Home » Finance » Currency Trading

Are Central Banks Part of the Problem?

Jun 11, 2008
The extreme volatility in the forex market over the past few days is both exciting and very dangerous. You had better visit your doctor and get a complete physical before trading in these markets. Certainly they are not for the faint hearted or for those who need to avoid stress.

On the 4th of June the Euro traded as low as 153.65 against the Dollar. Then the huge spike in oil prices and the nearly 400 point drop in the Dow weakened the dollar and took the Euro to a quick high of 158.43 just yesterday. Early this morning as I write this at 7:45 AM we are back at 155.15 in the Euro.

While such extreme moves are wonderful when you are on the right side of them such huge moves with "V" reversals make it difficult to stay with the flow. All can be going well and then just a few minutes later your trade can be under water. If you don't have protective stops placed, very deep water. Caution is in order.

It seems from recent statements made by the US Fed Chairman, Ben Bernanke, and the European Central Bank President Jean-Claude Trichet that they are not at all on the same page. The Dollar strengthened to as much as 153.65 Euros on Bernanke's latest comments that the Fed would be paying more attention to inflation. Forex market traders took this to mean that the US interest rate reduction cycle is over and that the Fed may even soon increase rates.

Only a day later Jean-Claude Trichet indicated that the EC may in fact raise interest rates and the Euro zoomed to as high as 158.43. Nearly 500 pip swings in Euro - US Dollar quotes over just a very few days is highly interesting but indicates that there are extreme financial stresses in the world forex markets that have the central bankers out of step. Just a statement here and there can make or break your day in such a market environment.

With crude oil spiking to nearly $140 a barrel on Friday, with the US stock market tanking 400 points only to bounce back a weakish 70 points on Monday, with the housing market in a free fall, with banks and brokerage firms still writing off billions, really hundreds of billions, of dollars of sorry toxic waste mortgage and derivative instrument investments, and with the forex market popping around like a cork on the ocean in a category 5 hurricane, we are in some deep do do in the investment world.

As always, in such an extreme trading environment one man's disaster is another mans great fortune. If trade this wild market you must just don't look too far ahead as to market direction. If you pick your entry points very carefully as the market reaches extremes you should be able to make nice quick profits on the correction that follows.

However, if you have a heart condition, you had best avoid these extreme forex markets. When central bankers have a hard time coordinating policies you can be sure of forex market turmoil.
About the Author
If you are brave and bold and have true risk capital on hand you may want to Learn to Trade Forex There is a lot of information to review at Forex Trading Guru.
Rating:
Please Rate:
(Average: Not rated)
Views: 297
Print Email Report Share
Article Categories
    • Artists
    • Gambling
    • Humanities
    • Humor
    • Movies
    • Music
    • Photography
    • Tattoos
    • Television
    • Classic Cars
    • Motorcycles
    • Recreational Vehicles
    • SUVs
    • Trucks
    • Vans
    • Branding
    • Business Opportunities
    • Careers and Jobs
    • Corporate
    • Customer Service
    • Direct Mail
    • Entrepreneurship
    • Ethics
    • Financing
    • Franchising
    • Home-Based Business
    • Human Resources
    • Import and Export
    • Leadership
    • Management
    • Market Research
    • Marketing and Advertising
    • Negotiation
    • Network Marketing
    • Networking
    • Organizational
    • Presentation
    • Project Management
    • Public Relations
    • Small Business
    • Strategic Planning
    • Team Building
    • Telemarketing
    • Training
    • Data Recovery
    • Databases
    • Games
    • Hardware
    • Networks
    • Operating Systems
    • Programming
    • Security
    • Software
    • Spyware and Viruses
    • Ask an Expert
    • College and University
    • Home Schooling
    • K-12
    • Languages
    • Online Education
    • Psychology
    • Coffee
    • Cooking
    • Gourmet
    • Recipes
    • Wine and Spirits
    • Acne
    • Aerobics
    • Alternative Medicine
    • Beauty
    • Cancer
    • Cosmetics
    • Depression
    • Diabetes
    • Diseases and Conditions
    • Fitness Equipment
    • Fitness
    • Hair Loss
    • Heart Disease
    • Medicine
    • Men's Health
    • Muscle Building
    • Nutrition
    • Skin Care
    • Supplements and Vitamins
    • Weight Loss
    • Women's Health
    • Yoga
    • Arts and Crafts
    • Babies
    • Collecting
    • Elderly Care
    • Genealogy
    • Hobbies
    • Parenting
    • Pets
    • Pregnancy
    • Woodworking
    • Feng Shui
    • Gardening
    • Home Appliances
    • Home Security
    • Interior Design
    • Landscaping
    • Affiliate Programs
    • Article Marketing
    • Auctions
    • Audio
    • Banner Advertising
    • Blogging
    • Broadband
    • Domain Names
    • E-Books
    • E-Commerce
    • Email Marketing
    • Ezines and Newsletters
    • Forums
    • Internet Marketing
    • Link Popularity
    • Pay-Per-Click
    • Podcasting
    • RSS
    • Search Engine Marketing
    • Search Engine Optimization
    • Security
    • Social Media
    • Spam
    • Video
    • Viral Marketing
    • Web Design
    • Web Development
    • Web Hosting
    • Copyright
    • Cyber Law
    • Intellectual Property
    • National, State, Local
    • Patents
    • Regulatory Compliance
    • Trademarks
    • Buying
    • Selling
    • Baseball
    • Basketball
    • Boating
    • Cycling
    • Extreme Sports
    • Fishing
    • Football
    • Golf
    • Hockey
    • Hunting
    • Martial Arts
    • Running
    • Scuba Diving
    • Soccer
    • Swimming
    • Tennis
    • Dating
    • Divorce
    • Marriage
    • Weddings
    • Astrology
    • Buddhism
    • Christianity
    • Faith
    • Hinduism
    • Islam
    • Judaism
    • Meditation
    • Metaphysical
    • New Age
    • Cable and Satellite TV
    • Cell Phones
    • Communication
    • Gadgets and Gizmos
    • GPS
    • Satellite Radio
    • Video Conferencing
    • VoIP
    • Addictions
    • Coaching
    • Goal Setting
    • Motivational
    • Stress Management
    • Time Management
    • Clothing
    • Electronics
    • Fashion
    • Gifts
    • Jewelry
    • Causes and Organizations
    • Environment
    • History
    • Holidays
    • Men's Issues
    • Nature
    • Philosophy
    • Politics
    • Women's Issues
    • World Affairs
    • Air Travel
    • Camping
    • Cruises
    • Destinations
    • Outdoors
    • Article Writing
    • Book Reviews
    • Copywriting
    • Fiction
    • Non-Fiction
    • Poetry
    • Quotes
    • Screenplay
    • Tools and Resources