Trading a Falling Yen

Trading a Falling Yen

Bywww.TheForexNittyGritty.com

http://www.theforexnittygritty.com/

The Japanese economy has been asleep for two decades after a real

estate and stock market bubble and subsequent crash. The

combination cause and effect has been an overly strong Yen.

www.theforexnittygritty.com/forex/trading-a-falling-yen

http://www.theforexnittygritty.com/forex/trading-a-falling-yen







In regards to currency trading, why is the Yen considered a

safe haven currency? The Yen has been strong, overly strong, as a result of the deflation at home as well as the monetary policy

pursued by Japan.


http://www.theforexnittygritty.com/forex/why-is-the-yen-considered-a-safe-haven-currency

http://www.theforexnittygritty.com/forex/why-is-the-yen-considered-a-safe-haven-currency








However, this policy has made Japanese products overly

expensive and hurt the export driven economy.









Today things are changing in Japan as Japanese Prime Minister,

Shinzo Abe is following a three pronged policy to get the Japanese

economy moving again.









Part of this policy is to double the money supply by next year. The Yen has fallen twenty percent

since the first of the year. Trading a falling Yen is new territory for

the majority of Forex traders.









Trading a falling Yen can be profitable, or not, depending on

how well one carries out fundamental analysis of Forex

pairs as regards the Yen and other currencies.


http://www.theforexnittygritty.com/forex/fundamental-analysis-of-forex-pairs

http://www.theforexnittygritty.com/forex/fundamental-analysis-of-forex-pairs








And, success in trading a falling Yen will depend on technical

analysis of major Forex currencies as other nations

adjust their monetary policies in order to protect their respective

balances of payment.


http://www.theforexnittygritty.com/forex/technical-analysis-of-major-forex-currencies










Japanese Fiscal and Monetary Policy









For years after the Second World War Japan encouraged savings by its people. This resulted in large bank accounts and lots of money

to lend in Japan.









It was, to a degree, the cause of the excessive buying of property and stocks that lead to the crash twenty years ago. Since that time

Japan has been trapped in deflation in which the Yen has

been overly strong.









This has hurt exports, production, and employment. The policy by the new government is meant to

correct labor laws as well as import rules to make the

economy more efficient and competitive.









In addition, increasing the monetary supply is meant to

reduce the value of the Yen, which it has, and increase exports which have gone up.









The previously moribund Japanese economy rose at an

annualized rate of three and a half percent in the first quarter of the

year.









The third leg of the stool is greatly increased government spending meant to stimulate the economy, add jobs, raise wages, and further raise economic production. If the entire package works, traders will likely be trading a falling Yen for

another year or so.www.theforexnittygritty.com/forex/trading-

a-falling-yen








Profiting from Trading a Falling Yen









Profitable tips for Forex day trading include following the

pronouncements of government officials and central banks.


http://www.theforexnittygritty.com/forex/profitable-tips-for-forex-day-trading

http://www.theforexnittygritty.com/forex/profitable-tips-for-forex-day-trading








Although the fundamentals eventually set Forex prices, market sentiment is greatly

swayed by the Forex news and predictions that drive prices.









Traders will want to cash in on the trend as the Yen continues to fall and be alert for a turn around when the policy runs its course or when politics change in Japan and

drive the Yen back up.









Trend trading, scalping, and channel trading will apply in

trading a falling Yen.









As always do your own fundamental analysis, keep

abreast of market sentiment, and when you do not understand the market sit on the sidelines and watch instead of guessing and

losing your trading capital.









Trading a Falling Yen

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Transcript of Trading a Falling Yen