seller and the buyer are obligated to fulfill their portion of the forward contract on the delivery date. As currency traders anticipate a falling Yuan, forwards decline. The early result of the debt crisis in Europe and the USA has been the appreciation of other currencies, including the Yuan. However, the threat of a substantial economic downturn in both economies threatens Chinese exports and threatens to drive down the Yuan. Chinese exports did, in fact, fall last month. While talk of internationalization of the Yuan persists its value seems to be driving today by the market and much less so by currency manipulation.

To trade a declining Yuan will require a change of mindset for many traders. The Yuan rose to a seventeen year high against the dollar in mid-November, after a nearly four percent run up this year. Some may merely view this as a correction. However, the debt issues in Europe and North America are terribly real. Thus the Asian exporters who have profited from keeping their currencies weak and have built up huge dollar and Euro currency reserves are likely to pay a price in terms of reduced exports. A silver lining to the clouds may be that as the Yuan depreciates the value of China’s reserves will go up. For those set to trade a declining Yuan two general issues come to mind. One is that the continued appreciation of the Yuan is not guaranteed, especially if China ceases to manipulate its currency. The other is that China has its own set of internal issues and problems. The nation has had steady economic growth for years and many Chinese would consider it political suicide to drastically reduce exports and cash flow into the country. China states that it intends to increase development of internal infrastructure projects in order to maintain high employment and its internal economy. With time, to trade a declining Yuan or a rising Yuan traders may spend less time concerning themselves with currency manipulation and will watch the same sorts of employment numbers and statistics as they watch in the USA when trading the US dollar. With time the Yuan could join the dollar as a safe haven currency.

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    Global Economic Recovery

    Posted by TFNG Admin On October - 29 - 2011

    Currency and stock traders have been hoping to see tangible signs of a global economic recovery. When the largest heavy equipment manufacturer in the world, Caterpillar, reported better than expected earnings it also predicted growth in the three percent range through the end of 2012. Stock markets reacted positively and currency traders are looking to see which currencies will profit the most. A lot of the construction spending coming this next year has to do with the ongoing reconstruction efforts in Japan following the worst earthquake and tsunami in the history of the island nation. Construction in Japan as well as in the USA are expected to help lead global economic recovery this next year. Does that mean that the YEN and USD will rise as well? Investing in the US dollar was a good bet recently as the dollar rose against most currencies and falling interest rates on T bills made assets held in dollars and T bills doubly valuable.

    Traders recognize, however, that the Japan and Switzerland have been selling their currencies recently to avoid high priced Yen and francs. Traders also recognize that for a global economic recovery to really gain steam the European Union needs to follow through with promises and its more prosperous members need to ante up somewhere in the neighborhood of €2 Trillion in order to resolve the continuing debt dilemma. If this happens most traders expect to see a rally of the Euro which could lead to a falling dollar. Although many see the dollar as a safe haven currency a rising Euro could compete as a secure currency to park assets in time of economic distress. Likewise, if the Swiss and Japanese stop dumping their currencies they could rise as well. Smart traders are using options to hedge currency risk.

    A positive factor pointing to a continued global economic recovery, as opposed to a second dip of the worst recession in three quarters of a century, is the fact that many US companies are flush with cash. Many, in fact, have substantial sums offshore. If legislation meant to encourage a repatriation of these assets goes through it could bring a lot of dollars back to the USD and also drive the dollar higher. This would be a situation similar to the Yen repatriation scenario earlier this year when Japanese investors divested themselves of investments denominated in dollars and other currencies and converted these currencies back into Yen. These investors had been engaged in the so called Yen carry trade. They were able to move assets out of Japan with its low interest rates and convert to currencies where interest rates were higher. When the earthquake and tsunami wreaked havoc on the nation many needed assets back home in Japan to finance reconstruction efforts. The resulting wave of purchases of YEN drove the currency up very rapidly and only a threat of unified intervention by the combined financial ministers of the G7 served to stabilize exchange rates. As a continuing global economic recovery seems more likely there will very likely be substantial cash flows for investment and well as asset repatriation. Currency traders are well advised to follow fundamentals and technical aspects of their currency pair of choice in the coming months.

