Check out this primer on currency trading and see if you can apply it to the classic binary options trading strategy models.
If you’re looking into binary options as a means for making money via currency trading, you may find this little bit of background info on currency trading useful when creating your own binary options strategy. It’s a basic bit of grounding by Roger Grove which will come in handy as you begin to move on to more advanced currency trading and binary options strategy such as that which this website covers in detail.
So, how do you make money trading currency? You have an idea, you think you know what you wanna do, but how do you really wanna do it?
Well, you have to go back to the fundamentals of what makes a currency go up or down in value. Generally, it’s whether that country is taking in more cash than they’re paying out. Sort of like your home! If you see your checking accout steadily going down in value, you’re not feeling very good, and if you go to borrow money you’re gonna pay a higher rate of interest. Where as if the value of your checking account is consistently going up, well, the banks are gonna love you, they’re gonna wanna lend you money at the lowest rate possible. So, countries are soft of the same. How do you get that data? Well, again, you can go back to Bloomberg to look for it, you can go to Reuters to look for it, but the easiest way is to go to your book store, and get The Economist (magazine).
If you go to your local book store and buy The Economist (costs about four dollars), there’s the table in the back of the magazine which comes out every two weeks that talks about whether that country is bringing in more money than it’s spending or spending more money than it’s bringing in. It’s identified as the current account. If the current account is negative, in our way of thinking, you wanna beshort their currency. If the current account is positive, you wanna belong their currency. An example: here in the United States, our curent account today is about 5% of GDP. That, to me, means that you probably wanna remain short the US dollar against other currencies that have more money coming in. Who would that be? Well, the Yen for certainly, and the Euro would be two examples, and the Swiss Frank would be a third.
So, get The Economist! That’s the best place to start.
I am Roger Grove, and the question is:
How do you make money trading currency?