Forex On Demand

Foreign Currency Trading

Professional Currency Trading Accounts
  • Home
  • Currency Trading
  • ForexTerminology
  • Market Order Types
  • Technical Analysis
  • Reading Charts
  • Fundamental Analysis
The forex market Why currency trading Opening an Account Calculating Profit & Loss Currency trading articles Selecting Broker
Pips and Ticks Currency Trading Quotes Leveraged trading and margin
Placing Orders Market Orders Limit Orders Stop loss orders Take profit orders Trailing stop orders Entry Orders
Technical Analysis Understanding charts Line charts Bar charts Candlestick charts Point & Figure Charts Long & short positions
Trend types Uptrends Downtrends Sideways Support resistance Triangles Head shoulders Tops bottoms Flags pennants rectangles
Fundamental Analysis Major Indicators
Trader Application
The leading independent currency trading platform.
Get it now for free


Goverment Policies

  • Fiscal policies
  • Monetary policies
  • Reserve requirements
  • Discount rates
  • Open market operations
  • Exchange rates
  • Intervention
Currency trading articles

Monetary Policies' Affect on Currency Trading

Monetary policy is the way in which the government manages monetary levels in the country.

The job for planning and executing monetary policy is usually given to a financial institution, such as the European Central bank for Europe or the Federal Reserve for the US. These institutions should be independent of government influence, and are usually central banks that are given the authority over monetary policy.

Monetary policy usually involves the raising or lowering of short term interest rates. These hold perhaps the utmost importance on currency trading prices. An example of an influence of monetary policy is when a certain central bank changes currency trading exchange rates with other major currencies. Even though monetary policy is different than fiscal policy, both of them influence one another immensely.

Types of Monetary Policy

Even though monetary policy is quite diverse and includes various actions, it all revolves around one basic factor, which is the modification of the base currency trading price. This activity of changing the liquidity of base currency trading is named open market operations.

Currency trading transactions are not only handled by investors of the Foreign currency market, and the majority of them are performed by the government authorities themselves. This fact is not known to all traders, even though it is of the highest importance.

The central bank is the major influencer of such factors as:

  • Short term interest rates
  • The currency trading exchange rate
  • The domestic price of spot market commodities such as gold

Central banks usually work with a different set of motives than traders, rather than trying to make a profit, they try to stabilize various economic factors. You should try and place the currency trading order according to the most recent decisions made by central banks, so you invest wisely and not count on luck working in your favor.

As a trader of the currency trading market, you should always keep that in mind. You do not need to learn specifically about each economic indicator, because this will only confuse you and make currency trading more difficult. Instead, read the following monetary policies and try to notice if they are reported as done on financial news.

  • Inflation targeting and price level targeting - Here the government tries to influence Interest rate on overnight debt, in an effort to change the CPI.
  • Monetary aggregates - An activity directed into increasing money supply, and change the CPI.
  • Fixed exchange rates - An effort to change currency trading price, and lower inflation.

You can get a lot of currency trading information by adhering to monetary policy, so try and stay updated with these factors so you can invest accordingly.

Posted by Richard Hollar


News

20/07/11
State Street Cuts 850 Jobs After Earnings Miss Estimates
http://www.businessweek.com/
20/07/11
Caixin Online: South China Sea energy riches beckon
http://www.marketwatch.com/
20/07/11
Earnings Preview: Philip Morris Int'l
http://news.yahoo.com/
20/07/11
Coca-Cola’s Results Are Lifted by Overseas Business
http://www.nytimes.com/
Getting Started?

Getting Started?


Download our forex trading software - Receive a FREE Demo account by Easy-Forex.com
Apply Now
Forex Pro Account

Forex Pro Account


Get your pro account with exclusive benefits such as instant deposits, fixed spreads, continuous quoting and more!
Apply Now

Free Tools

Forex Currency Converter Forex Currency Converter
Forex Pivot Point Calculator Forex Pivot Point Calculator
Forex Margin Calculator Forex Margin
Calculator

ICTS Currency Trading Presentation


Forex Video Presentation

Watch our step by step video presentation. An introduction to the ICTS foreign currency trading platform.

Watch Presentation

Home  |   Contact   |  Catalogue   |  Content Finder
Privacy declaration  |   Copyright information  |   Disclaimer  |   Terms of use
Copyright © 2014 ForexOnDemand.com. Foreign Currency Trading. All rights reserved.