FOREX (FOReign EXchange market) - the international currency market, which is free money are bought and sold. In its present condition FOREX was launched in 1970, when they were introduced free currency exchange rates, the price of one currency against another is determined only by the participants of the market based on supply and demand.
In terms of freedom from external control and free competition are concerned, FOREX is a perfect market. He is also the largest and most liquid financial market. According to various estimates, the volume of the market constitute from 1 to 1.5 trillion. $ Per day (single trading platform does not exist and therefore an absolutely exact number is impossible). Transactions are conducted all over the world via telecommunications systems around the clock to 00:00 (GMT) Monday 22:00 (GMT) Friday. Practically in every time zone (that is, in Frankfurt, London, New York, Tokyo, Hong Kong etc.) there are dealers who will quote currencies.
FOREX - more objective market, because if participants would like to change prices to their advantage, they must operate with tens of billions of dollars, so the market impact of individual participants is almost completely excluded. The superior liquidity allows you to open and / or close positions within seconds. Hold time position is arbitrary and has no limits: from several seconds to many years and depends only on your trading strategies. Although the daily fluctuations of currencies are rather insignificant, but when you use the credit lines that are accessible even to currency speculators with small capitals in the $ 1000-5000, the profit may be impressive.
Consider an example. You have analyzed the market situation, came to the conclusion that the pound will go up against the dollar. Opening a lot for buying the pound (GBP) with 1% margin (leverage 1:100) at a price of 1.4989, you expect the growth rate. Some time later your expectations become true and you close the position 77 at 1.5050 and earn 61 pips (about $ 405). The calculation of 1 pip click.
Everyday fluctuations of currencies constitute about 100 - 150 points, allowing traders to make money on these movements.
In FOREX, it is not necessary at first to buy the currency to sell it later. Possible to open positions for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit needed to work in the FOREX market a $ 2,000 and grant a leverage of 1:100. Thus opening the position at $ 100,000, a trader invests $ 1,000 and receives a loan of $ 99.000. The major currencies traded in FOREX, are Euro (EUR), Japanese Yen (JPY), Pound (GBP) and Swiss franc (CHF), all of them are traded against the U.S. dollar (USD).
In order to assess the situation on the market a trader must be able to use fundamental and / or technical analysis, as well as be able to operate in a constantly changing information about political and economic nature.
Most small and medium players in financial markets use technical analysis. Technical analysis assumes that all the information about the market and its further fluctuations is contained in the price range. Any factor influencing the price - economic, political or psychological - is already considered the market and included in the price. The initial data for technical analysis are prices - the highest and lowest prices, the opening and closing price for a certain period of time and volume of transactions.Technical analysis relies on three assumptions:
movement of the market considers everything;
Movement of prices is purposeful;
History repeats itself.
Ie Technical analysis - a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.
Fundamental analysis - an analysis of the economic situation in the country of the currency, political events and rumors. The country's economy depends on the level of inflation and unemployment,% rate of the Central Bank's fiscal policy. Political stability also influences the exchange rate. Special role played by Central Bank policy, as concentrated interventions or refusal from them greatly influence the exchange rate.
But at the same time, fundamental analysis should not consider as an analysis of the economy. A far bigger role in the FOREX market belongs to the expectations of market participants and their assessment of these expectations. Strong influence on the expectations of market participants have different prognoses and bulletins, issued by market participants. Often a situation where an effect of "self-fulfilling prophecy," when market players raise or lower the exchange rates according to the forecasts. But a deep and thorough fundamental analysis is available only for big banks with a staff of professional analysts and constant access to a wide field of information.Despite these different approaches, and analysis of market fundamental analysis and technical analysis are complementary. Traders who act on the basis of fundamental analysis, however, have to consider some technical characteristics of the market (the basic levels of support - resistance, overbought - oversold), and supporters of the technical approach to the market the main news (% rates, important political events) .
On the main important advantages of the market FOREX:
The biggest number of participants and the largest volumes of transactions;
absence of an external regulator - the prices are determined solely by supply and demand;
Superior liquidity and speed of the market - carrying out transactions in seconds according to online quotes;
24-hour operation throughout the week;
the possibility of opening a position for any period of time, depending only on the trader;
No fees, except for the difference between the purchase and sale;
opportunity to get a bigger profit than the invested sum;
Qualified work in the FOREX market can become your main professional activity;
You can make deals any time you like.
