I have said this before, but I will say it again – You readers can teach me plenty. Below is something I did not know ….
In response to the question about trading the EUR/JPY in your article “Walk Your Path With Due Diligence.”
I don’t believe there is any one news source on that pair, as it is actually a product of the EUR/USD and USD/JPY. When you buy or sell EUR/JPY you are really buying or selling EUR/USD and USD/JPY. So, to get an idea of what’s going on in the EUR/JPY you can watch the other two. You can see this if you multiply EUR/USD times USD/JPY you will have the price of the EUR/JPY to the pip, as well as the GBP/JPY and the rest of the JPY pairs
Thanks so much for the response to the earlier question one of the readers asked. I appreciate it, and I hope that he is tuning in to see the answer as well …
The above response is an excellent segue to a point worth making, as the information the writer brings out really defines the importance of relationships in markets.
“Our national economies are inextricably linked.” President Obama said this at a press conference this morning. His reference is the G20 summit in Canada. Within this statement is an important point for traders and investors to consider – do you analyze a market in relation to other markets, or do you see it as “an island unto itself?”
My question refers to intermarket analysis and single market analysis, and I bring it up because if you are looking at your market in isolation, you are doing yourself a disfavor. President Obama is correct – our national economies are inextricably linked, and so are our markets. One can not understand what is happening economically in the U.S. or Europe without understanding the Chinese economy. These three economies are so closely tied together on trade, currency, and fiscal matters that to separate them would require surgery similar to the surgery used for separating Siamese twins, and, of course, with the same fatal risk.
My point is to understand a market, one needs to understand the context of that market, as well as the other markets that exert an influence on that market. This is the essence of intermarket analysis. One can do this on his or her own, or one can find software that utilizes intermarket analysis. The latter is, of course, the easier way to go, but if one is studious and technically savvy, he or she can utilize intermarket analysis. Ultimately, it doesn’t matter how you do it, just do it. Analyzing markets in isolation was good to do some thirty years ago, but in today’s high-speed information and high-speed trading world, single-market analysis just doesn’t cut it.
Trade in the day; invest in your life …
