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Old 2010-01-03, 01:42 AM   #1 (permalink)
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Trader for 1 - 2 years
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Default Currency Stability

hi peeps,

would like to find out from you guys on how stable is currency prices?

I've heard people saying that currency prices are stable because it moves in 4th decimal places which is very minimal.

I've also heard that currency prices are stable because each currency pair would prevent or wouldn't allow the other currency to surge too high or low due to economic fundamentals/ import and export

On the other hand, i've heard that in comparison with stocks, the decimal movement is very little compared to stocks which explains currency prices stability

What are your views whether currency prices are considered stable?
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Old 2010-01-06, 05:03 PM   #2 (permalink)
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Default

Well, since no one else wanted to take a stab at this, here's my take.

Stable? Currencies are nuts.

The only "stable" ones I have seen are the AUD/NZD and EUR/CHF. Everything else is a crap shoot.

4th decimal means things move MORE. Now if it was just 2 decimals, it would not be a big deal. Moving from 1.25 to 1.26 is nothing compared to moving from 1.2500 to 1.2600 in my opinion.

I honestly don't know how they compare to stocks, because I don't fully understand stocks, but I am happy with Forex and my little strategies.
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Old 2010-01-06, 06:50 PM   #3 (permalink)
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Default price stability?

Well Dennerle, all I can say is that the term "stability" is relative. If you mean overall price movement, meaning more "stable" currencies move less, then I would not want a stable market, because we need movement to make money. I think a more appropriate definition for "stability" would be: price that moves according to some sort of order... (ie. steady trends, not many whipsaws, obeying fibonacci, etc.)

I have noticed that the forex market has a great deal of stability... yes, there are erratic times (after news releases, after Bernanke or Geithner open their mouths, etc...) This market happens to be very excitable.. But when the market is clear of news or any other geo-political events, then there is a very nice order to it, and a lot of money can be made.

If you look at the big picture, currency values do not change that much over the course of a trading session.. only 1 to 2 cents per day.. It's the leverage that is provided to forex traders which make small movements equal large gains (or losses). So if you can understand how to manage this leverage along with your risk, then you are way ahead of the game..

If you have a hard time obeying risk management rules, then maybe you want to try your hand at using a forex robot trader to do your trading for you.

I hope this helps.

...good trades,
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Old 2010-01-07, 10:52 AM   #4 (permalink)
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Default

Agree -- the whole point is leverage . If you invested your money in currencies without any leverage you would hardly notice any changes. High leverage (mostly between 1:100 to 1:500) causes a small ripple on the FX see to change into a big wave...
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