QUOTE OF THE DAY

#quoteoftheday #forex

"A leader is one who knows the way, goes thw way, and shoes the way."

By John C. Maxwell.

FOREX THEORY

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Hawkish and Dovish Central Banks

We just learned that currency prices are affected a great deal by changes in a country’s interest rates.

We now know that interest rates are ultimately affected by a central bank’s view on the economy and price stability, which influence monetary policy.

Central banks operate like most other businesses in that they have a leader, a president or a chairman. 

It’s that individual’s role to be the voice of that central bank, conveying to the market which direction monetary policy is headed. And much like when Jeff Bezos or Mark Zuckerberg steps to the microphone, everyone listens.

So by using the Pythagorean Theorem (where a² + b² = c²), wouldn’t it make sense to keep an eye on what those guys at the central banks are saying?

Using the Complex conjugate root theorem, the answer is yes!

Yes, it’s important to know what’s coming down the road regarding potential monetary policy changes. And lucky for you, central banks are getting better at communicating with the market.

Whether you actually understand what they’re saying, well that’s a different story.

So, the next time Janet Yellen or Mario Draghi are giving speeches, keep your ears open. Better yet, use the trusty BabyPips.com Economic Calendar to prepare yourself before the actual speech.

QUOTE OF THE DAY

#quoteoftheday #forex

"If you are not willing to learn, no one can help you. If you are determined to learn no one can stop you."

By Unknown Author.

MR.VIGNESH TALKS ABOUT SSL FXGURU

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QUOTE OF THE DAY

#quoteoftheday #forex

"You don’t build business, you build people and then people build the business."

By Zig Ziglar.

FOREX THEORY

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Round and Round with Monetary Policy Cycles (Part 2)

Just the idea of something like that happening would disrupt not only the individual trader, but the economy as a whole.

That’s why we normally see interest rate changes of .25% to 1% at a time. Again, remember that central banks want price stability, not shock and awe.

Part of this stability comes with the amount of time needed to make these interest rate changes happen. It can take several months to even several years.

Just like forex traders who collect and study data to make their next move, central bankers do a similar job, but they have to focus their decision-making with the entire economy in mind, not just a single trade.

Interest rate hikes can be like stepping on the brakes while interest rate cuts can be like hitting the accelerator, but bear in mind that consumers and business react a little more slowly to these changes.

This lag time between the change in monetary policy and the actual effect on the economy can take one to two years.

QUOTE OF THE DAY

#quoteoftheday #forex

"If you live in fear because of what happened in the past, you’ll end up losing what you have in the present."

By Billy Cox.