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      Trading the AUD

      Posted by TFNG Admin On September - 23 - 2011

      Forex traders trading the AUD do well to keep their eye on the commodities markets, specifically coal, iron ore, copper, gold, natural gas, wheat, cattle and uranium. Australia is a large island nation (sixth largest in the world) with a relatively small population (22 million being number 55 in the world. It is blessed with abundant natural resources and proximity to the growing industrial powers of Asia. Thus Australia only suffered one quarter of negative growth during the current worldwide recession and has seen its currency, the Australian dollar – AUD – go up from 1.3285 to the USD in 2006 to 1.0902 to the USD in 2010 (CIA Factbook). How to trade currency such as the AUD always has to do with understanding the fundamentals that drive currency rates. Trading the AUD also has to do with reading market sentiment as the actions of many traders and businesses hedging currency risk come together to create a market price. The proximity of China, Japan, and Korea, especially, to Australia and its natural resources provides the Australian economy with advantages that can result in the ascent of the AUD. This ascent may not be only versus the USD, EURO, and YEN but against the Chinese Yuan. The perception of continued growth lends itself to profits for those who understand day by day market sentiment in trading the AUD.

      Trading the AUD can be similar to trading the Real – BRL, Rupee – INR, Yuan – CNY, or Ruble – RUB. Brazil, India, China, and Russia all have growing economies. These nations also have economies that are substantially smaller than that of the USA or the EU. This situation gives these nations substantial room to grow and prosper. It trading the AUD it is not important that there are a lot more US dollars or Euros than Australian dollars in the world. The only important factor for those trading the AUD is the relative value of a currently falling EURO versus a rising Australian dollar or the strengthening of the USD dollar against the Australian dollar. Although the AUD is commonly quoted against the USD it can be traded against any major currency, including the Yen, Euro, Swiss franc – CHF, British Pound – GBP, or Canadian Dollar – CAD. Trading the AUD against another generally rising currency such as the Real, Rupee, or Yuan will typically not be as profitable as trading the AUD against a currency that is in trouble, such as is the case with the EURO today. A Forex trader considering how to short the EUR may, at times, do better shorting the Euro against the AUD than against the USD.

      A long term consideration in trading the AUD is that Australia is a net exporter of both raw commodities such as coal and wheat as well as an exporter of finished steel products and processed meats. As Asia leads the world out of the recession Australia is ideally situated to do business with and China, Japan, and Korea as well as other prosperous Asian nations like Singapore and Taiwan or the most populous Islamic nation in the world, Indonesia. As always we are not suggesting that traders buy or sell AUD but offer an example of thinking through the fundamentals of a major world currency. Trading the AUD can be profitable but a successful Forex trading system requires thoughtful preparation, discipline, and timing.

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        Foreign Currency Rates

        Posted by TFNG Admin On August - 11 - 2011

        The world awaits a meeting of the US Federal Reserve Foreign as foreign currency rates are likely to respond directly to the actions of the Fed. After the credit rating agency, Standard and Poor’s, downgraded US debt two things happened. Stock markets around the world fell and US treasury notes were in such high demand at auction that the ten year bond went for 2.3% percent, the lowest in three years. Although there is general consensus that both the US and Europe need to get a handle on their debt there is also an underlying concern that a policy of absolute fiscal austerity would plunge the USA, and the world, back into recession. Forex traders and investors are therefore very interested in whether or not the Fed drops interest rates in order to support the US economy or leaves them in place. Foreign currency rates will likely respond the any Fed announcement although the direction of foreign currency rates is not all that certain. The surprising interest in US treasuries tells us that the US dollar is still seen as safe haven currency and that US treasuries are still considered a safe bet. According to press reports Fed chairman Bernanke has been preping the market for likely Fed moves. After an urgent conference call with G7 financial ministers the GA7 issued a statement saying they would take “all necessary measures to support financial stability and growth”. But what will happen to foreign currency rates is there is an Italian debt default?

