fOREX wORLD

Open positions in the spread pattern

2009-11-26T00:46:00.000-08:00

Open positions in the spread pattern. Theory uncertainty

A risky act will always be appreciated at its true, anyone who tries not to risk going to die and did not know the price of sweet victory.

Until then, we have heard a lot of different ways of entering the market, all of them, each in its own way, given a guaranteed method of entry into the market. In this article we wish to consider a new option that is entering the market with the trend spread, the ability to spread open. So, first of all, I would like to draw your attention to the following, which catch the "peak", ie the highest point, the task is not quite so simple, even we can say is very difficult and sometimes impossible.

The challenge of entering the peak, the catch is that the peak maximum or minimum at broadside trend is very vysokoriskovannoy procedure. See Figure 1:

Figure 1 Figure EURUSD changing trends and the identification of maxima fracture.

Pay attention to the daily schedule for the EURUSD, the figure number 1, and in particular, to the turning direction of the rising trend or downward trend. Max or minima are marked by red crosses I have to learn the importance of prices in these locations, we had a horizontal line, which will be convenient to navigate within the meaning of prices and its components. This is precisely such moments we try to describe in this article and analyze the method of entering the market in order to catch the trend, with higher probability from entry into the market.

As we know every trader dreams that successfully enter the market, but the more he dreams of learning to catch it turning points and trends to go dry from the water, in the event of a change in trend. If all things were easy, everyone would do so and, accordingly, the market would not unfold. In order to learn how to enter the market, especially, need to change their views on the situation occurring in the district. That is, it is necessary to force yourself to think individually and not try to do, as do all. In fact, in itself, the time of entering the market during the period of change trend is very risky, and therefore, in the case of attempts to determine the trend, ie the direction of the trend can often overstay in one place and take no action, determining the direction of the trend. In this case, turn to catch up is impossible, because when you have to be defined trend lines of the market is already very late. Therefore, from this we can conclude that in the case of attempts to catch the maximum price change in the direction of the trend seems almost impossible, or in other words one can say that the probability of such a transaction would be approximately 20%. There are some methods that can increase your chances of success in such attempts. It is possible that over time they will become your constant companions, and you will be guided by this theory at work in the market.

Figure 2 the change of trends, a schedule for the day time on the EURUSD.

Look at Figure 2:

The following figure we have marked three points, which can be described as peaks in the change of the trend. Point number one signals the descending trend, despite the fact that the previous short-term trend could be called bottom-up. Point number two is the point of maximum change in the direction of long-term ascending trend, pay attention to the horizontal line running radius of the point number two, this line intersects the two bottom-up peak at two, and then change direction of trend occurred at a time . The appearance of such peaks may be due to a variety of external factors that cause, some kind of uncertainty on the part of large and small traders in the market. Consequently, the uncertainty of its traders allowed us to use two attempts to enter the market. But the point could be two and three and a peak at the third turn of the trend would not only go on a global direction, but also set the lateral direction of the trend. Foresee such a possibility, it would be very difficult. Three-point minimum price rollback a short-term trends on the global trend and the point of fracture, after which the direction of the trend is changing radically, before taking the previous direction that was set a global trend. Each of these points has a very great interest to our study, because these points and will be our goal at the entrance to the market.

First of all, I would like to draw your attention to the risk of financial transactions by the transaction at the opening of the warrants, at the time of maximum or minimum recoil.

By looking at Figure 3:

Figure 3 year schedule for 2002 -2004, EURUSD number change trend direction for a given period of time.

Drawing attention to the figure, we can safely assume that the probability of the observed trends you turn around once every five months. This may suggest that the trend may change as in the opposite direction, and define the lateral movement, which in turn reduces the chance of determining the qualitative trend in the number of times. Now suppose a high risk of finding such a maximum or minimum in the spread pattern. But our task is not to talk to you about the immediate risks and that you can not do this, the aim is to show how you can maximize the likelihood of a successful login, using the theory of uncertainty set out by us.

The very name of our theory says much about how to warn you that the process of finding the point of entry is very uncertain, but the probability, so we try to proceed according to the probabilistic assessment in order to increase your chances. Given the previously described method of work in the market and the consequences under probability assessments, we can assume that the main task in finding the maximum or minimum, ie a peak at the entrance to the market is to "further" thinking. That is, in other words, to learn to identify a stable peak spatial reasoning must be set for several months in advance. All this can greatly assist you in determining the direction of the course. Do not think of everything, I suggest to review only in accordance with his vision, as a rule, the one who successfully establishes a maximum price or a minimum when entering the market, he does it in advance. How to anticipating the situation.

The theory of uncertainty:

Trader seeking turnaround trend and the time of entry into the market must rely on their common sense, as a rule, the decisions taken by the entrance to the market much sooner than is determined by the trend. To maximize their chances to be guided by the following factors:

1. Early analysis of the fundamental factors for several weeks in advance, taking into account the previously announced figures. In the case of a strong correction to the global trend played an important role as fundamental factors of the economy of the country, the currency which is traded on the market. Here is a list of important fundamental factors that should be disregarded in the change of the trend. As a general rule, if a significant change of these factors on the market may be of concern.

1. The trade balance deficit.
2. Balance of payments deficit.
3. Indices of inflation: consumer price index and wholesale price index.
4. Gross national product.
5. Unemployment.
6. Data on money supply.
7. Election of the president or parliament.
8. The size of retail sales.
9. Housing.
10. The value of orders.
11. The index of production prices.
12. Performance.
13. Indices of stock.
14. Deposit rates.

The above factors may significantly warn you of an impending change of trend. In the case where the data goes against the fundamental analysis of prices and in the analysis in the future as there is such a phenomenon can be assumed that after some period of time may be counter-trend. In this case it is necessary to proceed to the analysis of a technical nature to identify more specific points to enter the market.

2. In the analysis of technical indicators can be tested any equipment you think. We, in turn, are guided by the following indicators: MACD, RSI, Stochastic, Moving Average. The combination of these indicators at different time periods allows you to easily enter the market and go on without a loss in the event of failure analysis.

3. And, of course, do not forget about money management when investing. That is not immediately invest a large sum in the event of a successful analysis of just gradually invest certain amounts in the market. This will allow you to protect against large losses.

A good trend you!

President and Managing the international hedge fund
AlMaz Hedge Fund Management
Alexander M. Mazurkevich
www.Mazurkevich.Com

Successful Intra-Day Traders

2009-11-24T06:42:00.000-08:00

Being neutral to the profit and loss
You probably know people for whom the world merknet when they take a loss of $ 100, but if they earn $ 1000, you are at the top of the world. Definitely they are not neutral. If this applies to you, your intra-day trade, almost certainly, is controlled by fear and greed: reduced by $ 100, you probably do not want to take a loss just because you know that will suffer emotionally. Rising to $ 1000, you would like more, even if you must, just, take profits. Or you can take profits too early, because they fear that the position could turn against you. All this is not a good intra-day trade.

Professional intra-day traders do not permit daily fluctuations in their bills, disturb them. The results of one week is not important, do not even have the monthly results. This is only a small episode in their trading career. Daily variations actually have little meaning.

Emotional ups and downs is quite normal for beginners intra-day traders. If these emotions affect your shopping decisions too much, it is advisable to go back to trade on paper, in order to acquire confidence. You should not allow these fluctuations to overly influence you.

Being neutral to the price movements
You probably familiar with the situation when the trade goes against you and you start looking for reasons why it is still a good position and you should retain it. This is very dangerous for the intra-day traders, because it leads to their feet and big losses.

strategies in the trading process - the worst thing you can do. You can always find justification for their position to go up or down, but you do not see an objective price movement. You have moved from response to the anticipation! Within-day trader must not, under any circumstances, try to predict future price movements.

As the intra-day trader you must play on the actual price movement rather than on the motion, which must be! Please leave predictions to investors, you will sell during the day.
Most intra-day traders are included in the position, based on fundamental data. They mixed intra-day trade with the investment. It is also very dangerous. At the time, as may be reason to enter the position for the short-term trading, they regarded it as an investment, even if it goes against them.

Consider the famous example of
Think of "Enron".
Yes, were moments during the sale of "Enron", when the purchase was justified. Some bought Enron during the short recovery of $ 8.5 to $ 10. The problem is that if you base their entry on the confidence that the company is cheap and it should go up, you will be more and more inclined to hold their position or even add to it when the price becomes lower. The stronger your opinion about the market-based instruments, the harder to make decisions based on actual price movement.

Within-day traders do not have to do this. We strongly advise you to have a separate account to trade on fundamental data. In intra-day trade with the big lever, you could be tempted to take risks that would be too high!

We are not saying that bad to have expectations, trading within the day: everyone should know what the potential outcome of his position. If these expectations, however, is not true, within-day trader must recognize and respond according to what is actually happening.

