The Forex Indicator Number One!

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The Forex Indicator Number One!

Hello folk,

The Forex Indicator Number One!

I wanted to share my biggest experience on how to trade the forex market.

The Forex Indicator Number One!

I got to know that the smart money is in the yield market. Everything what happens in world shows the yield market. And there is one rule for currencies and their strength.

The Forex Indicator Number One!

“Currencies follow yields/ interest rate”

The Forex Indicator Number One!

It’s simple and you have to repeat this sentence hundreds of times in your mind. Currencies follow yields, since the interest rate tells you how worth the money is. It’s the only measurement for money. That’s what the central banks tell you, how much worth is the currency.

The Forex Indicator Number One!

Now you might ask “You want me to wait for interest rate decisions of the central banks?”
No! I’m telling you, read what the bond market is telling you. How is the 10years Treasury Yield moving? How is the shape of the Yield Curve and where is it going? It tells you about the economy conditions (in this case the USA) and most important the inflation. Every country has bonds they sell to get loan. In Europe you take an eye on Germany, France and Italy since they are the most strongest countries in Europe.

The Forex Indicator Number One!

“So you are telling me, checking the yield curve tells me about how much worth the money is, the economy conditions and most important the inflation?” Yes!!

“What is the Yield Curve and how to understand the spread between US 10y and Japan 10y yields?”

Well, this takes to much to explain. I can tell you this: Spread between 2 Yields from different countries tells you where the currency pair will go!
You can learn about the Yield Curve a lot in the internet.

Most important Links:

[The Bond Market as a Forecaster for Economic Conditions](https://www.thebalance.com/can-bonds-predict-the-direction-of-the-economy-416906)

[All about the Yield Curve](https://www.thebalance.com/what-is-the-yield-curve-416919)

[Steepening and Flattening Yield Curve](https://www.thebalance.com/steepening-and-flattening-yield-curve-416920)

[Bond Spreads: A Leading Indicator For Forex](https://www.investopedia.com/articles/forex/05/041305.asp)

I can recommend you: Read everything you can find about yields, yield curve, yield market, yield predictions, economic influence in bond yields and all the working papers which you can find in the internet about the yield curve. And if you are really smart, make an excel sheet out of it and trade the currency market like a pro.

“Currencies follow yields/ interest rate”

EDIT:

The following links are informative for you too:

Yields of all maturities and the YIELD CURVE:

[World Government Bonds](http://www.worldgovernmentbonds.com)

To track all central bank monetary policies:

[Global Monetary Policy](https://www.cfr.org/global/global-monetary-policy-tracker/p37726)



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Comment (13)

  1. I just finished the book **All About Forex Trading** by John Jagerson and S. Wade Hansen and one of the indicators they recommend is **10-Year Bond Yield Spreads**. I am admittedly a beginner, but it was the first time I came across this in any of my reading and made a note to explore this further. Thanks for the links OP! **Below is what was in the book if anyone is interested.**

    **“10-year bond yield spreads**

    Monitoring 10-year bond spreads could give you a good idea of where investment flows may be headed in the future. Here’s the thing, though: you can’t just look for the country that has the highest yield and anticipate that the currency from the country is going to continue to move higher and higher. What you want to be looking for is a country whose bond yields are increasing. It is this change in bond yields that can lead to a change in investment flows which can lead to an increase in the value of the currency.

    For instance, if you are watching bond yields in Switzerland, and you notice that they are starting to move steadily higher, this is a great clue that the value of the Swiss franc may be appreciating. Now, if, at the same time, you notice that the bond yields in the United States are starting to decline, you should seriously consider looking at placing a trade that takes advantage of both a strengthening Swiss franc and a weakening dollar.

    The financial times is an excellent resource for tracking these Bond rates”

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  2. I will read your sources because im a curious soul, but have you actually traded based on this system or are you just learning this?

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  3. Wow but all of this is simplified in the chart itself. Read the chart n will tell you in which direction will it go.
    Trading is like driving, trade more so you don’t read the manual anymore.
    However, these yield stuff and economic calendar are good to read to begin with.

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  4. How long of a timeframe are you trading when looking at yield curves? Can it be useful to look at yield curves even if you hold a position for just a few days? Or is it longer term?

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  5. And generally this is how the institutions trade. They look at the big picture, that’s why swing trade will suit this fundamental analysis. We should pick the battlefield, in which not easy for any retail traders. Keep trading and learn from mistakes.

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  6. I’m a bot, *bleep*, *bloop*. Someone has linked to this thread from another place on reddit:

    – [/r/u_nayrbkramm] [The Forex Indicator Number One!]( https://www.reddit.com/r/u_nayrbkramm/comments/asdqev/the_forex_indicator_number_one/)

     *^(If you follow any of the above links, please respect the rules of reddit and don’t vote in the other threads.) ^([Info](/r/TotesMessenger) ^/ ^[Contact](/message/compose?to=/r/TotesMessenger))*

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  7. Until you give me a chart showing what the bond is telling you and how that “telling” translates to the movement of a pair; I’m not sold to your thread. Don’t forget we get this stuff often – almost every week someone tells us that something works out and here are the links da da da … The easiest thing for us to see what you mean here with a chart(s). Thanx

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