Posted on 11 August 2011.
Every trader knows that the key to making money in the markets is price movement, and forex futures trading is a shining example of how money can be made in movement both up and down. Given the extreme volatility in today’s currency markets, the wide swings that occur every day offer amazing opportunities to turn wisely placed pennies into well-deserved dollars.
Of course, the real beauty of forex futures trading is that you can turn your pennies into something other than dollars as well. Take euros, for example. Say that a savvy trader who carefully follows the markets realizes that an upcoming report from the Treasury or the Department of Labor is likely to indicate a rise in unemployment or inflation. This would point towards the opportunity of turning today’s not-yet-inflated dollar assets into something that will better hold its value over the short term.
By taking a futures contract before other less-attentive traders realize that the dollar is likely to drop in value, it is possible to lock in today’s dollar value by switching to a more stable currency. Then, when the dollar completes its fall and starts to rise again, the trader switches back to the dollar and ends up with a significantly larger number of dollars that are rising back to their original value or perhaps even beyond.
Since the forex futures trading markets are making significant moves on a daily basis, it is easy to see how such a strategy can net tidy profits every single day. Jump out of the dollar before the public realizes it is falling. Jump back in when the selected safe haven currency starts to move back downward on a relative basis. In the meantime, your funds are parked in the strongest possible currency, no matter which one it is. In today’s inflationary environment, forex futures trading offers a real advantage over other trading venues.
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