Features of the national trade

2009-11-24T06:41:00.000-08:00

No, probably it is in the blood of the population one-sixth of the land ... Everybody knows where it is free cheese, and many know about it, that "we are not so rich to buy cheap things, and still are very fond of halyavu. Even though not stoprotsentnaya ball, but to a less expensive ... So we buy the product in unlimited quantities of the Polish-Turkish-Chinese friendship, klyuem on the pyramid and all the confidence in the two hundred per cent per annum.
Almost the same can be said about the work on international currency markets. What do you think, where the bulk of the clients of brokerage firms, allowing the side of more than 1 00 and a minimum deposit of USD 1 000? True, they probably say porusski! And then you can not particularly straining to make a simple human desire to get where cheaper. As you select a thousand?
Very simply. Suppose you nachitalis on enrichment at the Stock and decided to try. You are getting so protected and hidden from his wife one thousand dollars, and start looking for a suitable office. You in the eye popadaetsya advertising company that offers such an environment: the shoulder 100 and a minimum deposit of 1 000 U.S. dollars. It suits you and that you give us your honest earn thousand ... and possibly two ... but clearly less than ten. By the way, we should note that for the success of the need always to keep abreast of market developments, and that at least a pair of triple-hundred a month, if not more.
Now consider a normal working day: 1 0 August 1 999, 1 4:25 GMT; at this time to EUR LOW = 1, 070 1 HIGH = 1, 0764 LAST = 1 0738 and the day is not over. The difference between these two values is EUR 0,0063, that when the amount of lots in the 1 00 thousand U.S. dollars is USD630, that is, more than half of your deposit. But in your contract probably will be a point that if you lose more than half the money in your account - the position is closed by a locked until you do not fill up or not zaberete their money. Now imagine that you have opened almost at the crest, thinking that the quotes will be even higher, and did not have time to close, when they went down. As a result, over time you lose a thousand dollars, and in the brokerage firm you smiling saying "come yet, they have already committed to you, maybe even ignorirovav orders to the opening position.
Thus, the greater the amount of leverage, the greater the risk is subject to your personal account, and the faster it can dry up. Even if you are lucky, a market movement against you, even briefly, can cost profit for several days.

Study indicators. Part One. Introduction

2009-11-24T06:21:00.000-08:00

Introduction

This article was written to introduce the concept of indicators and explain how to use them in your analysis. We pour some light on the differences between advanced and lagging indicators, as well as examine their advantages and disadvantages. Many, if not the most popular indicators are as oscillators. Mindful of this, we also show how to read and oscillators to explain how to get signals. Later vetom number of indicators on, we turn our attention to certain indicators, and present examples of signals in action.
What is the indicator?

The indicator - a number of data points, which are obtained by applying a formula to price data protection. Price data includes any combination of the opening (open), the highest value (high), the lowest value (low) or the closure of close) during the period of time. Some indicators can only use the closing price in tovremya others include in their formula for the volume and open interest. Introduce the price data in a formula and calculated

. For example, the average number of 3 closing price - provides a single point of data ((4 1 +43 +43) / 3 = 42.33).

However, one data point does not daetmnogo information and does not show that makes indikator.Dlya analysis requires a number of data points over time. By creating time-series data points, the comparison can be made between present and past levels. For purposes of analysis, indicators usually show in graphic form above or below the price chart (a chart). Shown in graphic form, the indicator can be compared with the corresponding price schedule. Sometimes the indicators are built on top of price schedule for a more accurate comparison.
With the proposed indicators?

The indicator suggests a different perspective to analyze the price movement. Some, such as moving averages of values derived from simple formulas, and mechanics is relatively simple to understand. Others, like stohastikov (Stochastics), have complex formulas and require more time to study, to fully understand and appreciate. Regardless of the complexity of the formula, the indicators can provide a unique perspective in defining the strength and direction of price changes.
Simple moving average (Simple moving average) - an indicator, which calculates the average

price on the number of periods. If extremely volatile price fluctuations, the moving average value can help smooth the data. Moving average value filters out random noise and offers a smooth-term price movements. Schedule of Veritas (VRTS) displays greater volatility, and the analyst may have difficulty in determining the trend. Applying the 1 0-day simple moving average value to the price schedule, random fluctuations smoothed to facilitate the opportunity to identify the trend.

Why use LEDs?
Indicators serve three broad functions: prevention, validation and prediction.
LED can act as a warning to examine the price movement of a little more closely. If momentum (driving force) is reduced, it could be a signal that can be expected to break through support. Or, if formed a more positive divergence (the difference), it can serve as a warning to watch for a sharp break through the resistance. LEDs can be used to confirm other technical analysis tools. If there is a drastic change in the price of the price chart, the intersection of the moving average values could serve as evidence of this breakthrough. Or, if the market punch line support, the corresponding indicator on the graph Low On-Balance-Volume (OBV), it could serve as a proof of the weakness of the market. Some investors and traders use indicators to predict the direction of future changes in prices.

Tips for using indicators.

Indicators show. This may sound too categorical, but sometimes traders ignored the change in the price and focus on the display. Indicators filtered price movement formulas. Also, they - and not derived directly reflect the price action. This should be taken into account when applying the analysis. Any analysis of the indicator should be taken, mindful of izmeneniitseny. As the indicator shows the change in prices? Price movement is becoming more powerful? Weaker?

Even though the situation may be obvious, sometimes indicators to generate signals for buying and selling, the signals must be taken in context with other technical analysis tools. The indicator may signal the purchase, but if the chart shows a downward triangle with a number of declining peaks, it could be a false alarm.

Figure Inktomi (INKT), MACD grew from April to August and formed a positive divergence in August. MACD signaled the possibility of buying, but the market was unable to overcome the resistance level and reach the previous peak. This is not confirmation of the market was a sign warning against long positions. For the record, the signal for the sale took place when the market prorval line support decreasing the triangle at the beginning of October 00.

As always in the technical analysis, the ability to read the indicators more art than science. The same indicator may show different behavioral models that are applicable to different actions. LEDs, which work well for IBM, c could not work for the airlines Delta. Expertise with the various indicators can be done through careful study and analysis.

Today, using hundreds of indicators, new indicators under construction each week. Technical analysis programs come with sets of indicators, which vstraivayut, and even allow users to create their own display. Given the number of fraud, which is associated with indicators, choosing an indicator that you will follow, the challenge of his ukroscheniya. Even with the introduction of hundreds novyhindikatorov, only a few offer an excellent prospect and worthy of attention. Strangely enough, but the indicators, which generally deserve more attention - those who have passed the test of time.

When choosing an indicator to analyze, select it carefully and sparingly. Attempts to reach more than five indicators is usually futile. Better to concentrate on two or three indicators, and to study their effect. Try to select indicators, which complement each other, rather than those that operate in unison, and generates the same signals. For example, it would be redundant to use two indicators, which are good to show perekuplennye and resell the levels, such as Stochastics and RSI . Both of them show momentum (driving force) levels perekuplennosti and pereprodannosti.

Advantages and disadvantages of "LEVERAGE"

2009-11-24T06:20:00.000-08:00

The rapid development of Internet and the international currency market in mid-1990's led to a practical trade currency to extract income were involved hundreds of millions of private investors. Ability to deal with not only the currency exchange points in the bank, but also directly on the exchange, bypassing intermediaries, attracted to this market means many investors, increasing its liquidity. It is for this reason FOREX into a universal, high-yield, open and most liquid market in the world.

Moreover, profitability of operations in FOREX by several orders of magnitude higher than that of operations in exchange. This was made possible with the invention of machinery margin trading, which in a few years led to the formation of entire institutions, currency trading to help small investors to operate in FOREX an equal footing with larger players that determine the state of international economy and politics: national banks, large investment companies and other financial institutions, vorochayuschimi billions of dollars.

Happiness small investor is obliged to operate in FOREX only so-called shoulder, or by simply, in English - Leverage. We will thoroughly and in detail to give the exact calculations and clever formula. There are profound literature, margin trading, using Leverage is the foundation of all activities in the market FOREX. We just wanted to raise objections about the articles in the first issue FOREX MAGAZINE, the author of sokrushaetsya about - oh, horror! - The possibility of big losses when trading with leverage of 1:100, and even suspects terrible, terrible and treacherous brokers that they were lured to their specific network simple trusting lovely traders. Not without artful brokers in this world, of course. But we do not talk about them, as a tool - on the shoulder, that is on the basis of margin trading.

Let us leave on the conscience of the author's assertion that the shoulder will inevitably lead to losses. So you can agree to that and bricks down on somebody's head, is guilty of a crime, and therefore it should be once and for all ban. Investigate that gives Leverage, for which he needed, and well I use the shoulder, which we, traders, brokers provide. But at the same time, and what are the "shoulders" are found in the market, and which may, indeed, should not rely.

So, the most common size of the shoulder on the FOREX for investors operating amounts from 300 to 10-15 thousand dollars - 1:100. What happens to your money when you open the account with a broker, is starting to buy and sell currency? What does it mean that the shoulder?

After purchasing, for example, one standard lot, you actually bought a thousand dollars of your deposit with a broker in a hundred times more: 1000h100 = 100.000 dollars and exchange them for dollars. But really in the hands of the money you get can not, yet that had not yet invented a mechanism for a real deal, except robbery. That's the essence of margin trading: you get over the 100,000 U.S. dollars that you give to free loan, the amount of dollars that you can afford at the rate prevailing on the FOREX-market in the twinkling of the transaction. And if obmennike bank rate changes twice a day, the FOREX - every minute, and sometimes every second. If for example you are lucky (or you are clever), and now you buy for example, 78 740 dollars at the rate of 1.27, then after 5 minutes, saw that the rate of 1.2730 is already, you can sell 78 740 euro, with the account of the amount of 100,236 dollars. However, since 100000 you like to give credit, then you are obliged to return them, and your "fat" is 236 dollars.

