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Choosing A Forex Strategy
Technical analysis and fundamental analysis are the two basic
areas of strategy in the FOREX market which is the exact same as
in the equity markets. However, technical analysis is by far the
most common strategy that is used by individual FOREX...
Currency trading is not the monopoly of the nerds and the geeks
The general perception is that any and every person who is
involved in the business of trading of currency or foreign
exchange is a person who has a super high IQ. To hear words and
phrases like liquidity ratio, central bank intervention...
Currency Trading – The Future Of Investment
Forex Trading, meaning Currency Trading, is a world wide, little known market, which will become the most popular source of income for investors in the very near future. It is open for banks, rich investors and small ones alike and, depending on...
Introduction To Forex
The Foreign Exchange Market – better known as FOREX - is a world wide market for buying and selling currencies. It handles a huge volume of transactions 24 hours a day, 5 days a week. Daily exchanges are worth approximately $1.5 trillion (US...
The History of FOREX Trading
The origin of FOREX trading traces its history to centuries ago. Different currencies and the need to exchange them had existed since the Babylonians. They are credited with the first use of paper notes and receipts. Speculation hardly ever...
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Trading Analysis: The Big Mac
The Big Mac Factor... And What It Means to You
When "experts" say the dollar is "overvalued and about to
crash," what exactly is it that they're talking about? How do
they know?
It turns out, they don't know what they're talking about... as
the U.S. dollar is not undervalued or overvalued versus the
major currencies of the world, based on how much a dollar buys,
versus how much a euro or a yen buys (this is based on a rather
complicated calculation of "purchasing power parity," or PPP).
Fortunately, The Economist magazine invented a novel way to show
PPP that everyone can understand. According to the May 29, 2004
issue of the magazine, the editors invented the Big Mac Index
"in 1986 as a light-hearted guide to whether currencies are at
their 'correct' level."
The magazine simply asks McDonald's for the U.S. dollar price of
a Big Mac all over the world (McDonald's serves burgers in 120
countries). As of May 29, a Big Mac was 13% more expensive in
Europe than in the States. However, in Japan, a Big Mac was 20%
cheaper.
My take on this is that the U.S. dollar likely won't crash or
soar against these major currencies, based on this indicator.
The brutal truth is that the dollar isn't much overvalued or
undervalued.
The currency world sure is a much more boring world today than
many commentators would have you believe. It was a different
story back in 1995...
A Big Mac
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in Japan was 100% more expensive than a Big Mac in the
States. Not surprisingly, over the next few years, the Japanese
yen crashed. In 1995, at the yen's peak, it only took 80 yen to
buy one U.S. dollar. By mid-1998, it took nearly twice as many
yen to buy one U.S. dollar.
If you had been smart enough to recognize the huge overvaluation
of the yen in 1995 - and the Big Mac Index was one very simple
way you could have done that - then you could have profited
enormously as the yen weakened.
Currency Trading: Much Ado About Nothing, at the Moment
I don't expect you to turn into a currency trader. And the great
thing is, right now, you don't need to be an expert on
currencies - you don't need to transfer your money back and
forth from yen to euros to dollars... why? Because the world's
paper currencies are fairly in line with each other - a Big Mac
costs the same in the countries of the world's major currencies.
The next time a Big Mac hits $6 a burger in Tokyo, I'll let you
know.
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http://www.australiansharetrading.com/ the complete online
resouse for share trading Please use this aricle, you have my
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share trading By Nik Halik =>
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About the author:
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