Depending on where you have started your forex training you may already understand currencies have “personalities.” There are a series of questions you should ask about the currencies you intend on trading. Once you ask these questions you can move on to the current details in the news and charts. The foreign exchange market is large, the largest actually. When you have a lot of moving parts to consider it is a good idea to learn the basics about certain currencies. You can then move on to trade these currencies with each other in a decent pairing instead of choosing the more volatile scenario. Compared to Australia, Japan, and the Eurozone, the USA has the most traded currency for one major reason.
Foreign Exchange Market: USD Reasonable Trading
The USD is considered to have the largest currency reserves around the world. It is the main reason that 85 per cent of the trades in the foreign exchange market include the USD. Not everything is peachy with the USD if you just assess it on its merits. According to the basic “personality” concept a deficit is not a good start. Deficit usually means the country has a weak economy. This is a standard by which countries are compared. By adding in additional information it is clear that the USA does not have a weak economy compared to other countries in the world. Despite the USA being rated at 190 out of 190 for deficit, where one is the top surplus and 190 is the largest deficit you would think the USD would not be very strong against any currency.
Other things help strengthen the USD. The main point is that in the foreign exchange market you compared one currency to another to see which currency is gaining in strength in that moment. Strength can be found in the exports a country has. The USA has a long list of agricultural exports, capital goods, and industrial supplies for exports. Manufactured goods and commercial services have the highest percentages for exports. Where the USA exports to is as important as what. If you monitor what is exported along with who gains those exports you can see which currencies might be affected when exports are being shipped out. The European Union and Canada are the two major countries receiving exports from the USA.
Foreign Exchange Market USA Export Relationship
Exports show where and what is moving a currency in strength or weakness. If the European Union has ordered agricultural goods a few things will happen. The first is that there is a bump in the agricultural goods industry. The next is that the EU has to exchange their currency for USD. Demand for USD increases its strength. An increase in strength can provide you a profit in the foreign exchange market as long as the other currency in the pair is losing it completely. The EU is not the same as the Eurozone so any country in the EU could be involved in the purchase, not necessarily one using the Euro.
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