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I am fairly new and have a question...

  • #1
  • First Post: Dec 22, 2005 12:33am Dec 22, 2005 12:33am
I would like to ask a silly question... I work with people who currency trade and I try to read the fundamental announcements and I keep getting mixed info on interest rates. Do interest rate increases strengthen or weaken a country's currency?
  • #2
  • Dec 22, 2005 5:02am Dec 22, 2005 5:02am
Quoting jimsasya
I would like to ask a silly question... I work with people who currency trade and I try to read the fundamental announcements and I keep getting mixed info on interest rates. Do interest rate increases strengthen or weaken a country's currency?
Your question is not silly jimsasya. To answer, it would depend on what perspective you view it. From Forex trading stand point, hiked interest rate add strength to that currency. The higher the interest rate the more people want to save with banks, the less loans and bond investments.

Significantly, this also affect the stock market trades because less people invest in it.
On the contrary, the opposite is true when interest rate is low. Hope this answers your question.

Happy trading
  • #3
  • Dec 23, 2005 12:20am Dec 23, 2005 12:20am
Thanks for the clarification. It does help.
  • #4
  • Dec 23, 2005 3:55am Dec 23, 2005 3:55am
Quoting jimsasya
Thanks for the clarification. It does help.
Anytime..
  • #5
  • Dec 23, 2005 1:09pm Dec 23, 2005 1:09pm
Quoting Nardino
....From Forex trading stand point, hiked interest rate add strength to that currency. The higher the interest rate the more people want to save with banks, the less loans and bond investments.

Significantly, this also affect the stock market trades because less people invest in it.
On the contrary, the opposite is true when interest rate is low.
In general terms this might be true, but it can depend on the reason for the hike. If inflation is a worry, hiked rates can just be an indication that the central bank also has that concern. This is less an issue with the major industrial countries, though.

Importantly, however, interest rates are a relative thing. If the US and UK both hike rates by the same amount, for example, that basically nullifies everything.

Eventually, though, as suggested, eventually hiked rates leads to economic stress, which is not positive for a currency (unless, of course, other countries are doing worse).
Efficient Markets? Hah!
  • #6
  • Dec 28, 2005 2:52pm Dec 28, 2005 2:52pm
The market moves in reaction to news. Economic news drives the market -- because economic news in the end drives interest rates.

Interest rates are the supreme gods of exchange rates. Currency rates are set based on expectations about how much currency is going to be worth against another currency over the long term. This is more important than I can possibly communicate -- interest rates are the supreme driver, over the long term, of currency rates. Just take a look, for example, of a chart of the CAD/JPY over the last 12 months, or the GBP/JPY. Japan's interest rate was at 0% while the CAD and GBP had rising or stable high interest rates.

What happens in cases like this is that investments fly to CAD-backed bonds to gain the higher interest rate. This creates CAD buying. Not only that, but hedge funds load up on CAD and sell JPY for long term carry trades. This is big trading for them -- and when you saw the CADJPY take a huge dive lower in December, it was because hedge funds were dumping their carry trades to close out year-end profits. They were also worried that the Bank of Japan is going to start raising interest rates (slow and steady, Greenspan style) next year.

So news in the short term is influential because traders price in what they think will now happen with interest rates based on that news.

Rob
  • #7
  • Apr 25, 2024 3:44pm Apr 25, 2024 3:44pm
hey, i am 6 months into learning forex trading now and still not sure whats best timeframe to use trading whilst having a full time job. i keep changing it up and was wondering what other traders use whilst working full time.
  • #8
  • May 17, 2024 3:07am May 17, 2024 3:07am
Quoting jimsasya
I would like to ask a silly question... I work with people who currency trade and I try to read the fundamental announcements and I keep getting mixed info on interest rates. Do interest rate increases strengthen or weaken a country's currency?

Interest rate increases typically strengthen a country's currency. When a central bank raises interest rates, it attracts foreign investment due to higher returns on investments denominated in that currency. This increased demand for the currency tends to drive up its value in the foreign exchange market. Conversely, interest rate cuts generally weaken a currency, as lower returns on investments make it less attractive to investors. If you have any more questions about currency trading fundamentals, feel free to ask!
  • #9
  • May 20, 2024 9:00am May 20, 2024 9:00am
Interest rate increases can strengthen a country's currency. Higher interest rates provide higher returns on investments in that currency, making it more attractive to foreign investors. As investors buy the currency to invest in higher-yielding assets, the demand for that currency increases, which can lead to appreciation in its value. However, the impact on the price also depends on other economic factors and market perceptions.
For instance, if an interest rate hike is seen as a response to high inflation rather than a sign of a robust economy, the currency might not strengthen as expected. It's important to consider the overall economic context and market sentiment when evaluating the potential effects of interest rate changes on currency strength.
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  • #10
  • Jun 4, 2024 12:57am Jun 4, 2024 12:57am
Hi all, sorry to jump on this thread but the site wont allow me to create a new one. I am new and using a demo account on Oanda linked with Trading View & MT4. I have been reading about Oanda being a Market Maker and not an ECN broker. I like the Oanda interface which is very simple to use but are there any better options for brokers that are an ECN broker? I like that I can setup the trade on Trading View but close it on MT4 as the accounts sync. I tried Pepperstone but the accounts wont sync across from Trading View to MT4. Also what are peoples thought on CTrader? MT4 looks like something from last century by comparison and CTrader seems alot more intuitive.
  • #11
  • Jun 6, 2024 11:32am Jun 6, 2024 11:32am
Quoting mw17lks
I have been reading about Oanda being a Market Maker and not an ECN broker

Personally, if I were trading spot forex CFDs (which I don’t, now) I would far rather use Oanda than some other broker pretending not to hold the other side of my trades by calling themselves ‘ECN’ to try to fool me. It took me a while to learn this, though (and many people actually never do, because they believe all the nonsensical terms the industry puts out to fool people, like ECN and NDD and STP.

