Currency Trading And The Internal Market Economy

What is Currency Trading?
Currency Trading is simply the act of buying and selling various currencies of countries of the world.
The Foreign Exchange or Forex as it is popularly known is the market that permits you to buy or sell currencies in volume. A currency trader, whether he/she represents a corporation, bank, or an individual, must be skilled and well acquainted with the methods of the Forex market, by monitoring and acting promptly on the subtle changes which indicate a potential for profit. A typical scenario might go thus: A currency trader is with the British pound and the U.S. dollar. This is known as a Currency Pair. The British Pound, GBP is the base currency, while the US Dollar, USD is the secondary currency. Any news that stipulates that the value of the British Pound, GBP has increased from previous reports, makes a positive reaction which will cause a spike in the value of the British Pound, GBP. This report, in turn, will cause traders to rally on the GBP and USD currency pair. In like manner, if the opposite of this situation occurred, and a positive report for the USD was announced, and then the GBP/USD currency pair would dip, or fall. Any of the above scenarios can offer up profit, but it depends on the part of the currency pair is bought or sold at the time. A few factors decide the price of each of the currencies within the pairdecided by a few factors, and they include changes in political leadership, natural disasters or economic booms or busts. Any news report that can affect the strength of an individual currency, however remotely, can change the value of a currency trade in a few minutes. This factor makes currency trading risky at times, as currencies can be quite volatile when compared to other markets. The only key to success when engaging in currency trading is to utilize conservative risk management. This practical conservative risk management has multiple aspects, although, in the end, currency trading should be approached with caution and the trader should have a firm trading plan. Retail currency trading is typically carried out by market brokers and makers. The retail traders can place trades through their market brokers and these, in turn, will put that trade on their behalf on the interbank market.
Intermarket Analysis
This is a branch of technical analysis which examines the connections between four primary asset classes which are stocks, bonds, currencies and commodities.
There are simple relationships between stocks and bonds, commodities and bonds, and the dollar and commodities. Examining these relationships can aid chartists in determining the investing cycle stage, and selecting the best sectors and avoiding the worst performing areas in the market.
Inflationary Relationships
The Intermarket relationships are dependent on the forces of deflation or inflation. Below are the pointer Intermarket relationships within an inflationary environment:

1.A positive correlation between stocks and bonds.
2.Bonds typically change direction before stocks.
3.An INVERSE relationship between commodities and bonds.
4.An INVERSE relationship between commodities and the US Dollar.

Intermarket Analysis is a crucial tool for medium-term or long-term analysis of the stock market. A single indicator or a single relationship should not be utilized on its own to make a general assessment of all market conditions.