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Trade Fundamentals in Exchange Markets. !!!!!!!Intentionally left blank!!!!!!!!. Content. The Exchange Trade History and Its Concept Fundamental Analysis Factors affecting the market tendencies Monetary policy Economic calendar Technical Analysis Chart types Trend and tendencies - PowerPoint PPT Presentation
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Trade Fundamentals in Exchange Markets
!!!!!!!Intentionally left blank!!!!!!!!
The Exchange Trade History and Its Concept Fundamental Analysis
Factors affecting the market tendencies Monetary policy Economic calendar
Technical Analysis Chart types Trend and tendencies Reversal patterns
Capital Management Market enter signals Trading plan
Content
The Exchange Trade History and Its Concept
“In usum negotiatorum cujuseungue nationis ac Linguae”
(“For sales people of all nations and languages”)
Commodity Exchange
Stock Exchange
Foreign Exchange
FOREX Market Advantages
Minimal capital investments High liquidity No direct sales Exchange at any time High yield Large trade volume
FOREXWhat is it?
Concepts
CFD (Contract for difference) Contract for Difference allows to earn on both rise and
fall of price value
Margin Amount taken as a collateral for position opening Taken at the time of trade opening at the open price
and does not change anymore
Margin trading The system works through a brokerage company
providing leverage
Margin Trading Features Small start-up capital
Loans are granted in any currency
Trading is carried out without real money
Loan granting is charge-free in case of intraday trading
Broker allows interest on customer’s available funds
Trade is conducted remotely
Exchange rates
Base currency Quote currency Quote type
EUR USD Reverse
GBP USD Reverse
USD JPY Direct
USD CHF Direct
GBP CHF Cross rate
CAD JPY Cross rate
FOREX: Predictable!
Capital movement Data release and its expectation Policymakers announcements
Fundamental Analysis Definition
Method of price change forecasting through studying macroeconomic factors that influence the price
Purpose Determination of a financial asset true value based on
some macroeconomics factors
News type Unexpected
Scheduled
Factors Affecting the Market
Political Psychological Economic Force-majeureInstability in the country Meeting expectations Monetary policy Natural disasters
Elections Underestimation of events
Economic development Terrorism acts
Scandal resignations Mistaken expectations Catastrophes
Meeting of senior officials
Official statements
Press-conferences
Political scandals
Monetary Policy CB Interest rate correction
CB Interest rate – a rate at which commercial banks borrow funds from the Central Bank.
Change of required reserves rate Required reserves is a share of bank deposits in the
Central Bank
Open market operations – is a purchase/sale of government securities (bonds)
Currency Intervention Definition
Market enter of the CB for the purpose of forced adjustment of the national currency rate
Target National currency cheapening of countries-exporters
Country’s Economic Development Data
Inflation Depreciation of paper money due to its issue in sizes exceeding
the turnover needs that is accompanied by commodities price upturn and real wages drop.
Unemployment Socioeconomic phenomenon when a part of population cannot
find a job
GDP Consumption + government spending + investments + export –
import
Trade Balance The difference between exports and imports of goods
Economic Calendar
Trading Sessions
Session Stock Exchange GMT +3
Asian Tokyo, Singapore, Sydney.
01:00 – 09:00
European London, Frankfurt, Paris.
8:00 – 16:00
American New York 14:00 – 22:00
Technical Analysis Definition
Research method for market dynamics based on studying historical data
Purpose Forecasting of the future price movement
Axioms Price includes everything
Price moves in a certain direction
History repeats itself
Chart Types Line - closing price is marked only for every next
period.
Bar – shows maximal (high) and minimal prices (low), opening and closing prices.
Japanese candlestick – a rectangle between opening and closing prices called candlestick body. A dash from a candlestick body to maximal (high) and minimal (low) price values within this timeframe is called shadow.
Line Chart
Japanese Candlestick
Chart Timeframes М1, М5, М15, М30, H1, H4, D1, W1, MN
high
low
open
close
5M
1M
1M 1M
1M 1M
open
close
max
min
high
low
Black Candle Formation Black Candle Formation
White Candle Formation
open
close
min
max high
low
Trend Reversal Signals
Evening star Morning starShooting star
Open price = Close price
Doji
Trend
Trend is a vector of price movement
Main rule: “Trend is your friend”
Conclusion: “Do not work against trend”
Trend Classification By duration
Long-term– from 6 months to several years
Medium-term– from 2 weeks to 6 months
Short-term– up to 2 weeks
By movement direction Ascending – price goes up.
Descending – price goes down.
Flat – no certain move direction
Trend Line Definition
The line connecting successive data values for determining market direction.
Lines Support line – connects key lows of the market. Resistance line – connects key highs of the market.
Levels Historical level– distinguishing level which the market remembers
for a very long time. Psychological level – level occurring near round price values.
Downtrend
Uptrend and Local Trend
Flat
Reverse Pattern 1. Head & Shoulders
=
=1st shoulder 2nd shoulder
Head
Neck’s line sell
Continuation or Reverse Pattern TriangleTriangle
=
=buy
12
34 5
Min= 200 pipssell
Capital Management Investors
Positional
Speculative
Tactics
Averaging
Locking
Pyramid
Theory of probability
Trading Plan Definition
Systematic description of individual trading
Sections Descriptive part
Information Analysis
Forecast
Market enter signals
Target levels calculation
Threats
Trade opening or closing
Results analysis
FOREX entered the modern life and took its important place in it
FOREX gives opportunity to earn money by your own effort and intellect
FOREX and everything related to it are destined for success
History of FOREX is just beginning
Everyone has a chance to do part for the history of FOREX development!