        The situation in Europe is probably bleaker than in the USA. Thus foreign currency rates that include the Euro will likely favor the other currency unless the EU can staunch the flow red ink in Italy, which is the newest nation on the continent to threaten sovereign debt default. The Greek debt crisis, in fact the  PIIGS crisis (Portugal, Italy, Ireland, Greece, and Spain) has been brewing for over a year and has been a drag on the Euro. There is concern that if one of these nations defaults on its debt it could become contagious and there would be a round debt defaults across the globe. Foreign currency rates would become chaotic and, in all likelihood, favor the traditional safe haven currencies, namely the Swiss franc, the Yen, and, yes, the US dollar.

        Watching short term foreign currency rates and trading with technical analysis as a guide can be profitable in foreign exchange trading and moves in foreign currency rates. For the long term traders need to look at the fundamentals and attempt to divine the intent of central banks, the US Federal Reserve, and national leaders as the debt crisis continues to simmer and threatens to boil over. A useful insight for traders is that while the S&P debt downgrade affected stock markets throughout the world it had an opposite effect on US treasuries and the US dollar. As civil war continues in Libya and threatens in Syria pro-democracy movements continue throughout the Middle East the world is a potentially unstable place and this will be reflected in foreign currency rates.

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          Why is the Dollar Climbing?

          Posted by TFNG Admin On July - 8 - 2011

          A pertinent question among Forex traders today is, “Why is the dollar climbing?” There have been a number of reasons why the dollar has fallen of late. The US Federal Reserve has been following a policy intended to promote investment and create jobs. As such interest rates have been kept low. When asked about this, the Fed as responded that it is less concerned about inflation than with stifling the economic recovery. Why has the dollar faltered in relation to the Euro? Forex investors have looked outside of the US with its low interest rates for profits to places such as the European Union and the Euro for higher interest rates. As the Euro has faltered due to the persistent Greek debt crisis this strategy has backfired on many Forex traders. So, why is the dollar climbing? Is it just because the Euro is having problems?

          An interesting event may well be the fact that US multinationals are said to be bringing profits home to the USA. This could be related to their collective belief that the dollar will soon rally. Whatever the reason the effect on the dollar could well be similar to what happen with Yen repatriation when Japanese companies brought home Yen to deal with the after effects of the earthquake and tsunami. If, in fact, US multinationals bring profits home to the USA the purchase of dollar with the various currencies of the world will drive up the price of the dollar. Traders can successfully anticipate this situation in two ways. By engaging to continual analysis of the dollar traders will stay current on US monetary policy. They will be aware of companies beginning to purchase dollars. By following technical pricing patterns traders will not need to ask, why is the dollar climbing? They will simply trade according to market patterns and pocket their profits.

          We may ask why is the dollar climbing when we hear of huge debt problems in the US as well as solid growth in other economies over the last couple of years. One of the issues of the years has been the lack of transparency in many economies. An example is the strength of the Japanese economy and the Yen during the 1980’s. The Yen was strong and the Japanese industrial machine, seemingly, could do no wrong. Japanese investors were buying US assets from Colombia pictures on the West Coast to Rockefeller Center in New York City. Shortly after these well published purchases it became apparent that there were problems in Japan. Much high level lending in Japan took place based upon handshakes and old school relationships. Encouraged by the government loans were made to support new industry and business even when these were not especially profitable. When this became known the proverbial house of cards came tumbling down. Japan has languished with near zero percent interest rates for twenty years as a result. The country has remained prosperous but the myth of invincibility was busted and the Yen did not go on to become the world’s dominant currency. During this time many have continued to view the dollar as a safe haven currency. So, why is the dollar climbing? As always it has to do with a variety of factors but in the end it means that folks want to buy dollars and will pay a higher price.