In terms of freedom from external control and free competition are concerned, FOREX is a perfect market. He is also the largest and most liquid financial market. According to various estimates, the volume of the market constitute from 1 to 1.5 trillion. $ Per day (single trading platform does not exist and therefore an absolutely exact number is impossible). Transactions are conducted all over the world via telecommunications systems around the clock to 00:00 (GMT) Monday 22:00 (GMT) Friday. Practically in every time zone (that is, in Frankfurt, London, New York, Tokyo, Hong Kong etc.) there are dealers who will quote currencies.
FOREX - more objective market, because if participants would like to change prices to their advantage, they must operate with tens of billions of dollars, so the market impact of individual participants is almost completely excluded. The superior liquidity allows you to open and / or close positions within seconds. Hold time position is arbitrary and has no limits: from several seconds to many years and depends only on your trading strategies. Although the daily fluctuations of currencies are rather insignificant, but when you use the credit lines that are accessible even to currency speculators with small capitals in the $ 1000-5000, the profit may be impressive.
Consider an example. You have analyzed the market situation, came to the conclusion that the pound will go up against the dollar. Opening a lot for buying the pound (GBP) with 1% margin (leverage 1:100) at a price of 1.4989, you expect the growth rate. Some time later your expectations become true and you close the position 77 at 1.5050 and earn 61 pips (about $ 405). The calculation of 1 pip click.
Everyday fluctuations of currencies constitute about 100 - 150 points, allowing traders to make money on these movements.
In FOREX, it is not necessary at first to buy the currency to sell it later. Possible to open positions for buying and selling any currency without actually having it. Usually Internet-brokers establish the minimum deposit needed to work in the FOREX market a $ 2,000 and grant a leverage of 1:100. Thus opening the position at $ 100,000, a trader invests $ 1,000 and receives a loan of $ 99.000. The major currencies traded in FOREX, are Euro (EUR), Japanese Yen (JPY), Pound (GBP) and Swiss franc (CHF), all of them are traded against the U.S. dollar (USD).
In order to assess the situation on the market a trader must be able to use fundamental and / or technical analysis, as well as be able to operate in a constantly changing information about political and economic nature.
Most small and medium players in financial markets use technical analysis. Technical analysis assumes that all the information about the market and its further fluctuations is contained in the price range. Any factor influencing the price - economic, political or psychological - is already considered the market and included in the price. The initial data for technical analysis are prices - the highest and lowest prices, the opening and closing price for a certain period of time and volume of transactions.Technical analysis relies on three assumptions:
movement of the market considers everything;
Movement of prices is purposeful;
History repeats itself.
Ie Technical analysis - a statistical and mathematical analysis of previous quotes and a prognosis of coming prices.
Fundamental analysis - an analysis of the economic situation in the country of the currency, political events and rumors. The country's economy depends on the level of inflation and unemployment,% rate of the Central Bank's fiscal policy. Political stability also influences the exchange rate. Special role played by Central Bank policy, as concentrated interventions or refusal from them greatly influence the exchange rate.
But at the same time, fundamental analysis should not consider as an analysis of the economy. A far bigger role in the FOREX market belongs to the expectations of market participants and their assessment of these expectations. Strong influence on the expectations of market participants have different prognoses and bulletins, issued by market participants. Often a situation where an effect of "self-fulfilling prophecy," when market players raise or lower the exchange rates according to the forecasts. But a deep and thorough fundamental analysis is available only for big banks with a staff of professional analysts and constant access to a wide field of information.Despite these different approaches, and analysis of market fundamental analysis and technical analysis are complementary. Traders who act on the basis of fundamental analysis, however, have to consider some technical characteristics of the market (the basic levels of support - resistance, overbought - oversold), and supporters of the technical approach to the market the main news (% rates, important political events) .
On the main important advantages of the market FOREX:
The biggest number of participants and the largest volumes of transactions;
absence of an external regulator - the prices are determined solely by supply and demand;
Superior liquidity and speed of the market - carrying out transactions in seconds according to online quotes;
24-hour operation throughout the week;
the possibility of opening a position for any period of time, depending only on the trader;
No fees, except for the difference between the purchase and sale;
opportunity to get a bigger profit than the invested sum;
Qualified work in the FOREX market can become your main professional activity;
You can make deals any time you like.
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