How do i make an economically researched decision about a currency? (New to trading)

gnr2206 · Jan 23, 2011

Hello fellow T2W members,

Recently the euro has been trending upwards against the british pound (EUR/GBP). What i basically want to know does anyone have any advice to help when making a decision about a currency. What data should i be looking for? Im not looking for people oppinions on the currency but how to, for want of a better word, judge it.

I ask this question as recently i feel as though if i dont start doing proper research into what im buying and why then im just buying because everyone is buying

Any help would be really appriecated as im relatively new to this, thanks!

Rhody Trader · Jan 23, 2011

Basically, what you're talking about is comparative macroeconomic analysis. Make sure to note the "comparative" qualifier there. You have to look at the high level economic data and monetary policy for both sides of the currency pair, not just one.

scose-no-doubt · Jan 23, 2011

I'd say doing a course in economics is a good start.

Black Swan · Jan 23, 2011

The cot report.

gnr2206 · Jan 23, 2011

im taking economics in school (final year, going to college next year) but what were doing now in macro is balance of trade, government & taxation etc but we dont really apply it to anything in real life tbh unlike what is done in college.

Basically, when i see an analyst or an economist going onto bloomberg and giving there oppinions about certain currencies and stocks and basically what i want to know is how they come to these conclusions, where do they get their info etc.????

Black Swan · Jan 23, 2011

gnr2206 said:
im taking economics in school (final year, going to college next year) but what were doing now in macro is balance of trade, government & taxation etc but we dont really apply it to anything in real life tbh unlike what is done in college.

Basically, when i see an analyst or an economist going onto bloomberg and giving there oppinions about certain currencies and stocks and basically what i want to know is how they come to these conclusions, where do they get their info etc.????

Ignore them, Google (then bookmark) the commitment of traders report and the analysis that accompanies...That will indicate where the big players are placing their FX bets, prolly outweighs (by a significant factor) any TA or opinion when it comes to position trading (investing in) currencies. As for stocks I couldn't/wouldn't comment.

I'd give you a few links (heads up) but IMO it's important that you dyor.

gnr2206 · Jan 23, 2011

Black Swan said:
Ignore them, Google (then bookmark) the commitment of traders report and the analysis that accompanies...That will indicate where the big players are placing their FX bets, prolly outweighs (by a significant factor) any TA or opinion when it comes to position trading (investing in) currencies. As for stocks I couldn't/wouldn't comment.

I'd give you a few links (heads up) but IMO it's important that you dyor.

much appriecated sir! any other links would help also

DashRiprock · Jan 23, 2011

gnr2206 said:
im taking economics in school (final year, going to college next year) but what were doing now in macro is balance of trade, government & taxation etc but we dont really apply it to anything in real life tbh unlike what is done in college.

Basically, when i see an analyst or an economist going onto bloomberg and giving there oppinions about certain currencies and stocks and basically what i want to know is how they come to these conclusions, where do they get their info etc.????

if you join ft alphaville in their long room sometimes are posted banks research on currencies and sectors and all sorts.

fx macro is a mix of future interest rate expectations / balance of trade / fiscal position / inflation / purchasing power parity / strength of domestic economy and probably lots of other things as well

Martinghoul · Jan 23, 2011

gnr2206 said:
im taking economics in school (final year, going to college next year) but what were doing now in macro is balance of trade, government & taxation etc but we dont really apply it to anything in real life tbh unlike what is done in college.

Basically, when i see an analyst or an economist going onto bloomberg and giving there oppinions about certain currencies and stocks and basically what i want to know is how they come to these conclusions, where do they get their info etc.????

You must learn to walk before you attempt to run... The things you're covering in school are important basics that you should learn and learn well.

While you're doing all this, it certainly can't hurt to try to look at how people look at things in the industry. There's a lot of stuff out there that's free that you can read and think about. Most important thing to remember is to take everything with a pinch of salt.

oiltanker · Jan 23, 2011

...Basically, when i see an analyst or an economist going onto bloomberg and giving there oppinions about certain currencies and stocks..

find the ones who have made money from their opinions. the rest is just opinions.

How do i make an economically researched decision about a currency? (New to trading)

gnr2206

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