How to profit from trading currencies

Central banks are competing with one another to devalue their currencies. That spells opportunity for spread betters. Here's how currency trades work.

The currency (foreign exchange) markets are full of interesting cross rates. Although it is possible to trade fairly exotic currencies against each other, I like to stay with trading a major currency against the US dollar. Why? Because the dollar is the world's reserve currency, and a whole slew of economic data that affects the market's view of the dollar is freely available.

So the task in trading a currency becomes one of making a judgment of the relative merits of the currency vis-a-vis the dollar. That should be easy, right?

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John is is a British-born lapsed PhD physicist, who previously worked for Nasa on the Mars exploration team. He is a former commodity trading advisor with the US Commodities Futures Trading Commission, and worked in a boutique futures house in California in the 1980s.

 

He was a partner in one of the first futures newsletter advisory services, based in Washington DC, specialising in pork bellies and currencies. John is primarily a chart-reading trader, having cut his trading teeth in the days before PCs.

 

As well as his work in the financial world, he has launched, run and sold several 'real' businesses producing 'real' products.