Lets start with a basic primer on Currency . This thread is not for the lazy
3 ways to create money
• Deficit spending by government - Inflationary
• Commercial Banks loans. Not Inflationary (because it comes with interest payment and repayment of debt)
• Exports Not Inflationary (exports is a direct correlation of money reserves)
When US Imports Goods from china, they send USD to china in exchange. US loses control of those dollars, but dollars are always within US monetary system.
What devalues a currency?
COLLAPSE OF PRODUCTIVE OUTPUT
POLITICAL INSTABILITY WAR / CIVIL WAR Syria and Iraq WAR. Currency worth dick Ukraine Russia , Egypt Tunisia political instability.
FOREIGN DENOMINTAED DEBT LOST FAITH IN THE CURRENCY
Mexican peso tanked when trump took over as political instability with relationship to US uncertainty
why didn't CAD soar when oil was up so much, political instability with US. Trump and nafta agreement
post brexit vote pound and euro fell, political uncertainty
What values a Currency?
• Interest Rate
• Current Account Deficits section within Balance of Payments that record ◦ nations transactions with Rest Of World ◦ Net trade in goods and services, net earnings cross border investment and net transfer payment
• Public Debt • Terms of trade – evolution of prices or exports and imports
• Political Stability
• Speculation market sentiment
• Relative strength of other currencies
• Government Intervention
• Economic Growth/Recession
Think of a currency like a stock You can increase profits(exports) but if company is shrinking or not growing it is of no use to investors. Amazon perfect example, it barely made money forever and a day, giving shit away for free till they earned market share. Now? Bezo's richest man alive
So if EU exports increase but unemployment high and production low, then EUR will sell off.
Current Account surplus means nothing EU exports means less EUR around the world. Scarcity of EUR, but this doesn't make EUR rise.
I don't get it- why does any of this matter? NONE of this is relevant for putting on a trade, *right now*, if you want to make money today or tomorrow or perhaps even next week, although I guess it's relevant if you're on the monthly chart and planning a potential exit in 2020.
Let me ask you something. Let's say you look at the major 8 currency pairs, drop down to the 4 HR time frame, and throw 50+ nano and microlots of various stop widths and take profits, with half or more being 1R scalps, at a 20-40 pip grid corresponding to the 4 HR support.
You do this twice a day.
You've done the math beforehand, and know your risk per basket of trades.
You've diversified into 8 currency pairs zeroing in on a high probability zone.
Are you telling me you'll be net-negative for the week?