Confused about fundamentals
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Thread: Confused about fundamentals

  1. #1
    Hi,
    I have just finished the book 10 fundamentals of trading and also he says that when interest rates increase that the currency will weaken.
    I was under the belief that raised interest rates strengtens the currency , because of individuals investing their currency for one having greater interest rate(Bonds etc..)

    Could somebody clarify this to me?

  2. #2
    I was under the exact same impression after reading the book myself. The only conclusion I can provide is the facts. An increase in interest rates will strenghten the trading of that particular's currency (for the reason you provided....investment). I am not certain what Mr. Martinez was trying to get at, maybe it was in the long run, I am not certain, but what I am sure of (99% nothing is 100 percent) that if/when GBP raises interest rates on thursday that the USDGBP chart will move upward.

  3. #3
    In the event the interest rate grow, individuals tend to save more to find the interest, so the bank pay additional cash for the interee,, this saved cash need to be pay , or the bank will cover the interest for nothing (loss)...

    while the increasing number seem resembles a increasing worth of a currency,it posses danger if the utilisation is low.

  4. #4
    Whynot utilize TECHNICAL analysis which is a wonderful summary of the fundamental news presented well on your chart

  5. #5
    Please suggest me a good book on how interest rates/monetary policy/inflation/trade-balance impact a currency?

  6. #6
    Quote Originally Posted by ;
    whynot use TECHNICAL analysis which is a nice summary of the fundamental news presented well on your chart
    That's a fact, yet fundamental gives reasoning for why its moving in this fashion, which is fantastic to get a swing trader.

  7. #7
    Quote Originally Posted by ;
    Please suggest me a good book on how interest rates/monetary policy/inflation/trade-balance impact a currency?
    Only search International Finance/Macroeconomics and a book by Paul Krugman will develop. Very informative and good.

  8. #8
    I would second Paul Krugman as well..it actually answers most questions newbies have, seeing economy, price, valuation, inflation and the rest..good chance.

  9. #9
    Here is my view about Fundamentals vs. Technicals

    Fundamentals tell you what should happen

    Technicals tell you what did happen

    Thus, in my estimation Fundamentals are entirely worthless in trading in which technical analysis is completely useless in investing. Anyone who utilizes fundamentals in any commerce less than 3 weeks in duration does not understand what trading is. Trading is currently buying when price action is going higher and selling if price action goes lower. The fundamentals are worthless.

  10. #10
    Quote Originally Posted by ;
    Hello,
    I've only finished the book 10 essentials of trading and he states that when interest rates increase the currency would weaken.
    I was under the belief that raised interest rates strengtens the currency , due to people exchanging their currency for one having greater interest rate(Bonds etc..)

    Could someone clarify this to me?
    Currencies are traded in pairs. If EU interest rate climbs, USD will weaken, so EUR/USD will go up.

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