These currency pairs are important to watch and consider when investing, says Casey Stubbs, who also explains his use of candlestick charts, and gives some getting-started tips for equity investors interested in forex trading.
Listen to the complete interview here.
Kate Stalter: Today I’m talking about forex with Casey Stubbs of Winners Edge Trading.
Casey, a forex trader wrote on the MoneyShow.com Web site that three of the big factors that can move currency markets are micro, macro—that is, economics data—and monetary policy. It seems that we’ve all of that in spades in the last few months. How would you advise monitoring the currency markets, given all the variables these days?
Casey Stubbs: Well you’re absolutely right, and those factors are very much in play in the currency trading market, and that’s what requires currency traders to be very flexible…and they must be monitoring their positions constantly.
And one of the ways I recommend doing that is: Stay abreast of all of the news channels and stay tuned to the business section of the papers. Just keep a look out for articles that talk about the dollar, articles that talk about the Federal Reserve, and just try to gauge what is going on in those particular markets.
Kate Stalter: Let’s talk about some of the specifics that have been in the news. One thing that has been on the minds of people who trade and invest—across all asset classes, really—is the euro. Should forex traders be concerned about the fate of the euro right now, or really just watch what the charts are telling them?
Casey Stubbs: Well, I personally am a technical trader, which means I look at charts. Now I don’t disregard it completely, but one of the things you will notice in the news right now, and a lot of the different sources that you’ll hear information from is, reports will be varying back and forth. So one day you’ll hear that there’s good news coming out for the euro, and the next day you’ll hear that there’s bad news.
The market is actually in an indecision period, and has not been trending for some time. I’m speaking primarily about the euro/dollar (EUR/USD), which is the largest currency here that’s traded with much volume. It doesn’t have a dynamic trend, so it’s going back and forth, and you’re getting conflicting reports.
Really, I think in that type of environment, technical trading is ideally the best way to go, and that is looking and examining the patterns on the charts.
Kate Stalter: Rather than trying to, say, to forecast what might happen with the euro six months or a year from now, for example?
Casey Stubbs: I totally believe so, because especially with the current conditions of the United States economy and the dollar…that’s not really in great condition either.
So as far as making an educated decision based on economic data or financial information, it really doesn’t seem to be feasible that anyone would be able to do that at this point. It’s kind of just making an educated guess, which either way you would pick, it’s almost a toss-up.
Kate Stalter: Let me also ask you about the yen. That’s been in the news because it’s been rising pretty fast and the Bank of Japan intervened, as it’s prone to do. How should traders view the yen, Casey?
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