Currency trading insights and strategies: Kathy Lien has become a popular currency analyst and commentator. In the following five articles, taken from past issues of both Currency Trader and Active Trader magazines, Kathy looks at forex basics, how shifting interest rates impact currencies (an analysis of the changing forex market in early 2006), and specific volatility and carry trade strategies.

This collection is 30 percent off the regular price. Price shown is the discounted price.


ARTICLE 1: “Forex trading: Understanding the currency market” (Active Trader, July 2004)
Summary/excerpt: What makes currencies tick? Find out which economic factors help shape the short–term and long–term forex landscape.

ARTICLE 2: “Getting a lift from the carry trade” (Currency Trader, Oct. 2004).
Summary/excerpt: Correctly assessing the risk environment paves the way to capitalizing on the interest–rate differentials between currencies.

Just as markets that offer the highest returns will attract the most volume, so, too, in the world of international capital flows, nations that offer the highest interest rates will generally attract the most investment and create the most demand for their currencies.

The carry trade is a forex strategy based on this reality. Although it is particularly popular among global macro hedge funds, it is actually very simple to understand and execute. Carry trades involve buying (or lending) a currency with a high interest rate and selling (or borrowing) a currency with a low interest rate.

ARTICLE 3: “Volatility–based currency trading” (Currency Trader, Feb. 2005)
Summary/excerpt: Market volatility can be a complex subject, but understanding a few basic principles can help you implement strategies to capitalize on volatility extremes.

Volatility–based trading approaches have traditionally been popular among hedge funds, commodity trading advisors, and other professional traders. There are many ways to gauge volatility and incorporate it in a trading strategy. Of the different ways to characterize and trade volatility, the best are based on the tendency of volatility to revert to the mean.

ARTICLE 4: “Dollar–yen: The year’s hottest carry trade” (Currency Trader, Aug. 2005)
Summary/excerpt: The buck was on the short side of many carry trades last year, but the current interest rate hike cycle offers the opportunity to go long the dollar and short the yen.

When trading currencies, you’re essentially dealing with the relationships between countries and their economies. The interest rate differential between countries plays a pivotal role in deciding which currencies to buy and which to sell.

The carry trade is designed to capitalize on the relationship between two countries interest rates and currencies.

ARTICLE 5: “Interest rate shuffle” (Currency Trader, Feb. 2006)
Summary/excerpt: Interest rates are a key forex market catalyst, and from the U.S. to Japan, some central banks are poised to adjust their interest rate policies.

If you had to pick the single biggest driver of currency moves last year, it would undoubtedly be interest rates. The U.S. Federal Reserves persistence in raising rates even when faced with $70 oil after Hurricane Katrina helped spur an unstoppable dollar rally last year. Interest rates will continue to be a dominant driving force in the markets in the first quarter of 2006. What will be most important to watch will be the major shift that is about to occur one that we have coined the interest rate shuffle.

Purchased separately, these five articles would cost $22.25. Now you can purchase them for $15.57 — 30 percent off the combined regular price.