So, actually, "shoulder" in itself - just a tool to operate in the market FOREX considerable amount, and get serious profit Taya work with very small by the standards of FOREX, the capital. Is there a risk? Of course there is. But the measure of the risk involved - it's your choice. If your capital of $ 10,000, then you have the right to take risks in a transaction not more than 3% of its capital, that is translated into concrete realities of the deal - you can afford in the moderate-risk strategy for trade to stop-loss, 30 points from the price (if you're working with one LOTO). However, if you're not lucky, and you will lose - that no more than $ 300. But if you have "guys are crazy and you do not take a lot for these conditions, as, for example, five, then your potential loss (with stop-loss of 30 points from the price) will have $ 1500 or 15% of the capital. And this has nothing to do with his shoulder. You or tolerated rollicking game, or make it clear what you can afford it or not. And if you do not like risk - and do not need to trade on the FOREX - put money in the bank and get their unfortunate 12-17% per annum. There is no leverage, no risk, no champagne. We should not lament about the terrible risks. They are on the FOREX is, and nothing would not be helped. Do you want to reduce them - save the experience, money, and as soon as you dial 30000 extra dollars - you can easily find a brokerage company with a "shoulder" from 1:50 to 1:30. Major brokerage companies are working with such amounts and with such "shoulders".

However, the market is extended to provide leverage and more than 1:100. For example, GCI (http://www.gcitrading.com) provide an opportunity to trade their clients $ 500 for a standard lot for all instruments, which is equivalent to approximately 0.5% margin or leverage of 1:200.

And here is the shoulder, of course, has a potentially much higher risk than even the much more common 1:100. But again - you need not make claims to the broker, and, above all, to himself. If you can afford such risks in terms of money management, and feel confident enough in the market, why not? Because the shoulder is not only bears the greater the risk - and huge profits. So - who is not in danger - do not drink champagne.

Be in yourself and your equity: if you want, you can and you know how to take risks and win - you no "shoulder" is not scared. If you prefer a conservative trade with less risk, and you have the risk capital of at least 30-50 thousand dollars - you must choose a reliable solid broker, providing the shoulder 1:30. If you are in zakromah "hundreds of millions of dollars, and you do not have to shoulder it - you can trade on FOREX as a major player - through its own bank.

Participants in the stock market

2009-11-23T22:53:00.000-08:00

The main actors in the stock market are, of course, big mutual funds, major investment companies and banks. They are such as accumulate funds of ordinary depositors, which is several hundred thousand. Their deals are always quite high and, as a rule, the deal does not go in one day, and stretched for a few, as appears on the market counterparties on the other side wanting to make a deal. Large investment companies have well-diversified portfolio of securities, which allows them to be in a stable condition in comparison to other investors.

Typically, the development strategies in such companies is a group of professional analysts, rating the most fundamental factors. The actions of these analysts, as a rule, is always limited and strictly controlled by the supreme leadership of the company, and are aimed at avoiding unnecessary risk investments with a proposal for a trader. Efforts to this command entirely recovered thanks to the high volume of transactions in which even minor fluctuations in price have a significant income. Moreover, the analytical departments of major investment firms and mutual funds have the latest software analysis and the latest developments in computer technology and telecommunications. Major investment companies also have a full range of information services, moreover, with their brokers on the exchange, they can make their own quotes purchase, speaking, in such a way as a market maker, but this will be written below.

A more limited companies have less capital. These companies typically can not carry out their transactions on favorable exchange rate for them, because of the small volume of transactions. Nevertheless, they have successfully diversified their capital, but were unable to keep up to date equipment and software are equally large companies. Analysis Division market less qualified, because of the fact that the company could not initially appoint a high salary for such a responsibility, and to link future earnings for future income earned through these traders for the company. Partly because of that company's traders enter into a risky transaction, in order to obtain more profit, but on the other hand, they risk a lot to lose. Because of these factors, companies with small capital, have fewer opportunities to generate income from investments in securities, as large companies, and the way to the Revenue for more risky.

However, the weak and vulnerable in terms of these factors are the ordinary investors. Going to the market through a broker, they enter into a minimum transaction allowed the market and a few lots. The situation is made worse at times and that those few lots were purchased through margin accounts, provided by a broker, at the price proposed by the broker. In such circumstances, ordinary investors can not have a well-planned portfolio of the 4-10 attacks. They lack the tools and opportunities to buy large batches of stock and to monitor each of them, as well as in margin account, they will be able to follow only the movements of quotations of securities 1-3, controlling the time the broker will offer to update your account or sell some of the securities .

Most ordinary investors, before arriving at an investor in the stock market, engaged in activities or as a non-investment, or playing the stock exchange. Sometimes these people lack the knowledge, and reading one or more pamphlets or books on market analysis, feel half-professional players, but it is not so, and as will be shown below those of ordinary players and investors in the vast majority of cases will directly depend on their the ability to control their emotions and psychological state, with control of open positions.

Ordinary investors, as opposed to investment companies are not able to get fresh quotes and economic news in real time and thus quickly respond to them, except for this market analysis of these investors restricted their personal views on the analysis. Software and computer-assisted ordinary investors also lagged behind those that are used in smaller investment companies. All these factors have led to the weak position of ordinary investors in the stock market.

Then look at the classification of participants in the stock market in market terms. In terms of strategy they are divided into four groups, each of which is in compliance with the name of four animals: bulls, bears, pigs, sheep.

As you know, bull horns, beat the enemy from the bottom up, so the bull market is associated with the buyer, the player who makes a bet on improving quotations and wins when prices rise. Bear on the contrary, the defense, beat the enemy paw down, so the bear went into the jargon of market participants, as the seller, the player who bet on the decline, and wins when prices fall.

Pigs are alchnye players. Having lost all of the greed of caution, they fall under the knife. Some pigs are buying or selling prohibitively high for those positions, progoraya at the first slight movement of the market is not in their favor. Other разоряются, perederzhav position, that is, continuing to wait for even greater profits, although the trend has turned.

Sheep are timid players boyazlivo following trends, rumors and gurus. From time to time they natsepiv a bychi horn or a well-bearskin, trying to act as experts. However, they are easily recognizable by жалобному bleyaniyu when the market come hard times, such as, for example, the lack of trend.

As soon as the doors open markets, the bulls are beginning to buy, bears to sell, close and violation of pigs and sheep. It is these groups of exchange, serving buyers and sellers, prices are formed, which in turn depend on the price of demand and price proposals. "The price of demand" is the price, which asks for the desired goods to the buyer, and the "offer price" is the price, which proposes to sell the goods. Disputes between buyers and sellers due to discrepancies in prices of supply and demand and are permanent.

Buyers want to pay as little as possible, and the sellers ¾ take as much as possible. If the two teams will each stand on their own, without changing the price of supply and demand, the transaction will never take place. If the deal does not take place, the market did not get the price of the paper, as the price of supply and demand only the desired price of the seller and buyer. A seller has a choice: either to wait for price increases, or to agree to a proposed lower price. A buyer also has a choice: either to wait for lower prices, or nadbavit its price. The transaction takes place at a time when both parties to assess the market the same way: a pushy bull, agreeing on the terms of the seller pays for the product more, or timorous bear, agreeing on the terms of the buyer sells the goods cheaper. Throgmorton Street ranged his presence led to action, and the bulls and bears. They speed up the negotiation process between the bulls and bears, as the competitors themselves are able to intercept and advantageous position before.

The buyer knows that if it is too long razdumyvat, another dealer, interfering in the bidding, uvedet goods. And the seller knows that if you do not sbavit price, another dealer, interfering in the bidding may go to the assignment of another seller. Abundance hesitant dealer encourages buyers and sellers be posgovorchivee with each other. The transaction takes place at a time when the two men ¾ the buyer and seller evaluate the market equally.

The advantages of trading systems to other methods of decision-making in the securities market

2009-11-23T22:50:00.000-08:00

In order not to be at the scene of sheep and pigs, and if they have, then be able to quickly get out of the market, you need to understand the strategies of the market all the dealer groups, ranging from professionals to ordinary investors.

The approach any stockbroker to trade in a 100% mechanical, or by 100% subjective. Meanwhile, stockbroker, who have designed and well-designed trading system, there is no need to take commercial decisions themselves. They have a plan that says exactly what to do in any situation. All of them want to ¾ is to monitor the market to determine what actions are dictated by the trade and plan to order the broker. Most often, these plans are computerized trading. Dealer enters the market data and trading system was said to him what to do.

On the other hand someone who is not trading on the plan, has no fixed rules. It takes trading decisions subjectively, when he pushes the date, he has no guiding thread, except his idea of what will work well. While he tries to learn from previous mistakes ¾ this does not help, because the correct decisions are not always end in profit and incorrect decisions did not always end with losses. But do not categorically assess the chances of such dealer, dealer history knows examples of successfully applying the analysis of Hanna, Fibonachi or astrology, and providing that there is a market order, but in this case, their success can be largely attributed to good management techniques in cash and a disciplined risk control and not the correctness of the provisional theories or methods of prediction.

