The effects of Politics on Forex
When you think of forex and its contributing factors, one that is often forgotten but plays a very large roll, is Politics.
A countries political issues can lead to it's currency to go up or down, and traders often base their decision to trade in that currency on what is happening politically. Here are a number of examples that explain this a lot better.
Take, for example, a government that is very unstable. Politically, the government could change tomorrow without anyone really knowing what or why. All they know is that because the government is so unstable, the changes a new government could make would effectively ruin any sort of economic growth. For example, in Zimbabwe, because of politics, they have a ten million dollar bill and yet its value is almost nothing.
Another time that things can be good in Forex is when there is a new government coming in that is known to be a lot more fiscally responsible. What this means is that the traders believe that if they invest in this currency, it will go up over time because there won't be any diabolical currency problems because the economy will have responsible people at the helm.
Interestingly, when there are a lot of issues with the economy of the world, one of the currencies that is always snapped up is the Swiss Franc because it is known to be very safe.
These currencies that people call 'safe havens' are ones that might not have as much movement because they're so steady, but they're safe to put money into. They won't collapse the next day. The Swiss Franc is especially an example of this because Switzerland is an isolationist.
It is important for a trader to really look into this sort of a situation. However, there are numerous other economic things for a trader to look into when considering playing around with Forex. - 23222
A countries political issues can lead to it's currency to go up or down, and traders often base their decision to trade in that currency on what is happening politically. Here are a number of examples that explain this a lot better.
Take, for example, a government that is very unstable. Politically, the government could change tomorrow without anyone really knowing what or why. All they know is that because the government is so unstable, the changes a new government could make would effectively ruin any sort of economic growth. For example, in Zimbabwe, because of politics, they have a ten million dollar bill and yet its value is almost nothing.
Another time that things can be good in Forex is when there is a new government coming in that is known to be a lot more fiscally responsible. What this means is that the traders believe that if they invest in this currency, it will go up over time because there won't be any diabolical currency problems because the economy will have responsible people at the helm.
Interestingly, when there are a lot of issues with the economy of the world, one of the currencies that is always snapped up is the Swiss Franc because it is known to be very safe.
These currencies that people call 'safe havens' are ones that might not have as much movement because they're so steady, but they're safe to put money into. They won't collapse the next day. The Swiss Franc is especially an example of this because Switzerland is an isolationist.
It is important for a trader to really look into this sort of a situation. However, there are numerous other economic things for a trader to look into when considering playing around with Forex. - 23222
About the Author:
Stuart Baker has been trading forex online for a number of years and has used a number of different online trading robots. One such robot designed for the current economic environment is The Forex Phantom. Please visit his blog here at The Forex Phantom Blog
posted by X - Men @ 3:56 AM
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