Forex Trade Investment
Events and activities are critical in determining the strategy to follow in making a buy or sell decision (Roledene et al., 2016). A mere tweet by a prominent government official, for example, may greatly affect the exchange rate in forex trading. Before the US elections, every trader was careful not to make losses out of blind purchases or sell off the currency. The tweets done by the outgoing American head of state send vital information concerning the direction the post-election activities may take the forex trade. One would be logically sound to sell the US currency in anticipation of a decline in value. In so doing, they will have made a profit from the shifts in the currency valuation.
From the 11 week trade, the holding period return was -0.0725 showing that most of the investment decisions made during the week did not represent the political environment’s actual situation. This week, it was wise to avoid much investment in the USD because of its volatility during the election ups and downs. The predicted ups and downs in the political temperatures made the USD’s value depreciate with the other currencies. The quote USD/JPY means that the value USD is expected to be higher than the Japanese yen. This quote is expected to give negative results if the investor bought the currency. As the figures depict, there was a loss of 60.42 dollars when the buying strategy was applied. The quote GBP/USD means that GBP has a higher value than the USD. Making a buy decision was thus profitable, leading to a gain of 186.60. it is therefore wise to research before investing in forex trade (Masteika & Rutkauskas, 2012). Nice research leads to nice earnings and vice versa.
References
Masteika, S., & Rutkauskas, A. V. (2012). Research on futures trends trading strategy based on
the short term chart pattern. Journal of Business Economics and Management, 13(5), 915-930.
Roledene, S., Ariyathilaka, L., Liyanage, N., Lakmal, P., & Bamunusinghe, J. (2016). GeniBux-
event-based intelligent Forex trading strategy enhancer. In 2016 IEEE International Conference on Information and Automation for Sustainability (ICIAfS) (pp. 1-6). IEEE.