Not need to fear if you use safe haven of Forex the Right Way!
Safe haven Forex trading refers to anticipating and profiting from the flight. From risk that occurs when there is bad financial news around the world in foreign currency markets.
Traders typically buy USD Yen and Swiss Francs during times of trouble.
The current dilemma in safe haven Forex trading, is that the USD may be due for a fall. The budget fight on Capitol Hill threatens to spill over into the United States, defaulting on its sovereign debt.
The Forex response to a United States government shutdown followed by default, could be dramatic enough to kick the USD out of the safe haven Club. This is a real problem for the currency that is part of eighty-five percent of all Forex trades.
For much of the last few years our focus was on when an Italian bond auction went badly or when the Greek economy contracted again.
Speculation that the EU would dismantle was bad news for the euro.
Now, however, the Greek economy is getting a little better and the outlook for the US dollar is pretty dismal. The trader will need to understand the fundamentals. These are key to know these news drives Forex trading in various currencies. But will also need to understand Technical Analysis of trading as well as to prosper in safe haven Forex trading.
Safe Haven – Switch a focus to the USD.
Before the USD took centre stage the euro was repeatedly in free fall and then rebounded. I wrote about this and and how a Forex trader can use signals such as double bottoms and double tops to anticipate reversals.
This sort of technical trading, can work in safe haven Forex trading as well but may be applicable to a wider range of currency pairs.
This in theory is because traders seek safe haven in three basic currencies.
All currencies trading against the Swiss Franc, Yen and USD tend to fall during tough economic worries and the three tend to rise.
When no new major event of fundamental factors intervene, then the market will trade itself to a consensus. Patterns will develop, safe haven pairs might not be consider and the astute trader may be able to profit from a return of more normal rates of exchange as anxiety lessens.
The issue now is that the USD may not be part of the good-old-boy Club of stable currencies.
Safe haven Forex trading.
Being aware that the currency markets are set to change comes from experience and staying in touch throughout the trading day.
Executing efficiently and successfully comes with experience and the discipline that it teaches. Meanwhile the dollar set to have its worst week month or year ever.
For a nation struggling with a slow recovering economy. Such a huge national debt and a steady worsening balance of payments the dollar seemed a better choice than many other currencies. But the threat of a default on debt payments throws virtually all Forex trades into limbo, including safe haven currencies.
The job of those interested in safe haven Forex trading is to anticipate when things will go bad with the dollar and when a rebound might occur.
It’s all part of understanding the Forex markets.