Oanda are far more honest and reliable than most. You’ve done well.

TradingView is fine. Both TV and cTrader are a million miles better than MT, obviously, but you already know this (which speaks well of you!).
  • #12
  • Jun 6, 2024 2:09pm Jun 6, 2024 2:09pm
Quoting mw17lks
Hi all, sorry to jump on this thread but the site wont allow me to create a new one. I am new and using a demo account on Oanda linked with Trading View & MT4. I have been reading about Oanda being a Market Maker and not an ECN broker. I like the Oanda interface which is very simple to use but are there any better options for brokers that are an ECN broker? I like that I can setup the trade on Trading View but close it on MT4 as the accounts sync. I tried Pepperstone but the accounts wont sync across from Trading View to MT4. Also what are peoples...
TradingView is great for real time analysis but fucking terrible for trade execution and management.

MT4 is just damn ugly right across the board. The clunkiness of that whole platform gives me brain fog. (not what you want when trading)

CTrader is a good retail forex trade execution and management app, where you can get it. (and I know that Pepperstone support it)

Another great option if you are using OANDA, is Motivewave. There is a subscription fee for the more advanced features but for basic multi time frame, multi monitor charting features (which includes pretty much everything I use), the 'community version' is absolutely free. Motivewave also offers second to none (considering it's FREE) back testing/replay mode functionality also. Unlike TradingView, the replay mode takes as many tabs on as many timeframes as you with, all back and perfectly in sync, to the same timepoint in the chart. Unlike TradingView, MotiveWave also offers some pretty advanced trade execution and management options. If I traded with a broker that supported it, I would absolutely be using MotiveWave for both analysis and trade execution.
  • #13
  • Jun 20, 2024 11:06pm Jun 20, 2024 11:06pm
I also have a question as I am fairly new to understanding how this website works.

There is a widget inside the 'market' tab that shows people that have gone long/short.
How does that work? Do they connect from their broker into the platform or just post their assumptions?
  • #14
  • Jun 21, 2024 3:32am Jun 21, 2024 3:32am
Quoting GusParker
{quote} TradingView is great for real time analysis but fucking terrible for trade execution and management. MT4 is just damn ugly right across the board. The clunkiness of that whole platform gives me brain fog. (not what you want when trading) CTrader is a good retail forex trade execution and management app, where you can get it. (and I know that Pepperstone support it) Another great option if you are using OANDA, is Motivewave. There is a subscription fee for the more advanced features but for basic multi time frame, multi monitor charting...
That made my day.
Don't you know that I'm loco ...
  • #15
  • Jun 21, 2024 1:53pm Jun 21, 2024 1:53pm
Quoting RedAllOver
{quote} That made my day.
Lol - it was a good post, too.

What surprised me, with this thread, was that nobody commented yet on the 18+ year gap between posts #6 and #7.
  • #16
  • Jun 22, 2024 5:34pm Jun 22, 2024 5:34pm
Quoting Quickly
{quote} Lol - it was a good post, too. What surprised me, with this thread, was that nobody commented yet on the 18+ year gap between posts #6 and #7.
Take notice, that was his 1st post, unless I'm wrong, there is a minimum number of posts before a new member can start a thread.

Which discourages spam bots, I guess.

Also, most forums encourage people to Search, try to find an answer to your question before making a new thread.

Or at least find a thread with the same ideas that you have, so I think he did good actually.

You're Welcome.
It takes a lot for me to IGNORE you, but you can try.
  • #17
  • Jun 24, 2024 7:20pm Jun 24, 2024 7:20pm
Quoting Erebus
{quote} Take notice, that was his 1st post, unless I'm wrong, there is a minimum number of posts before a new member can start a thread. Which discourages spam bots, I guess. Also, most forums encourage people to Search, try to find an answer to your question before making a new thread. Or at least find a thread with the same ideas that you have, so I think he did good actually. You're Welcome.
Do you by any chance know how many posts one needs to do before they are able to start their own threads?
  • #18
  • Jun 25, 2024 12:01pm Jun 25, 2024 12:01pm
Quoting Erebus
that was his 1st post
Oh well, if you have to ask a question in an existing thread, you may as well pick one that hasn’t seen a post at all for over 18 years.
  • #19
  • Last Post: Jun 25, 2024 6:33pm Jun 25, 2024 6:33pm
Quoting Quickly
{quote} Oh well, if you have to ask a question in an existing thread, you may as well pick one that hasn’t seen a post at all for over 18 years.
Your opinion, no problem, for me, people read the thread title and the latest post, either reply or move on, not worry about when, my opinion.

It takes a lot for me to IGNORE you, but you can try.
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