Sparked by a most interesting conversation in oneof webinars recently, I decided to dedicate some time in explaining why, when
trading Emerging market (EM) FX, you should take more care and most certainly take somewhat of a different approach. Via dukascopy there is plenty of opportunity to gain exposure to the EM world, they offer CCY's such as MXN,
PLN, RUB, TRY and ZAR. While each have their own varying features, a different approach needs to be considered.
This can broadly be considered as unexpectedrisks, and yes these occur in G7 majors, but are much more prevalent in
the EM world due the rapid expansion of their society - these can range from political risks to rapid changes in the structure of the economy. But furthermore we know that due the lower liquidity seen in these pairs that small
shocks can result in large price changes and so if one is to trade EM's they need to be familiar with the calendar of macro indicators which is somewhat harder to come by than those for G7 nations.
Undoubtedly, fundamentals and money flows aremore …