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Trading For Foreign Exchange Sydney Profits

Foreign Exchange Sydney

In 2013, Australia’s changing economic picture has altered trading in foreign exchange Sydney. What used to be an almost one-way street has become more of a two-way affair, complete with flashing yellow lights. For instance, “Abenomics” in Japan has led to a weakening of the Japanese yen – good news for all AUD/JPY positive interest rate carry trade aficionados. At the same time, the changing monetary policies of the US Federal Reserve appear to bolstering the value of the US dollar (through rising bond yields), cutting the turf out from under the AUD/USD. A “black swan” also has entered the picture – a resurgent euro, leading the EUR/AUD upwards and onwards. And, a Canadian too: the Bank of England is now under new leadership, making trading the GBP/AUD much more exciting than before.
High leverage ratios can enhance your profitability. For instance, if you’re trading with a 50:1 leverage ratio, then a minimum cash margin deposit of only AUD 2,000 can control a standard forex contract of AUD 100,000.

Foreign Exchange Sydney Trades Carefully

The actual amount of time that anyone in Australia has to trade in good forex conditions is limited, so you need to plan your trades well. For example, Mondays and Fridays can feature illiquid conditions that result in unsuccessful fills, leaving you with only Tuesday, Wednesday and Thursday to make a profit. Unfortunately, afternoons in Asia can run thin. This, then, narrows your “deep pool” trading time to about 4 hours on 3 days of the week. The impact on day traders is considerable; less so for swing or trend traders. The good news is that the AUD/USD, AUD/JPY and EUR/AUD range in excess of an average of 80 pips per trading day – plenty of room for profitable trading opportunities.

Using Leverage To Increase Profits Trading Foreign Exchange Sydney

Anyone who day trades foreign exchange Sydney needs to use a higher leverage ratio than someone who is swing trading or trend-trading. This is because a day trader is only in the market for a very short amount of time and in order to clear execution costs and make a profit, they need to use very little of their own cash to do it. Such a situation is fraught with risks. For example, if you use a 50:1 leverage ratio, then a trade could go against you by almost 200 pips before your position gets wiped out. However, at a 100:1 leverage ratio, that buffer zone just dropped to almost 100 pips (and if you go higher than 100:1, it drops even more).

Achieving Long-term Profits Trading Foreign Exchange Sydney

Anyone who wants to take a long view of the market ipso facto becomes a trend-trader. Since the AUD has a relatively high interest rate attached to it, making it expensive to short for long periods of time, this means that the only trades an AUD-related trend-trader can profitably launch are long-term, long positions. In 2013, the AUD/JPY is the only major AUD pair that might be a realistic candidate for such a trade. The problem is that the AUD/JPY is already closing in on its 10-year high. So, unless the Australian dollar weakens considerably more in 2013-2014 or the Bank of Japan expands its “Abenomics” monetary policies, it’s hard to see any degree of superior profitability in this situation.

 

 

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