Politics and its effects on Forex
There are a lot of factors that can play a part in Forex. One of the most influential factors that people don't typically take into consideration is politics.
There are endless political issues that can cause a currency to go up or to go down, traders take note of this as it affects their intentions to dabble in a particular currency. Here are some examples to better explain this.
If, for example, a particular government is quite unstable, that government could in fact change tomorrow without anyone knowing exactly why. They do know however, that as the government is so unstable a change could have adverse effects on economic growth. Using Zimbabwe as an example, they have a ten million dollar note, yet its value is almost nothing.
Another time that things can be good in Forex is when there is a new government coming in that is known to be a lot more fiscally responsible. What this means is that the traders believe that if they invest in this currency, it will go up over time because there won't be any diabolical currency problems because the economy will have responsible people at the helm.
Interestingly enough, when there are a lot of problems going on in the economic world, one of the currencies that are always gobbled up is the Swiss Franc because it is known to be very safe.
As Switzerland is categorized as isolationist, their Swiss Franc is a good example of a safe currency. Currencies that traders call 'safe havens' are ones that might not have so much movement because they are very steady, however, they are safe to put your money into.
It is important for a trader to really look into this sort of a situation. However, there are numerous other economic things for a trader to look into when considering playing around with Forex. - 23212
There are endless political issues that can cause a currency to go up or to go down, traders take note of this as it affects their intentions to dabble in a particular currency. Here are some examples to better explain this.
If, for example, a particular government is quite unstable, that government could in fact change tomorrow without anyone knowing exactly why. They do know however, that as the government is so unstable a change could have adverse effects on economic growth. Using Zimbabwe as an example, they have a ten million dollar note, yet its value is almost nothing.
Another time that things can be good in Forex is when there is a new government coming in that is known to be a lot more fiscally responsible. What this means is that the traders believe that if they invest in this currency, it will go up over time because there won't be any diabolical currency problems because the economy will have responsible people at the helm.
Interestingly enough, when there are a lot of problems going on in the economic world, one of the currencies that are always gobbled up is the Swiss Franc because it is known to be very safe.
As Switzerland is categorized as isolationist, their Swiss Franc is a good example of a safe currency. Currencies that traders call 'safe havens' are ones that might not have so much movement because they are very steady, however, they are safe to put your money into.
It is important for a trader to really look into this sort of a situation. However, there are numerous other economic things for a trader to look into when considering playing around with Forex. - 23212
About the Author:
Stuart Baker has been trading forex online for a number of years and has used a number of different online trading robots. One such robot which has been designed with the current economic environment in mind is The Forex Phantom. Please visit his blog here at The Forex Phantom Blog
posted by X - Men @ 2:58 AM
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