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            Swiss Currency Reserves

            Posted by TFNG Admin On June - 21 - 2011

            Swiss currency reserves at the Swiss National Bank are becoming a problem. How to trade Forex successfully includes keeping track of the state of each of the major currencies, including the Swiss franc. With this fact in mind we present a bit of information about the Swiss National Bank. The Swiss National Bank has four different names, one for each of the four official languages of Switzerland. These names are Schweizerische Nationalbank in German, Banque Nationale Suisse in French, Banca Nazionale Svizzera in Italian and Banca Naziunala Svizra in the preserved Roman dialect of Romansh. The Swiss National Bank is a corporation with government entities owning 55% of shares and private individuals owning the remaining 45% of publically traded shares. The Swiss National Bank functions as an independent central bank with the right to print and distribute money. It conducts Swiss monetary policy and has been largely responsible for the stability and strength of the Swiss franc. It has accumulated substantial foreign currency reserves. Unfortunately Swiss currency reserves have diminished in value as the Swiss franc has risen of late.

            Swiss currency reserves serve the same purpose as the currency reserves of Japan, Taiwan, and mainland China. A country sells its currency in order to prevent its own currency from becoming too expensive. Nations do this so that their exports can remain economically competitive. What happens in the long run is that the nation that buys other currencies as a continual monetary policy subsidizes is competitors for buying the nation’s products. The pitfall in this policy is that the currency that Switzerland, Japan, or one of the Chinas buys can still fall in value. This has happened to the Euro due to the several debt crises on the continent. The Swiss franc has gained 16% versus the Euro over the last month and a half. That translates to a 16% fall in value of Swiss currency reserves held as Euros. With the Swiss franc at record highs against the Euro the Swiss National Bank is holding interest rates near zero. As the Greek debt crisis plagues the Euro there is little relief in sight for Swiss currency reserves.

            The issue of holding someone else’s debt is not limited to Swiss currency reserves. Japan, China, Taiwan, and others have held dollars for years. At times this is profitable. With the dollar as a safe haven currency over most of the years since World War II holding greenbacks has not been a great risk. However, as the dollar has slid more than recovered of late anyone buying dollars is doing to drive the dollar up and their currency down. This allows the country doing to so keep their exports more productive. The rationale is that they will profit more in the long run selling discounted goods. As always, good Forex advice is to follow the monetary policies of nations such as Switzerland, Japan, and China for clues as to who will be buying dollars and Euros and who will be selling.

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              Foreign Currency Trading

              Posted by TFNG Admin On May - 13 - 2011

              Foreign currency trading is necessary for international trade. It is also an arena for the speculator looking for profits as well as companies wanting to hedge currency risk in international transactions. A German company may wish to sell machine parts to a company in the USA. They will want to be paid in Euros. The US company will need to use foreign currency trading to convert dollars to Euros in order to pay. The companies will come to an agreement on a price, in Euros, for the machine parts and the US company will pay upon delivery. If any time lapses between agreement and payment the US company will run the risk that the US dollar will fall in relation to the Euro. This will make the machine parts more expensive than anticipated. How to trade Forex in this situation can be done two ways. The US company can immediately buy Euros with dollars and make payment when the parts are delivered. This will be a good solution when the wait is a few days. If the contract will take six months to execute, the US company will not want to tie up its capital that long. The other reason for not immediately buying Euros is that the price the Euro in relation to the US dollar might fall. In that case the US company will get its machine parts at a discount. The other solution in this type of foreign currency trading is to buy options.

              Foreign currency trading with options allows the company to guarantee itself the current price of Euros in US dollars if it chooses to execute the contract. It will be, however, under no obligation to execute the options contract. Thus the company will simply let the contract expire and take its profits if the price of the Euro falls. It will execute the contract, buy Euros at the contract or strike price if the Euro rises against the dollar. Traders can use Forex technical strategies in foreign currency trading as another means of enhancing profits and limiting losses. As news hits the Forex markets traders react. Not only do all traders not react the same to the news but all trades cannot happen at once. Thus there is a degree of inefficiency in the foreign currency trading markets when the fundamentals change. By following technical price patterns a trader can often successfully anticipate price changes and trade accordingly.