For dealer selling not characterized as mechanical and emotional side of decision-making. The effect of fear and greed just remarkable. The nature of rights is that under the influence of these feelings, he invariably takes a mistaken decision to speculative arena: so instead of closing the lucrative positions, he pays an additional application for the purchase of the broker at a time when the trend is already waning. One of the main distinguishing features of the professional dealer in the fact that they have learned to control their fear and greed. They do this through self-discipline, which implies that the decision-making process has a structure designed, moreover, they are subject to signals from trading systems ¾ in fact, it is the only way to minimize the emotional strain, will inevitably destroy each trader.

All are more or less successful Throgmorton Street, not to mention the big investment companies are applying a relatively mechanical approach may find themselves unaware. Instead, most fans are more likely to use a subjective approach, following the short-term changes in prices as a guru. Many professional financial managers will have a system that is 100% mechanical. Those who do not operate 100% mechanically, typically allow themselves only a tiny number of opinion beyond the scope of their system.

When fully mechanical approach at the dealer will have a group of markets with which it will work. He will be the mathematical formulas that are based on the previous price talk, when to buy and when to sell. Will the rules of entry, exit rules to the playback position and the rule for vyigryvayuschih positions. Will the rules, when the trade and when to complete each of the systems. The only challenge facing the dealer, will be in the initial selection of a suitable market for each of its mechanical trading system and optimizing its parameters on the basis of available historical data, so that does not fit your trading system using historical data, and simultaneously to achieve the statistical advantages according to which:

(the average winning trade) * (% of winnings) ¾ (the cost of a broker and slippage)> (mean losing the deal) * (% losses)

Such a statistical advantage, but could not reach traders selling subjectively based on their perceptions of the market. Their income is likely to depend on the simple everyday factors, since these factors, not to mention the impact of rumors and guru, will influence the perception that the subjective traders would see on a computer screen.

In technical analysis, there is a whole lot of mechanical trading systems automatically decision about buying and selling securities. Some of them are quite complex, have their own methodology and understanding the market and contain several indicators, while others are based on a single indicator: whether moving averages or parabolic system, and also show good results. Many disadvantaged experience, stock analysts are trying to use as much as possible indicators in the trading system, and at the outlet willing to get a single consolidated signal. Typically, these analysts use several indicators of trends for the signal to start the trend and a host of indicators characterizing the zone perekuplennosti and pereprodannosti. But such searches cherished system with multiple indicators, according to the author's work, the vast majority of cases are doomed to failure because of two simple reasons.

The first reason for this ¾ contradictory signals: for example, while the use of parabolic systems and grid systems on the market slightly trend often signals of different forces and, if considered oscillators, the more they can often conflict with each other. The second reason is undesirable use of multiple indicators ¾ this delay signals. Even if the system is, for example, the trend of several indicators to it, because of construction, it is necessary to receive signals from at least the majority of indicators. But due to the fact that the trend indicators are the delay or, at best, simultaneous, the signals from the trend indicators will come only after the beginning of a new trend, and the overall signal received at the time when the trend is maturity. At that time, professional Throgmorton Street will gradually close their positions, and Throgmorton Street with trading systems to help them by engaging with them in the transaction. Closing position at such dealer will also occur at a time when the trend has changed and has become a recruiting force. From all this it follows that the use of such trading systems are either not efficient or inefficient and risky.

By virtue of the above considerations, to use the trade system with a small number of indicators and a tendency to detect at an early stage, rather than catch it for the tail. "

World currency market FOREX

2009-11-23T04:39:00.000-08:00

The history of the international currency market.
International Monetary Market, which is now to be known as FOREX, has deep-old roots. It goes back to thousands of years BC, when Egypt's first coinage. Sami currency exchange operations in their current understanding began to evolve in the Middle Ages. This was linked to the development of international trade and navigation. The first valyutchikami are Italian menyaly that earned on the exchange rates of different countries.
With the development of interstate relations market for currency exchange operations mutate, acquiring an increasingly shape. The most significant change in the currency market have been made in the twentieth century. Finding the market advanced features started in 70 of the 20 th century, when it was lifted system of fixed rates of one currency against another.
After the lifting of restrictions on currency fluctuations, there's a new kind of business, which is based on a profit in a free system of exchange. And the change of course caused all kinds of market conditions and is regulated only by demand and supply.

30-s XX century
The world financial crisis.
There is the destruction of trade and economic ties. A thing of the past times, the rule of gold coin standard. By the mid-30's London becomes the world's financial center. British pound sterling at that time was the main currency for trade transactions and the establishment of foreign exchange reserves. Even then pound jargon called "Cable" ( "cable"). This name is linked with the fact that the means of communication with the transactions was the telegraph, and information transmitted by cable.
In 1930, the Swiss city of Basel was established Bank for International Settlements. The goal was the creation of financial support for newly independent States and is experiencing balance of payments deficit. Before the First World War, there was a so-called "gold standard". Gold has all the features of money, and paper money freely exchanged for gold, according to the guidelines listed on their official gold content. Therefore, difficulties in establishing the exchange rate does not arise. They were based on a gold parity. This mechanism could operate only in conditions of free sale of gold at a fixed price and with no restrictions on its export. This is in full prior to the First World War.
Arose during the First World War, inflation has made it impossible to maintain razmena exchange for gold and led to the collapse of the "gold standard". In the short time it was revived in 1920-ies. modified, urezannom form. The world economic crisis of 1929-1933 biennium. and it led to the collapse. Thus, in 1931, Britain was forced to cancel the "anchor" the pound sterling to gold. A period of devaluations, periodic adjustments to the parities of currencies, strengthening foreign exchange controls and import restrictions.

1944
In the U.S., was the Bretton Woods conference. It is believed the end of the US-British rivalry. The conference was attended by two major figures: John Maynard Keynes (England) and Harry Dexter White (USA). They managed to create and adopt a new order for the world financial system under the circumstances.
Bretton Woods monetary system, established in 1944. Was designed to combine the hardness inherent in the gold standard and flexibility, differentiating system oscillating courses. There was an official gold content of the national currencies of participating countries, and through it to identify each other parities of currencies. In doing so, the obligation to exchange paper money for gold were recorded. Participating countries Bretton Woods agreement had decided not to reject the exchange rate parity of the value of + / - 1%. Automatic alignment of the balance of payments should have been done by changing income and prices in response to changes in foreign exchange reserves. Only in the case of a "fundamental imbalance" was to change parity.
In accordance with the Bretton Woods agreement, the United States to guarantee the exchange of its currency to gold at a fixed rate, but to bring dollars to the amount could only central bank of another country. In addition, it is seen as a "nedruzhestvennaya" to the U.S. action and has very rarely. However, French President de Gaulle S. manner successfully added to gold reserve in France.

The main provisions of the Bretton Woods system
The International Monetary Fund has become a vital institution that monitors international financial and economic relations;
Declared currency, playing the role of international reserves (the dollar and the de facto pound);
There are adjustable parities of currencies to the U.S. dollar (possibly rejecting - 1%), the dollar is pegged to gold (ounce of gold - $ 35);
IMF members have the right to change the parities only with the consent of the IMF;
Upon completion of the transition period should be a convertible currency, for the observance of the principle of all governments commit themselves to keep international reserves and, if necessary - to carry out intervention in currency markets.
Members of the IMF makes a contribution currency and gold.

1947
For the suspension of communism, the U.S. reconstruction program are the European economy. U.S. Secretary of State Marshall, in his report obrisovyvaet plan, under which the economy of Europe ozdorovitsya to a level where it can maintain its own military capabilities. One of the challenges is utolenie "dollar famine". When in 1949 the U.S. dollar liabilities Europe accounted for 3.1 billion, then in 1959 they reached 10.1 billion dollars.
In the 60 years have been detected weakness of this system, a tendency to accelerate the pace of inflation and increasing disparities in the rates of different countries. This has led to periodic review parities. Although the Bretton Woods system and is considered an example of solid fixed-rate for the period from 1948 to 1967. currencies have changed 109 countries. The average depreciation rate was 48.2%. At least 48 countries carried out for two and a devaluation of their currencies. By 1958, most European countries declared free convertibility of their currencies.

1964
Japan announced the convertibility of its currency. Following the announcement of the convertibility of the major currencies, it became clear that the U.S. is no longer able to maintain the price of $ 35 per ounce of gold. The dollar, inflation is a threat to the United States. The Kennedy administration has taken a number of misconceptions action - imposing a tax on the interest differential, raising the cost of foreign borrowing, and a program of voluntary restrictions on foreign loans. Tax and restrictions have led to the emergence of a new market - the market evrodollarov.

1967
A devaluation of the English pound, which has caused the latest blow to the illusory stability of the Bretton Woods system.

1970
In the U.S., sharply declining interest rates, creating a dramatic crisis of the dollar. Within a short period of time going on a massive outflow of capital from the U.S. to Europe, where interest rates were higher.

May 1971
Germany and the Netherlands announced a temporary free-floating its currency.

