The big banks are behind the big moves – know what they do and cash in!
The actual driver behind currency movements is differences between monetary policies of central banks.
So, let me explain the differences between monetary policies. If one central bank wants to tighten its monetary policy by increasing interest rates, and one bank wants to keep its monetary policy loose by keeping interest rates low, there’ll be a change in the currency values.
The country that wants to increase interest rates will have a stronger currency, and the country that keeps rates low will have a weaker currency.
So, blindly following an indicator that predicts movements with historic data is like walking into a casino and putting your cash on red.
You have to know what these banks are doing, or plan on doing, and create a buy or sell bias before you place your trades.
If I know that the US is going to increase its interest rates and the European Central Bank (ECB) is going to decrease its interest rates I know that the US Dollar WILL get stronger against the euro.
I’ll only look to buy the US Dollar against the EURO.
You can use differences in policy to make big money
Right now there are differences in policies. Investors are expecting the Federal Reserve (FED) in the United States to increase its interest rates. This is on the back of good economic growth in the US.
And, there’s very little growth in the Euro zone right now. So the ECB is keeping its interest rates lower for longer.
That’s why I’m sure that the US dollar will keep getting stronger and the Euro will keep getting weaker.
So, I’ll only look for short (sell) EUR/USD positions. Just blindly opening trades without taking this into account would be like gambling…
When the ECB’s policies start taking effect in the future, and they start seeing economic growth, I’ll start changing my bias on the currency pair. That’s when we’ll look for long (buy) positions…
So, before you throw your money blindly on a Forex trade, make sure you understand this crucial underlying factor. You have to know what the big banks are doing and follow their lead.
Then you’ll start reaping the benefits.
And, if you are looking to cash in on these policies, click here
to see how you can make 3,700 pips with one trade