subject: China and Trading the Currency Markets On 2010 [print this page] With the Chinese economy doing so well, the pressure for a floating Yuan is likely to increase.
This underpins the upward movement of Gold as a stronger Yuan ipso facto translates into a weaker Dollar, Euro or Pound.
As Simon Denham of FinancialSpreads.com recently said, The currency markets continue to swing backwards and forwards. It does appear to me that if you took virtually any position in one of the major currency crosses and waited long enough the market will eventually come back into your favour.
At some point in the future the addition of the Yuan to the floating currencies will give a massive boost to the currency exchanges. They sorely need a new cross after the demise of all the European currencies back in 2000.
So what should you do if you want to trade the currency markets? Ideally you want an account where you can quickly access a wide range of currencies.
If Im trading over short periods of time (between 10 minutes and 3 months) then a spread trading account is one of the easiest ways of doing that.
I prefer a spread trading account because of the other markets on offer. You can trade thousands of markets from the very popular FTSE 100 index and Euro/Pound exchange rate, to the less traded Indian Stock Market, Copper futures, Dollar/Peso markets.
Also, unlike traditional stocks and shares trading, there are no commissions or broker's fees.
And, whilst you can trade online and over the phone you can also trade a wide variety of markets outside market hours. With firms like paddypowertrader you can trade the top 20 currency markets 24 hours a day, from Sunday to Friday.
Yes, there are a good number of advantages but you must also remember the drawbacks. Familiarise yourself with the risks involved. Please ensure that spread trading matches your investment requirements. Spread trading does carry a high level of risk. Seek independent advice where necessary.
If you are new to spread trading then some risk free trading might be the order of the day. It is worth having a look at a spread trading practice account. A number of firms offer these for free.
A demo or practice account simply lets you trade the markets with virtual funds. In other words, it is risk free. If you want to test your theories on specific markets, then a little practice should help you understand the risks and rewards.
Finally, watch out for your emotions, they can play havoc with your trading. Having a strategy and sticking with it should help.
You could also employ trading orders like Stop Losses and Limit Orders to help control trading decisions. These are orders that close your currency trades if / when the markets hit a certain level.
