Let’s face it. We’re not real smart about money and economics. If we were we wouldn’t be here. Ok, maybe I should speak for myself. I’m not real smart about money and economics. I can’t even tell you in my own words based on my own comprehension of the subject what economics is. I can tell you vaguely that it has to do with money but I know it’s more than just that. In fact, according to Gwartney, Stroup, Sobel and MacPherson in the 11th edition of their text “Microeconomics Private & Public Choice”, “economics is the study of human behavior, with particular focus on human decision making.” So that goes to show you what I know, because they haven’t used the word money in defining economics, although, obviously a great deal of the decisions we make as humans are in some way centered around money.
Forex traders have to be smart about economics. They have to know how different economical factors will impact on different currencies. One of the main lessons I’ve learned thus far in my forex trading adventure is that oil price movements affect currency rates. I owe some big losses to my failure to appreciate just how large an impact changes in oil prices can have on the relationship between certain currencies. You can’t become a successful forex trader and not be smart when it comes to understanding how oil prices and other economical factors typically impact on relationships between currencies.
Kathy Lien is a professional forex trader who is supremely smart about money and economics. I visit her blog occasionally and try to pick up what little I can as I attempt to tear apart the forex trading concepts that are important to understand if I’m to ever become a successful forex trader.
Here is a video I watched today featuring Kathy talking to Polya Lesova of MarketWatch about the connection between the price of oil and US dollar as well as the euro.
I have no illusions about ever understanding forex on the level of a pro like Kathy Lien; but I might come away from this entire forex trading adventure at least a little bit smarter about money and economics and that can’t hurt can it? Source of Video: Video: Can the Dollar Continue to Rally?