Tag: Foreign Exchange

WTO Trading Forecasts Underscore the Need to Have Reliable Trading Signals

The WTO reported that after the surge of 2nd and 3rd waves of COVID-19 in Europe, growth in global merchandise trade is likely to slow down in the 4th quarter. Now more than ever, traditional forex and cryptocurrency traders are finding the need to seek for reliable trading signals to improve the results of their trading strategies. While there are different ways to go about it, the most convenient and fastest method is to use the services of entities providing trading signals as products and services.

Brief Overview of WTO’s Good Trade Barometer

According to the World Trade Organization (WTO), it has become apparent that when economies briefly reopened and resumed with global trading in the second and third quarters, the pent-up demands resulting from the first global lockdown have been met with adequate inventory stocking. Based on the WTO’s Good Trade Barometer for November, other components indicated mixed readings, to which a potential resurgence of the pandemic will have a considerable impact on how trading will carry on in the months ahead.

As it is now the case, the slow exchange of products in the international markets will likewise affect forex trading.

What is the Relationship between World Trade and Forex Trading

Every country trades with other countries, it’s just that nations trade more than others. That being the case, trading behaviors can affect how the value by which foreign currencies are purchased in the forex market. In layman’s term, if a country sold more during the day, it follows that the purchasing countries will also have to exchange their domestic currency into the currency acceptable as payment to the selling nation.

Now to illustrate by way of a hypothetical example, let’s say the U.S. imported products from another country like Canada, paying means a corresponding amount of U.S. dollars will be used to purchase an equivalent amount in Canadian dollars as payment for the Canadian goods. If on the other hand, Canada didn’t buy any product from the U.S. this will result to a trade deficit on the part of the U.S. There is no need for Canada to buy U.S. dollars either.

If U.S. world trade continues to experience trade deficits not only from Canadian trades but also from other countries, and for a prolonged period, the purchasing power of the U.S. dollar in world trade is bound to decline. Such decline is termed as inflation, which in the long run would lower the country’s exchange rate.

Mainly because the inability to sell U.S. domestic products to foreign countries will reduce the country’s trading capital, where and when trading is largely one sided . Where borrowing becomes necessary, the interest rate on such borrowings will cause the US dollar to weaken further.

Now supposing Canada continues to show a strong performance in world trading, from which it gains considerable amount of trade surplus, such developments will lead to growth in Canada’s trading capital. Moreover, if the U.S. purchases or imports goods from Canada on credit basis, the amount that Canada will collect from the U.S. will include interest payments and therefore further weaken the US dollar value against the Canadian dollar.

This hypothetical example is only an exaggeration of how global trades transpire, in order to show how trade deficits, trade surplus, inflation and interest rates and other similar factors can affect the value of different currencies.

Advice on What to Look for In Providers of Trading Signals

When looking for the most reliable trading signals provider, keep in mind that your goal is to improve your profits. Therefore it is not enough that the trading signals are based on mere word-of-mouth tips coming from the grapevine or based on personal perceptions of some market analysts.

Consider the services of signals trading firm AltSignals, which aside from providing signals derived from in-depth analysis of data, maintains special focus on providing only quality signals; as opposed to churning signals in large quantities. Moreover, altsignals services include learning modules that will enable newcomers to develop a better understanding of how trading markets behave.

As one of the best providers of trading signals, the transparency by which the company offers its services is one of the compelling factors that attracted more than 80,000 customers to sign up with AltSignals.