              In times of economic, political and social chaos foreign currency trading often has more to with finding a safe place for assets than for finding stellar profits. This usually has had to do with the dollar as a safe haven currency. The dollar for all of its problems is the currency of a democratic nation, a huge economy, and a stable society. This cannot be said for all currencies of the world. Thus when war breaks out in North Africa and political demonstrations occur in countries throughout the Middle East a common occurrence is that traders buy dollars, Yen, or Swiss francs until the situation stabilizes.

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                Forex Exchange Trading

                Posted by TFNG Admin On May - 10 - 2011

                Forex exchange trading takes place throughout the world in many over the counter financial markets. Forex exchange trading is anchored by financial centers around the world so that trading takes place virtually around the clock. Forex exchange trading is method by which international currency transactions and international trade can take place. Forex exchange trading is what determines, day by trading day, the relative values of currencies around the world. Although the primary reason for Forex exchange trading is to allow international trade to take place the Forex market also allows for speculation. Traders buy and sell one currency against another in anticipation of profits. A major part of Forex exchange trading is the hedging of currency risk in the carrying out of international business contracts. In learning how to trade Forex the new trader must learn the fundamentals that drive the values of the currencies which he wishes to trade. One currency is always traded against another in that the trader buys Yen with US dollars, Euros with British Pounds, Swiss Francs with Australian dollars, and so forth. By following employment statistics, pronouncements of monetary policy and trade figures of two nations the trader is able to anticipate a rise or fall in the nation’s currency. However, the fundamentals of Forex exchange trading are quickly taken into account by the market. It is through close attention to the technical or statistical analysis of trading prices that traders are able to profit from minute by minute fluctuations in currency prices.

                The current Forex exchange trading system evolved during the 1970 decade as the previous fixed rate currency system based on a gold standard gave way to floating currency rates. Today the Forex exchange trading system is characterized by a large trading volume, high liquidity, around the clock trading, low profit margins and high use of leverage. Daily trading volume has been estimated at $4 Trillion. Three fourths of that volume is in spot transactions and foreign exchange swaps. A tenth is in forwards, a twentieth in options and other trade products, and one percent in currency swaps. Many traders use Forex technical strategies in order to profitably anticipate price movement. This requires online Forex trading with software compatible with that of a broker who, electronically, executes the trades. Electronic Forex exchange trading takes place very rapidly with traders moving in and out of positions, daily, hourly, and by the minute.

                There are several strategies employed by traders to profit from trading Forex. Forex options trading is commonly used by companies that are hedging the currency risk of international business contracts. A company may buy calls on one currency with another. If the currency markets move to the disadvantage of the company it will rectify the situation by executing the options contract and buy sufficient amount of currency needed to complete the transaction. The options contract will allow the company to buy the currency in question at the strike price, the price when the contract was purchased, instead of the spot price, the current market price. Whether one is considering how to short the Euro or go long on the Swiss franc trading options reduces investment risk and preserves the right to buy or sell currency profitably.

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                  Forex Volatility Profits

                  Posted by TFNG Admin On April - 21 - 2011

                  With increased Forex volatility profits can rise for traders who are tuned in to the foreign currency market. The world is a chaotic place today with political unrest across North Africa and the Middle East, outright civil war and NATO intervention in Libya, and the devastating earthquake and tsunami that recently hit Japan. At such times Forex volatility profits the prepared. Volatility comes from uncertainty. Successful trading comes from a firm knowledge of the fundamentals of the currencies that one trades and a clear view of market direction so far as technical analysis will supply it. How to trade Forex at times like this is often to buy call or put options in Forex pairs. However, whether one is trading Forex directly or through options Forex volatility profits those who do their homework, develop their trading skills, use a well thought out trading plan, and stay in touch with the market.

                  How to enter profitable trades in Forex is the same at all stages of volatility. Forex volatility profits come because there are typically more trading opportunities in the inefficient markets that arise when war, economic chaos, and natural disasters stalk the world. Today in North Africa and the Middle East whole societies have taken their cue from the peaceful demonstrations that forced Egyptian president and strongman Hosni Mubarak from office. Syria has just rescinded a generations-long state of marshal law and closed down a secret court. In Yemen demonstrations continue and there is unrest in the oil rich state of Saudi Arabia. Not only does the price of oil flinch at the prospect of increasing civil unrest in this oil rich region but the value of the Euro, Pound Sterling, and Swiss franc can be affected by the prospect of a disruption of oil supplies and more civil war on Europe’s flank. Forex volatility profits may be very possible as events unfold.