August 1971
Inflation has swept, and the U.S.. U.S. balance of payments deficit leads to a reduction in gold from 18 to 11 billion dollars. At the same time, a rise in U.S. external debt. The market price of gold has become more than a fixed, and the U.S. can not artificially support it. Growth deficits forced the U.S. to suspend the convertibility of dollars in gold. August 15, 1971, U.S. President Robert Nixon eliminated between gold and the dollar link, and the U.S. currency lost its support.

December 1971
It was decided that the devaluation of the dollar (the first post-war period, but not the last). At a meeting in the Smithsonian Institution in Washington was a last attempt to save the Bretton Woods system. Interval deviations from parity exchange rates had been raised to 4.5%. To keep the border interval, it was very difficult. And some time later the Bundesbank held intervene in the amount of 5 billion dollars. It was a huge sum in those times, but it has not brought success. Currency markets in Europe and Japan had to be temporarily closed, while the U.S. announced the devaluation of the dollar by 10%. Developed countries have ceased to maintain a fixed parity and let currency swimming.

1973-1974
U.S. to progressively abolish the tax on interest differential and a program of voluntary restrictions on foreign loans. Bretton Woods system has ceased to exist. Since March 1973. regime of floating exchange rates is predominant.
In the last years of the Bretton Woods system of currency traders will benefit a great speculative profits in the period followed the termination of intervention of central banks. After the rejection of the possibility of extracting the fixed rate of return that have been severely limited. Many banks have suffered major losses, and two well-known - "Bankhaus Hershtadt" in Colon and Frenklin National in New York - even gone bankrupt because of failed speculation.

1976
A Jamaican Conference (in Kingston). Representatives of the world's leading states have established new principles of the world monetary system, including a shift to floating rates. States renounced the use of gold as a means to cover the deficit in international payments. The main elements of the new system are inter-state organizations, regulating foreign relations, currency convertibility. Means of payment in favor of national currencies. The main mechanism by which the international currency transactions are commercial banks.

1978
A European Monetary System (EMS). The core of EMU is a grid of cross-currency exchange rates with the central and boundary values of exchange rates. On the whole, the EMU reminds Bretton Woods. If the cross-rate closer to the border, both sides are obliged to conduct an intervention.
A key currency EMU - doychmarka.

1985
Gradually, the ECU is not counting, and physical instrument. Produced ECU-denominated traveler's checks and credit cards, banks offer deposits in the ECU.

The history of European unification

1957
In Rome, an agreement was signed on the formation of the European Economic Community. In the Community include: West Germany (FRG), France, Italy, the Netherlands, Belgium, Luxembourg.

1963
Chancellor Konrad Adenauer and President Charles de Gaulle signed a cooperation agreement between West Germany (FRG) and France.

1969
A meeting of EU leaders, which were set guidelines for a future monetary union within the European Economic Community.

1972
After the collapse of the Bretton Woods system of exchange rates of EU leaders signed the European agreement on the free swimming. For the European currencies were set limits fluctuations in their value relative to each other in the amount of 2.25%.
Collective fluctuation euro against the U.S. dollar was allowed in the amount of 4.5%.

1973
Britain, Ireland, Denmark became members of the European Agreement on the free swimming.

1978-79
Education the European Monetary System. The agreement establishing it was ratified by 9 parties - members of the European Community. The purpose of the establishment of EMU - an attempt to protect the currency of the Member States of the EEC sharp currency fluctuations.
Of the 9 signatories, only 7 have been full members: West Germany (FRG), France, the Netherlands, Belgium, Luxembourg, Denmark, Ireland. Britain did not participate in all documents, Italy joined them on certain conditions.
Simultaneously with the establishment of EMU has introduced a new currency - the ECU. The objective - the establishment of a means of payment within the EMU, and in due course - the replacement of national currencies. ECU was a basket of currencies stranuchastnits EMU. For the national currencies have been set limits on the fluctuations of the central values of 2.25%, for the Italian lira - 6%.

1981
On the European Monetary System joined Greece.

1986
In the European Monetary System will enter Spain and Portugal. For the Spanish Pesetas limits had been placed on the variation in the amount of 6%.

1990
Britain joined the exchange-rate mechanism, which was developed in the framework of EMU, with the pound sterling against the German mark to 2.9500. West Germany (FRG) and East Germany (GDR) have joined together in a unified Germany.

February 1992
In the Dutch city of Maastricht 12 Member States of the European Monetary Union signed a new Treaty on European Union. At the core of the treaty was based on the Rome Agreement of 1957. In the Maastricht Treaty had been scheduled orientations of the single European market, the European Central Bank, the single currency, common economic policy.

September 1992
Heavy times for the European currencies. There was the famous fall of the pound sterling. During the aggressive sales of pounds in the foreign exchange market the Bank of England and other members of the exchange rates were trying to keep it in an acceptable range of fluctuations in support of operations in the market. But all their efforts have not led to the desired result. Then the Bank of England was forced to raise the discount rate three times in one day in the amount of 5% in an attempt to prevent podeshevlenie pound. But the measure does not help, and pressure on the pound continued.
The famous financier George Soros was famous for the fact that playing podeshevlenie pounds and received a huge profit when he saw that the pound would not be able to keep within the established framework of exchange-rate mechanism.
Thus, the Bank of England was forced to withdraw its currency from the mechanism of exchange rates. The fate of the British pound and Italian lira divided. It was announced that they had temporarily come out of the mechanism of exchange rates.

July 1993
Out of the pound sterling exchange rate mechanism strongly influenced the movement of European currencies. All currency felt the intense pressure that has led to significant movements in the direction of their podeshevleniya. An interesting story happened with the French franc. After the devaluation of European currencies French franc remained the last bastion of stability. And then the whole market came to him in the hope that it should understand the plight of other currencies.
Remembering signed a bilateral cooperation agreement, Germany could not leave the franc at rasterzanie. Not only that Bundesbankprinimal involved in interventions in the currency market, but also for the maintenance of the franc, it was done lowering German interest rates. But even such selfless actions have not been able to save the franc from heavy podeshevleniya.
Due to such grand events in the currency market, in the mechanism of exchange rates, it was decided to increase the range of possible fluctuations of its currency to 2.25% and 6% to 15%.

December 1995
European leaders agree to introduce the euro in 1999 for countries that meet certain parameters for the largest government deficits, public debt, inflation and interest rates.

December 1996
Determine the appearance of euro banknotes.

June 1997
Determine the appearance of euro coins and euro-cents.

March 1998
The European Commission recommends a list of 11 countries that will enter the euro: Germany, France, Italy, Belgium, the Netherlands, Luxembourg, Ireland, Portugal, Spain, Austria, Finland.

May 1998
European Parliament approves the choice of 11 countries that will enter the European Monetary Union with the new euro currency. It starts with the choice of candidates for the post of head of the European Central Bank.

January 1999
The market for non-cash transactions and quotes a new European currency euro, which replaced the ECU. 11 European countries recorded exchange rates against the euro. The European Central Bank began to manage the monetary policy of the European Monetary Union (EMU).

Euro (EUR) "became the official currency for 12 EU countries. In the euro area are:

* Germany
* France
* Italy
* Belgium
* Netherlands
* Luxembourg
* Spain
* Portugal
* Greece
* Austria
* Finland
* Ireland.

Britain, Sweden and Denmark have not yet participated in the euro zone.
Rate, foreign exchange each of the countries - members of the EMU in the euro, with the exception of Greece, was fixed 1 January 1999 (see Table 1), while, since that date, each of these currencies ceased to exist as an independent currency. Course conversion drachmas to the euro was fixed on 1 January 2001. Prior to the completion of the conversion of funds in the euro on 1 January 2002, the national currency (HB) existed as subunits of the euro.
Starting from 0.00 in the European time, 1 January 2002 Euro officially became a cash turnover of 12 EC, and the national currencies of the euro zone ceased to exist.
The concept of market FOREX, liquidity
Table 1. Fixed exchange rates of participating European Monetary Union to the Euro:
1 euro = 13.7603 Austrian schillings
= 40.3399 Belgian francs
= 1.95583 German marks
= 5.94573 Finnish markka
= 6.55957 French franc
= 340.750 Greek drachma
= 0.787564 Irish pounds
= 1,936.27 Italian lire
= 40.3399 Luxembourg francs
= 2.20371 Dutch guilders
= 200,482 Portuguese escudos
= 166.386 Spanish Pesetas
International Monetary Market, or market FOREX (Foreign Exchange, or FX), - this is the market exchange (conversion) operations, sales, accounts and granting loans to foreign currency on the specific conditions of the foreign exchange market between the parties. The conditions include the amount, the exchange rate and the performance of a specific date. FOREX Market was formed in 70 years the last century, after undo the Bretton Woods system of fixed exchange rate anchor. Since then, the FOREX is becoming the most dynamic and liquid market. This is the only market in the world, working around the clock, five days a week. The rapid movement of funds, the low cost of transactions, high liquidity makes FOREX one of the most attractive markets for investors.
The essential difference FOREX market from other markets is that it does not have any particular place of trade. FOREX is a huge network of currency dealers connected among themselves through telecommunications, distributed to all the world's leading financial centers around the clock and work as a single mechanism. Currency trading is carried out by telephone or via computer terminals - a transaction carried out simultaneously in hundreds of banks around the world.
The essence of client investments in the market FOREX - this is an operation of buying and selling of foreign exchange contracts in order to profit from changes in exchange rates over time. These operations are known as conversion, and they represent the transaction agents of foreign exchange market for the exchange of specified amounts of the currency of one country to another country's currency at an agreed rate and calculated on a specified date.
The daily volume of conversion operations in the world is from 1 to 3 trillion U.S. dollars. The major currencies, which account for the vast amount of all transactions in the market FOREX, are the U.S. dollar (USD), euro (EUR), Japanese Yen (JPY), Swiss franc (CHF) and the English pound (GBR). Transactions involving the U.S. dollar accounted for about 70%. The share of electronic brokers now account for many of an estimated more than 15% of the market Forex, and tends to increase rapidly.
There are a number of features and significant benefits of the FOREX market, compared with other financial markets:

