Currency Stability

hi peeps,

would like to find out from you guys on how stable is currency prices?

I've heard people saying that currency prices are stable because it moves in 4th decimal places which is very minimal.

I've also heard that currency prices are stable because each currency pair would prevent or wouldn't allow the other currency to surge too high or low due to economic fundamentals/ import and export

On the other hand, i've heard that in comparison with stocks, the decimal movement is very little compared to stocks which explains currency prices stability

What are your views whether currency prices are considered stable?

More stable than a stock, a currency doesn't often lose 50% or 80% of its value, unless you have the misfortune to live in Zimbabwe. One of my stocks IMP which is one of the biggest platinum mines in the world did exactly that last year.

Also, you're not going to get a CEO who gets pissed in the company bar and say the wrong thing and the next day the stock is on the floor. I lost money like that.

In fx a 10% move is big. But a block is so expensive and credit so easy to get through margin accounts that people tend to over leverage the trade.

So I think it's more stable than stock, but quite likely you'll over leverage it and get a more volatile equity curve than stocks, where margin accounts are a lot less common.

There is one very big difference though. Stock is 100% predictable where fx 100% unpredictable. A stock will always go up. If it's not going up now, then it will go up later. Unless the company goes bankrupt, the stock will go up eventually. Same is not true for Fx, which is bi-directional. Makes it very difficult to trade...

Elkart, I agree with most of what you've said, but how exactly can you say: 'Stock is 100% predictable'?

I think you have the same probability of winning the stock markets as the forex markets, which both are next to impossible in the long term 😀.

Also, if you can predict the stock markets, why are you wasting your time on fx? 😄

Fx is easier to automate. And stocks is a lot of waiting. Fx is daily profit.

Elkart posted:
    Fx is easier to automate. And stocks is a lot of waiting. Fx is daily profit.

That is why I came to forex. A small part of my portfolio which includes stocks and real estate. Forex is daily and keeps the brain in play. I can't play golf all the time.

I am also interested in automation and atrategy creation

Fx views are fundamental to stocks.

The last resources rally we had was actually all about dollar weakness. So if I want to buy say Implats shares (platinum) I have to be relatively sure that both the dollar will weaken and demand will pick up, otherwise it be dead money.

All part of the puzzle.

I see it as a pyramid in terms of gains, property the slowest, then equities, then derivatives on equities and then FX. From there I cascade my investments down, as they are also affected by changes in market conditions in that order, property being the last to be affected, fx first.

To me we all trade fx anyway, no matter what we trade.

i agree, all markets are correlated, it just a depends on the risk tolerance of the investor.

Well, I measure the stability of any currency pair based of the market context, I mean trendy market or not! Yes, I am interested on only trendy market! For determining market trend I mainly use high time frames like Weekly and Monthly.

bizWiz posted:
i agree, all markets are correlated, it just a depends on the risk tolerance of the investor.

Yes, there have correlations between the currency pairs! But, you can’t use this strategy as directly because all of trading pairs move individually according to their own principle!

Most major currencies are relatively stable. Of course, there are exceptions sometimes: the GBP and CHF immediately come to mind due to BREXIT and the Swiss Bank shenanigans back in 2015.

It is necessary to watch the news and track down possible changes in the economy. If the trend of the economy of this country is predictable enough, the currency will be more stable. For example, in the United States there is some instability and uncertainty in monetary policy, and in Europe the situation is slightly better. Because of this, we see quite an obvious trend with options for reversal due to the instability of the dollar.

mlawson71 posted:
Most major currencies are relatively stable. Of course, there are exceptions sometimes: the GBP and CHF immediately come to mind due to BREXIT and the Swiss Bank shenanigans back in 2015.

Till now I can remember the issue of CHF. Luckily, I was out of the market in that time.

FernandoUgho posted:
It is necessary to watch the news and track down possible changes in the economy. If the trend of the economy of this country is predictable enough, the currency will be more stable. For example, in the United States there is some instability and uncertainty in monetary policy, and in Europe the situation is slightly better. Because of this, we see quite an obvious trend with options for reversal due to the instability of the dollar.

True, you need perfect timing to be investing in the U.S. dollar.

FMovingAverage posted:

FernandoUgho posted:
It is necessary to watch the news and track down possible changes in the economy. If the trend of the economy of this country is predictable enough, the currency will be more stable. For example, in the United States there is some instability and uncertainty in monetary policy, and in Europe the situation is slightly better. Because of this, we see quite an obvious trend with options for reversal due to the instability of the dollar.

True, you need perfect timing to be investing in the U.S. dollar.

This rule is applicable to all trading pairs; a good entry point is very crucial. In this case, my mainly use support/resistant tools.

Depends upon the risk tolerance of the investor , the capacity how much you can resist the fluctuation.

Baazex posted:
Depends upon the risk tolerance of the investor , the capacity how much you can resist the fluctuation.

Well; may I know your risk reward ratio? If you don’t mind actually……

mlawson71 posted:
Most major currencies are relatively stable. Of course, there are exceptions sometimes: the GBP and CHF immediately come to mind due to BREXIT and the Swiss Bank shenanigans back in 2015.

Those times of extreme instability also give rise to a number of viable trading opportunities.

Fundamental analysis plays a large role in proper Risk Management, especially in instances where an interest rate suddenly drops to 0% or a currency suddenly becomes devalued because of a Political Coup, or similar catastrophic event with extreme economic results.

Causality is the primary focus of interest in those instances.

Currencies are more stable because they are based on the country's economy. Currencies are regulated by bureaucrats and news is usually not unexpected. Unlike company stocks, which depend on a much larger number of factors. But in currencies there is no such profit as in stocks, so it’s worth choosing)