Taking control of your trades: a six-step guide
Sending money overseas via a foreign exchange broker doesn't necessarily mean you've got to hand over total control. While they can take care of everything for you, understanding the basics of trading can help you make the most of your international money transfers. It'll also put you in a much better position to benefit from automated trading platforms or peer-to-peer services. That's why we've put together this six-step guide to getting more involved in your trades.
1. Define your goals
If you’re looking for stable prices for your international mortgage payments, you’ll want to fix prices. If you’re sending a lump sum overseas, you may be better off deciding on a good price point and setting up an automated trade. Get to know your priorities before you start tweaking your trades.
2. Manage your risk
If you’re using a platform that lets you time your trade, make sure to set up a limit order. This automatically trades within your predefined minimum and maximum prices, making sure you won't lose money you can't afford to due to unforeseen circumstances.
3. Find reliable data
Comprehensive, trustworthy sources of historic data and market trends are essential to making good decisions. XE.com is one of the most reputable sources of historic currency data, and respected newspapers like the FT, Reuters and Bloomberg are useful for analysis.
4. Technical analysis
Technical analysis is all about using currency charts to predict price movements. This is a much more in-depth approach, so it's only worth considering if you want to really up your involvement. Start by drawing short, medium and long-term ‘trendlines’. Under a rising trend, lines should touch the base of every trough. Above a falling trend your line should touch each peak, revealing points where historic cycles might repeat themselves. From here you can move on to more advanced techniques.
5. Fundamental analysis
Fundamental analysis is about identifying economic and political trends – another more in-depth technique. For example, when the UK Office for National Statistics released positive employment data, the pound rose to a new high against the US dollar. Other events to look out for include interest rate decisions by central banks, trade statistics, Consumer Price Index data, GDP data, elections and referenda.
6. Get your timing right
It's important to factor in the different opening times of global currency markets. Get to know when the markets for the currencies you're trading overlap; it'll be the most active trading period for brokers, so you’re more likely to find a profitable match for your international money transfer.
If you're interested in learning more about sending money overseas, contact us today. We're here to give you everything you need to make confident decisions about how to make the most of your transfers.
