Post Why should you as a trader pay attention to interest rates?
Jul 28, 2020 at 08:43
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16 Replies
会员从Jul 09, 2020开始
19帖子
Jul 28, 2020 at 08:43
The general rule is that, as interest rates rise, they tend to increase demand for the currency. Due to higher interest rates, major investors tend to follow fixed-rate currencies.
Yet interest rates don’t just exist. Investors also tend to consider various other aspects such as geopolitical factors, economy overall stability, etc. Interest rates in large developed economies have not increased higher than 3% in recent years.
But if you look at developing economies, you can see higher interest rates. Developing economies typically have interest rates of at least 5%, if not more.
One reason for this is that developing economies tend to attract investors. In exchange for higher interest rates, developing economies can use the money to spend on infrastructure or debt financing.
There’s also a risk with higher rates. Most developing economies have no stable geopolitical scenario compared to developed economies. This in itself creates investor risk.
Returning to developed economies where interest rates aren’t that high, even 2% is sometimes considered a good return.
Investors looking for lower risk, but a slightly higher reward tends to chase higher-rate currencies
Yet interest rates don’t just exist. Investors also tend to consider various other aspects such as geopolitical factors, economy overall stability, etc. Interest rates in large developed economies have not increased higher than 3% in recent years.
But if you look at developing economies, you can see higher interest rates. Developing economies typically have interest rates of at least 5%, if not more.
One reason for this is that developing economies tend to attract investors. In exchange for higher interest rates, developing economies can use the money to spend on infrastructure or debt financing.
There’s also a risk with higher rates. Most developing economies have no stable geopolitical scenario compared to developed economies. This in itself creates investor risk.
Returning to developed economies where interest rates aren’t that high, even 2% is sometimes considered a good return.
Investors looking for lower risk, but a slightly higher reward tends to chase higher-rate currencies
会员从Mar 22, 2018开始
13帖子
Jul 28, 2020 at 11:03
With interest rates close to 0% in developed countries (and likely to stay that way for many years). Haven't interest rates lost their importance. It is the CHANGE in interest rates that can drive currency changes and as rates are expect to remain the same in all developing countries this is likely to have no impact on fx prices
会员从Jul 09, 2020开始
19帖子
Jul 29, 2020 at 08:31
Thanks for your information
and keep with touch
and keep with touch
会员从May 14, 2019开始
26帖子
Aug 22, 2020 at 08:44
Thank you, this is really helpful information.
会员从Jul 20, 2020开始
278帖子
Nov 21, 2020 at 19:15
Interest rates help you to fix your profit margin. otherwise, you can not set your goal.
Dec 11, 2020 at 10:55
When there is a rate hike, the currency will appreciate, which means that traders will buy. And when there is a cut, traders will sell and buy currencies with higher interest rates. Once a trader has determined the market movement, it is crucial to place the trade carefully
The more your practice, the more you learn.
会员从Aug 17, 2020开始
121帖子
Dec 14, 2020 at 05:34
The modification of interest rates also have an impact on the economy. Lower interest rates can stimulate the economy as it is cheaper to borrow money. Higher interest rates do the opposite and this way they play a role in controlling inflation.
forex_trader_2047425
会员从Dec 15, 2020开始
3帖子
Dec 16, 2020 at 21:23
I think the vast majority of traders on MyFxBook are day traders, and interest rates would not be much of a factor at all for those. My trades are a few minutes to one hour long.
会员从Mar 17, 2021开始
494帖子
Apr 30, 2021 at 18:33
If you want to make a good trading career, you have to keep concentrate on everything in this market.
会员从Jul 23, 2020开始
696帖子
Sep 07, 2021 at 15:05
Follow the economic calendar. That is all to find.
会员从Jul 23, 2020开始
816帖子
Sep 08, 2021 at 15:03
There are many factors that influence the market, interest rates are one of them.
Nov 30, 2021 at 07:31
The changes of interest rates are directly affect the price of particular assets. Mainly, it concerns all the assets, but cryptocurrency isn't so affected by the changes of interest rates. When you have a growing market, the upgrade of interest rate can easily turn bullish trend into bearish one just for couple of hours. A lots of traders would lose their money and their accumulations. In my opinion, interest rate is the key indicator on the market and thus, the US government understands it. They didn't change interest rate couple of weeks ago and it's good.
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