~PIP'n aint Ea$y~

[~6979~]

Currency rates move up and down in response to global news events, economic announcements, interest rates, and basic supply and demand factors. In overly simplistic terms, rates rise when there are more buyers than sellers. At some point, the rates become too expensive and buyers stop buying, thus the market corrects and moves in the other direction. On the other hand, rates fall when there are more sellers than buyers. At some point, the rates become a bargain, buyers start buying, the market corrects and begins moving back up.

If you examine the EUR/USD and the USD/CHF and consider them to be fractions, you will see that the USD is the denominator in one and the numerator in the other. If the monetary policies of the European Union and Switzerland remain reasonably constant, these currency pairs are essentially reciprocals of one another. In other words, when one goes up, the other should go down.

Upon examination of the charts, you can see how closely they mirror one another. Historically speaking, when one goes up, the other does indeed tend to go down.

What would happen if you bought both currency pairs? On the surface this makes no sense. If one goes up and the other goes down, you’d just break even. In reality, though, you’d make twice as much money – while at the same time, dramatically reducing your risk.


Possible automated trading strategy in there somewhere???...