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Currency Stability

dennerle
Jan 03 2010 at 06:42
posts 71
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?

Slow and Steady Wins the Race :)
Elkart
Elkart
Jan 03 2010 at 07:48
posts 941
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...

PipCollector
Jan 05 2010 at 15:09
posts 92
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 😀.

Patience is a virtue.
PipCollector
Jan 05 2010 at 18:55
posts 92
Also, if you can predict the stock markets, why are you wasting your time on fx? 😄

Patience is a virtue.
Elkart
Elkart
Jan 05 2010 at 22:13
posts 941
Fx is easier to automate. And stocks is a lot of waiting. Fx is daily profit.

pingman
Jan 08 2010 at 03:26
posts 7
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

Elkart
Elkart
Jan 08 2010 at 03:44
posts 941
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.

bizWiz
Jan 08 2010 at 13:58
posts 397
i agree, all markets are correlated, it just a depends on the risk tolerance of the investor.

Sleep is for the weak.
MeuLugar
Jul 19 2017 at 14:16
posts 45
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.

AniLorak
Jan 21 2018 at 07:51
posts 920
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!

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