Forex Trading News

Currency overlay is an investment strategy employed by institutional investors to protect their portfolios from currency fluctuations. The currency overlay manager first identifies the currency risk exposure of the portfolio, and then enters into currency hedging transactions to offset that risk. Currency overlay can be used to hedge both: currency risk arising from investments denominated […]

Forex broker, Skilling, has introduced around-the-clock trading on popular currency pairs, providing weekend trading opportunities. Key Takeaways 7 currency pairs can now be traded over the weekend: AUD/USD, EUR/USD, GBP/USD, NZD/USD, USD/CAD, USD/CHF, USD/JPY. Weekend forex trading is available on the Skilling Trader, MetaTrader 4 and cTrader platforms. Forex spreads are competitive, starting from 0.1 […]

There are many options pricing models with complex mathematical foundations and variables that go into determining what an option is worth. But in terms of the big-picture intuitive understanding of an option’s value is, it really boils down to two main factors: the probability that an option will be in the money (ITM) by expiration […]

In trading, there are countless variables that can impact the outcome of any trade, so intuition can be a reliable tool in many circumstances. For experienced traders, it can provide an intuitive edge – guiding them beyond data and analytics. But what really is intuition, and how does one use it in trading?   Key […]

Building trading and investing algorithms involves a blend of financial theory, mathematics, programming, and data analysis. These algorithms are designed to make trading decisions based on certain criteria, which can include any number of factors based on the underlying cause-effect relationships governing the decisions. Building trading and investing algorithms is a complex, iterative process that […]

In a separate article, we covered the current status of the basic reserves today; namely, the USD, EUR, JPY, GBP, CNY, and gold, as the main few. In this article, we’ll cover reserve currency history as well as reserve currency status, the benefits it brings, and how it’s lost. We are currently in a precarious […]

In international investment, currency risk is a significant concern, which leads to the concept of FX hedging. When investors from one country, such as Japan, buy foreign bonds, they must exchange their domestic currency (JPY) for another (such as USD or EUR). This exposes them to foreign exchange (FX) risk, which many prefer to avoid. […]

The Exchange Rate Overshoot Hypothesis, often referred to as the Overshooting Model, is a concept in foreign exchange (FX) trading. It offers an explanation for the often volatile short-term movements in exchange rates. Understanding this hypothesis can provide FX traders with insights into the dynamics of the currency markets they trade.   Key Takeaways – […]

Before trading foreign equities denominated in a different currency, it’s important to understand that it’s not just the returns, but returns + the currency movement. For example, if the USD has a higher nominal interest rate than the JPY, it will have implications for the forward curve of the USD/JPY currency pair. So if a […]

Interest rate parity (IRP) is a fundamental concept in international finance that describes the relationship between interest rates and foreign exchange rates. At its core, IRP asserts that the difference in interest rates between two countries is equal to the expected change in their exchange rates. We also give a mathematical example below.   Key Takeaways […]