1. First of all - free conversion of the world's leading currencies;
2. almost 100% I liquidity any transaction. Given the huge volume of transactions every day and every second committed to the FOREX (daily volume of transactions on the FOREX is from 1 to 3 trillion U.S. dollars), are here except where the transaction can not be executed because of lack of demand (as in crisis situations in the stock market shares and securities);
3. through margin trading system, widespread in the FOREX, market participants may be individuals with relatively small investments;
4. widely developed Internet trading system, the saturation of information space of the Internet provides access to current information and foreign exchange trading on the FOREX virtually any interested person from anywhere in the world where there is a possibility to connect to the Internet;
5. the possibility of carrying out transactions of sale of currencies in real time, almost instantly in response to operational information on changing market conditions or events.

For information about the state of financial markets in real time, as well as financial and economic news from Russian and international agencies use of international information systems, such as REUTERS, DOW JONES, CQG, BLOOMBERG, TENFORE etc. For more information on the systems we will in subsequent lectures.

Participants in the international currency market
Major participants in the currency market FOREX are:

* Central banks
* Commercial banks
* Currency Exchange
* Firms engaged in foreign trade
* Investment funds
* Brokerage company
* Individuals

Central banks
The basis of the FOREX market constitute the central banks of different countries. Their role is to manage foreign reserves, currency intervention, influencing the level of the exchange rate, as well as management level of interest rates on investments in local currency. Central banks are interested in maintaining rates at a level that is needed at this moment the economy of the country.
The biggest influence on world currency markets has the U.S. central bank - the Federal Reserve System (US Federal Reserve or FED). Then it was followed by the central banks of Germany - Bundesbank (Deutsche Bundesbank or BUBA) and British (Bank of England also called the Old Lady).
The central banks of countries entering the FOREX, as a rule, not for the purpose of making profits, and to check the stability or the correction of the existing national currency, as the latter has a significant impact on the economy. Central banks also fell on the foreign exchange market and commercial banks. Although profit is not the main purpose of these banks, their loss-making operations do not attract, so the intervention of central banks usually disguised and carried out chereh several commercial banks immediately. The central banks of different countries can carry out joint and coordinated intervention.

Commercial banks
In a large commercial banks performed the bulk of transactions on the FOREX banks holding accounts in the other market participants and be done with them the necessary conversion operations. Banks like to accumulate (through transactions with customers), the aggregate market demand for foreign currency conversions, as well as in attracting and placing funds and go with them to other banks. They operate under the direction of the exporters and importers, investment institutions, insurance and pension fonddov, hedzherov and private investors. Commercial banks in the market comply with orders for currency conversion, and lead their own operations (for speculative purposes and within the hedge investment risks). Customers of banks - are largely eksportnoimportnye companies, transactions in the foreign exchange market for the contracts, hedging (insurance) of its risks, as well as brokerage houses, serving their customers, leading speculation. In addition to meeting the requests of customers, banks can carry out operations, and independently in their own interests and at their own expense. Ultimately, the foreign exchange market is a market for interbank transactions, and, referring to the movement of exchange rates should be kept in mind the interbank foreign exchange market. At the world's largest foreign exchange markets influenced by international banks, the daily volume of transactions which are up to billions of dollars. These banks, like Barclays Bank, Citibank, Chase Manhatten Bank, Deutsche Bank, Union Bank of Switzerland, Citibank, Chase Manhattan Bank, Standard Bank. Some banks (eg, Union Bank of Switzerland) formed the bulk of profits from currency speculation.

Currency Exchange
Unlike the stock exchanges and markets for foreign currency transactions for a period of work of foreign exchange markets was not in a particular building, and during certain hours. The development of telecommunications technology, most major financial institutions in the world use the services markets directly and through intermediaries around the clock. Most major world stock exchanges are London, New York and Tokyo exchange markets.
In some countries with economies in transition, there are currency exchanges, responsible for the implementation of the exchange rates for businesses and market-based exchange rate. The state usually actively regulates the level of the exchange rate, using a compact stock market.
Companies engaged in foreign trade
Companies participating in international trade have a strong demand for foreign currency (importers) and the offer of foreign currency (exporters). In doing so, these organizations direct access to foreign markets, as a rule, do not have and carry out conversion and deposit transactions via commercial banks.

Investment Funds
These companies provided various kinds of international investment, pension, mutual funds, insurance companies and trusts are implementing a policy of diversified management of the portfolio of assets by placing funds in securities of governments and corporations in various countries. The most famous fund "Quantum"; George Soros conducting successful currency speculation.
For this type of firms are also major international corporations engaged in foreign manufacturing investment: the creation of subsidiaries, joint ventures, etc., such as Xerox, Nestle, General Motors and others.

Brokerage houses and businesses
In addition to banks, an active participant in the market were brokerage houses, serve as an intermediary between a large number of banks, funds and commission houses, dealing centers, etc. They, like banks, not only transactions on sales of currency prices, which expose other active participants, but also offer their own prices. Thus, they actively influence the process of pricing and the lives of the entire market, so they are called market-meykerami (market makers).
As a function of brokerage firms and companies are bringing the buyer and seller of foreign currency and the implementation of their conversion operations. During his mediation brokerage firms charge a brokerage commission. At Forex usually no commission as a percentage of the amount of the transaction, or as a pre-specified a certain amount. Typically, dealers brokerage company is listed on the exchange spread, which had already laid their commission.
Brokerage firm, has requested information on courses, is a place where a real exchange rate is already on the transaction. Commercial banks given the current level of satisfaction from the brokerage firms.
Among brokerage firms in the international currency markets, the most famous such as Lasser Marshall, Harlow Butler, Tullett and Tokio, Coutts, Tradition, and others.

Private individuals
Individuals who hold a wide range of non-trade transactions in foreign tourism, remittances, pensions, fees, buying and selling foreign currency. This is also the largest group of conducting monetary transactions with speculative purposes. In contrast to the active participants, passive participants in the market can not make their own quotes and make buying and selling currencies at prices that offer the active market participants. Passive market participants generally have the following objectives: payment of export and import contracts, foreign manufacturing investment, the opening of overseas branches or joint ventures, tourism, speculation on rate differentials, hedging currency risks, etc.
If the active participants in transactions with large amounts to several million dollars, the passive participants can use rychagovuyu or margin trading, where with a small deposit insurance, they can temporarily operate the capital, hundreds of times over this deposit. This method allows you to trade to participate in the currency market to small investors with little capital and thus receive a significant profit
Composition of the major market participants indicates that this market is being actively used "serious business" for serious purposes. Ie not all market participants are using FOREX for speculative purposes. As we have said, changes in exchange rates could lead to huge losses when eksportnoimportnyh operations. Attempts to protect itself against currency risks forcing exporters and importers to apply for those hedging instruments or the currency market: forward contracts, options, futures, etc. Moreover, even the business, which is not related to the export-import operations, may incur losses of exchange rate changes. Therefore, the study FOREX - the mandatory component of any successful business.

The lines of support and resistance trend lines

2009-11-23T03:00:00.000-08:00

The lines of support and resistance. The lines of resistance and support are the foundation of classical trend analysis, moreover, they are used to analyze the differences and shozhdeny some indicators. In a graphic analysis of all technical trend lines, models and figures are only ¾ combination of lines of resistance and support. The emergence of these lines is the next logical explanation.

The line connects the resistance of important market peaks or ridges. It occurs at a time when more buyers either can not or do not want to buy this valuable paper at higher prices. Simultaneously with each upward movement of prices is increasing the resistance of sellers and increased sales, which also has a downward pressure on prices. The trend upward stoporitsya and how depends on an invisible ceiling, to break that currently can not. If the bulls gather forces and bears weaken acumen, the price is likely to probet previous resistance level. Otherwise, prices will inevitably regress.

The line connects the important support minimums or bottom market. The emergence and existence of lines of support, directly opposite the lines of resistance. Here, the bulls switch places with the bears. Dealers are active players in the market, which pushed the price down, and buyers with ¾ the defending side. What would be more than passive sellers and buyers, the more likely it is that the line will support to break the price will go further down.

If the line of resistance and support line is strong and long enough withheld, depending on the combination creates various images and associations, which give the name of trend models and figures.

The lines of resistance and support better than through the best prices on the tops of emissions and nizah, and through the zone congestion pricing. Massive congestion pricing shows that it is the behavior of determining the number of traders changes direction, and the maximum emission prices in these places showed panic behavior of the weakest market participants, quickly closing its loss-making positions. The method of lines of resistance and support helps traders monitor changing trends ¾ her turn or acceleration. These levels are particularly important for the production of protective stop orders.