                  How to build a trading plan for Forex during times of high market volatility is to start long before the market becomes volatile. Successfully trading in high volume and volatility requires knowledge of both fundamentals and technical market factors. It requires that the trader develop the necessary skill set to execute trades in a timely manner, preserve investment capital, and find the most profitable currency pairs to trade. For example, trading the Australian dollar versus the Yen, Canadian dollar, or US dollar will make less sense when there is trouble on the doorstep of Europe than trading the pound, Swiss franc, or Euro versus one of the dollars or the Yen. Forex volatility profits will most typically come from situations where one currency is stable or profits from a situation while another is damaged. One can scan the various trading pairs for price movement or use a Forex service for alerts in finding the pairs with the most price movement. It will be up to the trader how to do this. Time spent finding the right pair can pay for itself in increased profits. Time saved by subscribing to an alert service may be even more profitable.

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                    War and Currency Trading

                    Posted by TFNG Admin On April - 5 - 2011

                    The standard wisdom on war and currency trading is that wars drive investors to put their money in currencies such as the dollar as a safe haven currency. Investors and traders respond to the uncertainty and economic disruption caused by armed conflict. Besides buying the US dollar, investors commonly buy Swiss francs, Yen, Euros, British Pounds, or gold bullion. When it is possible that a currency will devalue greatly, or disappear in the case of conquered country, any reasonably stable currency is a good bet. However, wars resolve themselves, for good or for ill. There are winners and there are losers. Depending upon who gains control of natural resources or markets economies may prosper as a result of war. When an economy prospers its currency commonly rises as well. This is, sadly, why many nations go to war.

                    Using the civil war in Libya as an example we can speculate about how that war and currency trading relate to each other. The facts of the day are always discounted by the market so it is possibility and speculation that drive prices. Those who might expect to be most closely affected by events in Libya are the European Union, Switzerland, and Great Britain. This is because Libya is a nearby supplier of oil. An unstable Libya is an unreliable source of oil. A rebel dominated Libya beholding to NATO forces and Arab supporters then becomes a goal for the oil consuming nations to the North of Libya. In that regard it is of note that rebel forces in the East of Libya have started selling oil through a Swiss trading company. The sale of a million barrels of crude oil promises to help the rebel cause in Libya and allow Libya, or part of it, to remain a stable supplier to oil to Europe. This becomes good news for the Swiss franc, Euro, and British Pound. Recently we wondered about Egypt and the Euro. Egypt came through its political crisis without violence. When demonstrators asked for more rights in Libya, the government responded with lethal force plunging the nation in civil conflict. War and currency trading issues are still a concern in Yemen, Syria, and Saudi Arabia as demonstrators demand right from rigid governments. The attentive currency trader will watch these situations and trade accordingly.

                    The Forex trader who accurately anticipates arms conflicts can profit by directly trading currencies that will suffer in consequence and in trading options on currencies with the likely end result is not so clear or certain. How to trade currency profitably is by anticipating war and currency trading in a timely manner. Many international companies trade these same situations in order to hedge currency risk. Speculators simply anticipate the sales and purchases of the major players in order to profit from war and currency trading. The first half of profiting from safe haven trading is when a crisis emerges. The second half is anticipating price movements of currencies as crises resolve. For example, as the Libyan situation stabilizes one might expect the Euro, Swiss franc, and British Pound to rise a little. To the extent that this happens and to the extent that a trader can anticipate it, he can  profitably trade situations of war and chaos and their effects on currency markets.

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                      Disclaimer - Forex, futures, stock, and options trading is not appropriate for everyone. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using this methodology or system or the information in this site will generate profits or ensure freedom from losses.

                      HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN OR MENTIONED.

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