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Forex Currency Trading Basics
If you are tired of the stock market you might want to try your
hand at trading foreign currency. Sometimes called Forex
currency trading, foreign currency exchange or simply FX, this
trading process is used every day in every country by banks...
Forex Signal Services
What are Forex signals? Forex signals are paid services offered by some brokers and independent Forex annalists. Companies that offer forex signals monitor and analyze the market for you, providing you with their data via desktop alerts, email or...
Forex Trading Online - 7 Reasons You Should!
Copyright 2005 Keith Thompson Forex trading online is a fast way to use your investment capital to it's fullest. The Forex markets offer distinct advantages to the small and large traders alike, making Forex currency trading in many ways...
Go Public Young CFO, Go Public
Go Public Young CFO, Go Public By William Cate Going West in the 1850s was the American path to business success. It made the railroads the dominant economic power in America in the 19th Century. Going overseas was the business success strategy...
Investments - Short Term or Long Term?
Many find investments to be a risky deal not because investments of any kind require fair amount of speculative measures for comparatively larger returns, but because they lack the knowledge about what to invest in and when.
Investments,...
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Trading Analysis: The Big Mac
The Big Mac Factor... And What It Means to You
When "experts" say the dollar is "overvalued and about to
crash," what exactly is it that they're talking about? How do
they know?
It turns out, they don't know what they're talking about... as
the U.S. dollar is not undervalued or overvalued versus the
major currencies of the world, based on how much a dollar buys,
versus how much a euro or a yen buys (this is based on a rather
complicated calculation of "purchasing power parity," or PPP).
Fortunately, The Economist magazine invented a novel way to show
PPP that everyone can understand. According to the May 29, 2004
issue of the magazine, the editors invented the Big Mac Index
"in 1986 as a light-hearted guide to whether currencies are at
their 'correct' level."
The magazine simply asks McDonald's for the U.S. dollar price of
a Big Mac all over the world (McDonald's serves burgers in 120
countries). As of May 29, a Big Mac was 13% more expensive in
Europe than in the States. However, in Japan, a Big Mac was 20%
cheaper.
My take on this is that the U.S. dollar likely won't crash or
soar against these major currencies, based on this indicator.
The brutal truth is that the dollar isn't much overvalued or
undervalued.
The currency world sure is a much more boring world today than
many commentators would have you believe. It was a different
story back in 1995...
A Big Mac
Associated Websites
in Japan was 100% more expensive than a Big Mac in the
States. Not surprisingly, over the next few years, the Japanese
yen crashed. In 1995, at the yen's peak, it only took 80 yen to
buy one U.S. dollar. By mid-1998, it took nearly twice as many
yen to buy one U.S. dollar.
If you had been smart enough to recognize the huge overvaluation
of the yen in 1995 - and the Big Mac Index was one very simple
way you could have done that - then you could have profited
enormously as the yen weakened.
Currency Trading: Much Ado About Nothing, at the Moment
I don't expect you to turn into a currency trader. And the great
thing is, right now, you don't need to be an expert on
currencies - you don't need to transfer your money back and
forth from yen to euros to dollars... why? Because the world's
paper currencies are fairly in line with each other - a Big Mac
costs the same in the countries of the world's major currencies.
The next time a Big Mac hits $6 a burger in Tokyo, I'll let you
know.
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http://www.australiansharetrading.com/ the complete online
resouse for share trading Please use this aricle, you have my
prior consent to do so, just don't change a thing.australian
share trading By Nik Halik =>
http://www.australiansharetrading.com offers share trading news
About the author:
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