So the President is who the President was...

Hi Guys and Girls,

Obama was re-elected as POTUS last night. Whilst remaining internationally popular, Obama's first term was not as successful as the U.S  public originally anticipated. The shine has worn off, Obama has lost some of his youthful vigour, and the economy has definitely seen better days. Still...

Be thankful this man doesn't run America. Seriously.

I'm not going to go into my own political views too much, but I'm happy Obama won. If Ronald Reagan reincarnated Mitt Romney would have won, we would be led back down the road to further deregulation of markets, a large reason the global economy got into the mess it was in.

What effect has this had on the market? Let's have a quick look.

The news of Obama being re-elected resulted in the dollar falling against a basket of currencies. This essentially means the dollar has become cheaper relative to other currencies. What are the reasons for this?

Speculators are now more confident that quantitative easing will continue, which was not certain under Romney. In simple economic terms, this generally means increasing the supply of money (in this case, the Federal Reserve is increasing the amount of dollars). The goal of this is to stimulate the economy. QE3 (Quantitative Easing Round 3) is expected to continue until mid 2015 at least, meaning the dollar is likely to weaken further down the line, so a lot of speculators have sold dollars in the hope of buying it in the future at a lower price.

This is basic trading strategy using fundamental information, and when a lot of people speculate on fundamental information (such as an election, or an important release from a central bank) then you often get knee-jerk reactions such as this.

So there you have it. Let's finish off with a video of Obama's basketball highlights :)

What were your views on the election?

Thanks for reading,

Jr
www.twitter.com/jr_dot

So you can trade a variety of products...

Hi Guys and Girls,

Not going to be a long post today, I just thought I'd mention something that I've left out thus far.

When you are trading currency like I have described, you are undertaking what is known as 'Futures Trading'. This is basically the speculation of a price moving up and down in the future.

Did you know however, that Forex is not the only thing you can trade? Let me introduce you to COMMODITIES.

Commodities are goods you see in everyday life, things that make the world economy go round. Rather than anticipating price movements of a currency in relation to one another, with commodities you are speculating on the price movement of just that item.

Examples of commodities? Oil, gold, sugar, cocoa, soya beans and live cattle!

Is it not amazing that you can trade such items without actually ever possessing them physically? 

You use information that you have gathered to make predictions on price movements, similar to the methods you use in the currency market. Let's talk about cattle.

10 points if you remember this guy

The price of live cattle has a lot to do with demand and supply, as well as personal income. If corn or soya beans (used to feed the cattle) change in price then this will have an effect on the price of cattle. The weather can also have an impact. If its cold, cows may waste energy by trying to keep themselves warm, and thus will weigh less - which then impacts the price they are traded at. Also, if personal income increases, the demand for quality beef also increases.

It's interesting how so many forms of information are included in the price of commodities. The individual who is able to disseminate this information and use it to anticipate price movements can make a lot of money.

Look at a full list of traded commodities here (frozen concentrated orange juice?!)
Which commodities would you like to see traded?

Thanks for reading,

Jr

www.twitter.com/jr_dot