The currency market is a big game in which both individual players and entire countries, and sometimes coalitions of countries, participate.
The exchange rate of the national currency has a rather harsh effect on the country’s economy, an excessively strong currency makes exports unprofitable, and an excessively cheap one undermines confidence in the national currency, causing its further depreciation.
Therefore, most governments prefer to keep the currency in a certain price range, using foreign exchange interventions and other methods of influencing the exchange rate for these purposes.
And if everything is clear with foreign exchange interventions, then what other ways to cause a change in the exchange rate?
This is news and rumors, it is no secret that the media in most cases work to order, publishing ordered news, which in one way or another affect the foreign exchange market.
Consider, for example, the situation that currently exists in the EURUSD currency pair a year ago, the euro cost $ 1.39 per euro, now the rate has dropped to 1.06, that is, the currency has actually fallen in price by 30%.
And this means that all goods produced in the Eurozone have also fallen in price by 30%, while American goods have risen in price by the same amount.
It is clear that in such a situation the European Union will play for a further fall, inflating the situation with Greece and not showing the real state of things. The United States, on the contrary, will try by all means to weaken the US dollar in order to somehow reduce the price of goods produced in America.
Therefore, you should not believe the news, but you need to evaluate the real value of both currencies and the possible prospects for the trend.
The euro is currently at almost a ten-year low, and despite the wishes of the EU leadership, there are no special economic prerequisites for its fall further. The situation with the dollar is completely opposite, temporary improvements in the economy are gradually declining, which is likely to lead to a fall in the US currency.
Trading on strong news can also have negative consequences, here you can earn only if you entered the market at the very beginning of the movement.
And as a rule, everything happens the other way around, the price has already approached its limit, and only then the trader decides to open a deal, as a result of a rollback and losses.
One should not think that if the news or forecast is published by an authoritative publication, then this testifies in favor of the reliability of the data; at present, almost any information is published for money. Trend lines and lows – highs in our case are a more reliable guide when opening deals than politicians’ statements and analysts’ speeches.
An even sadder experience is the use of insider information in trading, this is when one friend has a good friend who knows for sure that Gazprom will suffer losses this year, which means that its shares will fall in price and it is necessary to play for sale. Only those who spread them make money on such rumors, and the latter is subject to criminal liability.
If you still want to make a profit from trading on the news, use them for short time periods, open deals if you are in time for the start of a new trend and hold for no more than an hour. This is the only way you get a chance to profit, and then if you close the deal in time before the correction occurs .