Support and resistance owe their existence past experiences of people etched in their memory. The memory of the past turn at this level encourages dealer make the purchase or sale. Their mass action and create a support and resistance. Bearing in mind that the price reached a certain level, have stopped falling and they went up, Throgmorton Street, probably will buy when prices are once again down to that level. Bearing in mind that the market, rising to a certain ridge, turned, Throgmorton Street will be inclined to sell and play for a fall, when prices are again close to the ridge.

Support and resistance exist because a lot of stockbroker sokrushayutsya about everything. Suffer Throgmorton Street, which kept losing position. They are just waiting to get out of the game, when the market will return to the level where they opened the position. Kruchinyatsya Throgmorton Street missed a chance to buy and they are waiting for a wind. These feelings are not very strong in a narrow range of gaming, where the fluctuations are small and the losers are not particularly uyazvleny. But breakthroughs abroad playing band cause acute pain and frustration.

When the market is kept at a level to become familiar dealer buying at the bottom of the range and sell at the top. When prices move up, sold for a fall bear muchimy pain; bulls same sadness, that does not have bought more. And both groups are waiting for opportunities to buy if you get a new ¾ chance, that is, when prices are close to previously known levels of support or resistance. By this decision, they pushed the emotions: some ¾ pain and other ¾ disappointing. Support consists of regrets about missed opportunities for bulls and bears the pain.

Resistance ¾ an area of pain bulls, bears and regrets the willingness of both groups to sell. When prices fall below the range of the game, it bought before the bulls see that lose money. They feel as trapped and waiting for recovery, just to get out of the game without a loss. Bears also grieve that poorly played down, and waiting time of recovery, to sell more. The pain of the bulls and bears unfortunate represent resistance ¾ ceiling above the market rates. The strength of support and resistance depends on the strength of massive emotions stockbroker.

The longer prices stay in the area of dense hatching, the stronger the emotional involvement of the bulls and bears in the area. When prices fall into it, it supports, and when raised to the ¾ resistance. Area dense shading can change their role, turning it into support, then in opposition.

The strength of each area of support or resistance is dependent on three factors: it is its length, height and volume of its transactions. Spatially, these parameters can be thought of as the length, height and width of the zone dense hatching.

The greater the length of support or resistance ¾ that is, the greater the length of time or the number of aged strikes, so it is stronger. The longer the duration of support and resistance, the more votes dealer "was filed in favor of the market situation, that is, the more the dealer meets this year. When two-week range is formed only minimal support or resistance when they dvuhmesyachnom range average power, because the players have time to adapt to the situation, but with two-year, cost-established as a standard, they are very high.

But the years of support and resistance levels are gradually fading. Defeated fly from the stock market game, and their successive newcomers have no emotional involvement in the old prices.

Support and resistance intensified whenever prices fall in these zones. Seeing that at some point prices are deployed, Throgmorton Street are beginning to rely on that turn, when prices again approaching that mark. This is a constancy of some exchanges and performed postulate of technical analysis, "history is repeating itself."

The greater height of the zone of support and resistance, so it is stronger. High resistance zone shows a strong reluctance and resistance to bear the recent increase in prices and weakening of the bulls. The height of the zone of support and resistance for each of the securities market is different: the height of this can vary from 1% to 7% or more of the level of prices. What a great height is a zone of support and resistance, the greater the pressure on the head of bears and bulls, respectively, it can stop.

The higher volume of transactions in the area of support and resistance, so it is stronger. The abundance of deals in the area of dense shading indicates activity stockbroker ¾ as a sign of their strong emotional involvement in this price level. The low level of transactions showed reluctant speculation dealer at a given price level ¾ it is a sign of weak support or resistance.

For the lines of resistance and support provided for the next game tactics.

1. When the trend in the direction which the dealer is close to the area of support or resistance, it is necessary to safeguard pridvinut suspension to the line of resistance or support. Defensive suspension ¾ this order to sell at a price below the market, if the dealer has played in raising, or purchase to close a short position at a price above the market, if the dealer is playing for a fall. This suspension will protect against losses if prices turned against the trend set by dealer. After reaching the area of support or resistance, the trend has shown its viability ¾ or weakness. If it forces to penetrate this zone, it is accelerating its progress, and your stiff suspension will not be affected. If the same tendency to bounce off support or resistance zone, then it has to show weakness. In this case, you will save you a stiff suspension of the profits.

2. The significance of support and resistance zones on the schedules of the more than longer time scale. For example, weekly schedules suschestvennee day. Competent dealer always leads to an analysis of several time scales based on a larger. If the trend holds weekly path through the free zone, hitting the daily developments in the area of least resistance is already significant. If the weekly charts are approaching the area of support or resistance, should reinforce the willingness to act.

3. Levels of support and resistance levels to help determine the order of protection against losses and protect profits. The lower boundary of the area of dense hatching ¾ this support. Buying and placing the suspension below this level, Throgmorton Street prepare a good foundation for the game to increase. A more cautious Throgmorton Street to buy after the price probyut level of resistance, and the suspension placed in the middle area of dense hatching. The true breakthrough ceiling should not end with the fall back in the game range. In a downtrend must act as well, but in the opposite direction.

Lines of trends. Graphs exchanges reflect actions bulls and bears. Bottom recessions show when bears vybilis of force, and the bulls have returned to power. Ridges ups show when vydohlis bulls, bears and entered into force. A straight line connecting two neighboring donyshka shows the direction of head bulls. Direct connecting two adjacent ridge, shows the direction of head bears. These are called the direct lines of trends. Stockbroker using them to identify areas of exchange.

When the price line growth trend of the growing hold over the bottom. When prices decline line trend hold over the ridges. Continuing this line in the future, you can identify the nearest point of purchase and sale.

The most important characteristic of the line trend ¾ angle of inclination: it points to the dominant stock group. If the trend line ustremlena up: it means that the tone set the bulls. In this case it is better to buy, placing a protective suspension below the trend. If the trend line points down, set the tone for the bear. So better to sell down protective suspension above the trend.

Line trends ¾ one of the oldest tools in the arsenal dealer, and is mostly a graphical tool for technical analysis. In the modern computer means to identify trends include moving averages, the difference grid system moving averages, which will be written below.

Many analysts hold the line through the trend ends ¾ maximums and minimums. It is better to hold them over the edge of areas of dense hatching, because they show the areas in which bought and sold a majority stockbroker. Technical analysis ¾ as would an opinion poll, and they are working to identify the mood of large segments and build a line across the boundary zone pushes to bias: there is a temptation to move the line to confirm their preconceived views. We need to monitor themselves and resist the temptation.

Panic plunge in prices ¾ sell it on the bottom desperate bulls, and panic buying in the area comb ¾ is close short positions bears ¾ causes lines zashkalivaniya that the graphs look like long "tail." It is therefore better to hold the line trends at the edges of zones of dense hatching, rather than the "tail" that little is reported on the exchange contingent ¾ except that of alarmist in its ranks.

The most important trend line ¾ sending its inclination. If the line goes up the hill ¾ means to wear bull market: you pick an opportunity to purchase. If the line goes downhill, the saddle bears, and we should pick the possibility of selling short. The significance of the line trend can be assessed by five factors: the scale of time, its length, the number of strokes of tangency, angle and volume of transactions.

The larger scale of time, the higher the significance of the line. The line on a weekly schedule reflects a more important trend than at the time, etc. What is the line length, so it is important. Short line shows the steps the crowd in a short period of time. Over a long line of action noted the crowd in a short period of time. The longer the line, the greater its inertia. The powerful bull market trend lines can stick a few years.

The more strokes relate to the line, so it is important. When prices are on the rise, they decline to trend line indicates a rally bulls. If prices returned to the line, then bounce off it ¾ means that the dominant stock exchange group usmirila rebels.

The line-sketch trend held only two or donyshka ridge. The emergence of a third point reinforces the importance of the line, while the fourth and fifth point to the strength of the dominant position of the Exchange Group.

Angle to the horizontal trend line reflecting the emotional mood of the dominant stock exchange group. Steep line ¾ sign of vigorous action. The relatively flat line ¾ sign nespeshnosti. A more gentle line typically stretches longer, as the tortoise in the race with the hare.

Is useful to measure the angle of each of the lines and record them on the schedule. Comparing angles, one can estimate the effect of exchange sentiments among the dominant groups. Most trend lines are under the same angle in the same market. Perhaps this is due to the behavior of the leading players, who settled in this market. Sometimes the price of escape from their trend. Then you can build a new, steeper line. It shows that the trend is gaining progress. Build a new, more steep line, it is necessary to suspend Condense: move it directly under the line of recent trends and draw with the advent of each new stroke. Breaking steep trend line is usually accompanied by a sharp turn in prices.

With the trend towards increased volume of transactions typically rises when prices rise, and less when they fall. This shows that the rises are attracted stockbroker than downs. When trend is observed: a volume increased by a recession and decreasing during the recovery. When prices return to trend line on a large extent, this is a sign of the growing number of rebels. If the volume increases, and prices are moving in the direction of trend lines, it is a sign of stability. If the volume is declining, while prices are removed from the line, this signal opsnosti for it. If the volume increases, and prices returned to the line trend, this signal a possible break through, which shows that the dominant stock exchange group loses commanding heights. But for the more confident tone, as many dealer, after the gap from the price should move a further 2-3%.

After the gap is very steep trend to higher prices often are increasing again, reaching the crest of the old and podbirayas to its already prolomlennoy bottom-line trends. This creates an almost ideal situation for sales on the decline: it is at the same time there is a double ridge, return to the old lines, and we can not rule out the difference of technical indicators that give a signal to play for a fall. In a downtrend should act like, but in the opposite direction.

For the lines of a trend following tactics game.

1. need to work towards the trend line: if it goes up, you should look for an opportunity to buy and to avoid the game down. If it goes down, you'll need to play the game and avoid demotion to increase.

2. Line trends ¾ either support or resistance. With the growth of prices should be given orders to buy near the line trend and protective suspension set below it. When trend is necessary to do the same, but in the opposite direction.

3. The steep trend line usually ends sharp prolomami. If the steepness of the line more than 45 degrees, you need to put the suspension on the trend line and its daily draw.

4. Prolomiv steep line, prices often return to the recent ridge on the shrunken size and variances to the technical indicators. This ¾ great opportunity to play for a fall. Reduced to its previous donyshka gap after the line trend creates conditions for the purchase with a relatively small risk.

The theory of technical analysis

2009-11-23T02:47:00.000-08:00

A technical analysis. Technical ??????? this study the dynamics of the market, mostly through graphs to predict the future direction of the price. Technical analysis includes several different approaches to the study of evolution of prices, which are interconnected in a single coherent theory. This type of analysis is to study the price dynamics of the market by analyzing patterns of three changes of market factors: price, volume and if we study the market srochn s ??????????? open interest (the amount of open positions). And, for the primary analysis are prices and changes in other factors are studied to verify the accuracy of the direction of the price. This technical theory, as in any theory, there are basic tenets.

Three axioms TA. Three postulate of technical analysis as follows:

1. The market takes into account all. This postulate is the most important in technical analysis, it is necessary for an adequate understanding of the perception of all methods of analysis. Its essence is that any factor affecting the value of ??????? economic, political, psychological previously taken into account and reflected on the price chart. In other words, any change in prices is an appropriate change in external factors. The main consequence of this premise is the need to closely monitor and study the evolution of prices. By analyzing price charts and additional indicators, a technical analyst ensures that the market itself shows him the most likely direction of the movement.

This conflicts with the basic premise of the analysis, which focuses on studying the factors which appear after the analysis of findings on the movement of the market. So if demand exceeds supply, the fundamental analyst concludes increase prices. Technical analyst also concludes "the other way around: if the price increases, the demand exceeds the supply.

2. The movement of prices is subject to trends. This assumption has been the basis for the establishment of the techniques of technical analysis, as affected by market trends, as opposed to the chaotic market can be analyzed. Among the provisions that the price is subject to trends resulting two investigations. The investigation first was that the current trend is likely to grow further, but did not apply to its own opposite, that is a consequence of these excluded disorderly, erratic market movements. The investigation is the second said that the current trend will grow until the motion will not be running in the opposite direction.

3. History repeats itself. Technical analysis and study the market closely connected with the study of human psychology. So graphic pricing models that have been identified and classified in the last hundred years, reflect the essential features of the psychological state of the market. First of all, they point out what ??????????? bychi or Bear dominate at this point in the market. And if in the past, these models are employed, there is every reason to assume that in future they will work, because they are based on human psychology, which over the years does not change. It could be the last ????????? "History repeats itself" a few other words: the key to understanding the future lies in exploring the past.

The objectives of TA. Technical Analysis - Applied Social Psychology. His appointment - to identify trends in the behavior of crowds, and their changes with a view to taking stock of reasonable solutions. Technical analyst identifies market sentiment, placing a combination of the following purposes:

1) Assessment of the current direction of prices, that is, identifying the trend. It is possible the following options:

1. Moving up;

2. downward movement;

3. Flat.

2) Evaluation of the duration and period of validity of this direction. Maybe:

1. short-term trend;

2. the trend of long-term effects;

3. started the trend;

4. maturity of the trend;

5. death, the completion of the trend.

3) Evaluation of the amplitude of price fluctuations in the current direction:

1. little change of course;

2. strong change of course.

The classification of TA. All the variety of techniques of technical analysis can be divided into two large ??????? graphical techniques and analytical methods:

Graphic technical analysis is an analysis of various market graphic models generated by certain laws of motion of the price of plots, with the aim of assumptions or change the likelihood of continuing the current trend. Postulates of this kind of technical analysis are listed below the basic concepts of technical analysis: the trend lines, levels of market support and resistance levels correction current trend.

There are two types of graphical models:

1. Models of fracture ?????????? generated graphs model, which under certain conditions, can anticipate the change of the current market trend. These include such models as the "head of the shoulders," "double peak", "double-base", "tri-peak", "triple-ground."

2. Models continue ?????????? generated graphs model, which under certain conditions, show that there is a possibility of continuing the current trend. Perhaps the tendency to develop too fast and is entered in the state perekuplennosti or pereprodannosti. Then, after an intermediate correction, it will continue its development in the direction of the previous trend. In this group, provide such models as the "triangle", "diamonds", "flags, pennants and others.

Each model has a specific mechanism for education and a graphical form. The dynamics of the volume of transactions is a factor in confirming the existence of a model. All models find an explanation in terms of the psychology of market participants. Despite the seeming simplicity of this method, it is one of the basic techniques of technical analysis, and on the effectiveness of the application shows good results. A major shortcoming of this method is that it is very subjective. Every technical analyst should be a good chartist (English chart? schedule), as well as any graphical model ???????? is formed at the conclusion of the current price trends and the emergence of the likelihood of continuing or breaking the current trend.

On the analytical methods include techniques that use filtering or mathematical approximation of the time series. In technical analysis as the basic time-series uses the ranks of the share price for a certain period of time, the volume of trade and the number of open positions.

The main tool is an indicator of analytical methods, which in turn is a set of functions from one or more of the basic time series with time-window. Indicators can be divided into five categories:

1. Indicators of the trend. These indicators include indicators that serve to measure the trend ¾ its strength and duration. A classic example trendopodtverzhdayuschih indicator was a "rolling average". The same class includes such well-known indicators like MACD, Directional Movement, Parabolic, and others.

2. Indicators of variability. Indicators for the second category are used for measuring the variability of prices up an asset base. Variability ¾ this notion, describing the amount of daily, independent of the main lines, the price fluctuations. Such indicators are particularly important for the analyst to change the term market trend, or a side trend. Signals such indicators that were built with a small time window allows log and leave the markets during the day. These indicators include: Chaikin's Volatility, Standard Deviation, Bollinger Bands.

3. Indicators point. Representatives of the categories used to measure the speed of price changes over time. This, in turn, Momentum Indicator, Relative Strength Index (RSI) and the Price Rate-Of-Change (ROC). Also, under certain conditions, can be used, and MACD. But nothing prevents the use of signals as indicators of the time to confirm the trend, and to predict the time it ends, that the majority of specialists and makes.

4. LEDs cycle. These indicators are used to identify the cyclical component, and their length. This is Fibonacci Time Zones, MESA Sine Wave Indicator, and others. These indicators work well only on the side trends. It is very important, these indicators for futures traders, who work in the commodity markets, corn sugar or oil - in markets with very high cyclical component.

5. Indicators of market forces. The fifth category used as a base of independent variables, or the volume of transactions, or the number of open positions. Indicators in this category, based on the volume of data sets, give signals the strength of the current trend. Indicators for this category are On Balance Volume, Volume Accumulation, and others.

Brief history of development of TA. History of Western technical analysis has little more than a century. In the early nineties the nineteenth century, the Wall Street Journal an article by Charles Dow, where he presented a set of principles, which, in his view, could enter into a transaction to buy and sell without much risk. They have also been formulated, and now has become a classic theory of the direction of motion stock market. The principles of this theory is now used in almost all modern methods of technical analysis implicitly. Charles Dow never wrote a book, limiting their editorial articles for the magazine Wall Street Journal. After the death of Doe was replaced by B. Hamilton, who article "The End of tide" has raised the reputation of charts during the stock crash of 1929, he summed up the situation and the main Dow theory in the book market barometer ", and in 1932 the publisher of stock byulleteny Robert Rea brought it to its logical conclusion in the book "Dow Theory."

Times of the Great Depression of the thirties were the golden age of stock charts. After the collapse of 1929, many analysts has been little work and a lot of free time, and they spent it on the discovery of new theories of exchange of knowledge. That decade was marked by publications such as the legendary dealer Shabaker, Rea, Elliott, Vaykoff, Gunn and others. Their study were in two different directions. Some (Vaykoff and Shabaker) viewed as a graphic chart recording the exchange of supply and demand. Other (Elliott and Gann) were looking for "secret order" on the stock exchange. Proceedings Ralph Elliott led to the wave theory, open to the technical analysis of the magic of Fibonacci numbers. The main tenets of this theory argue that the price dynamics of a market is developing wave and there are certain patterns in the education market waves. William Gann created a complex combination of geometric, algebraic principles, which traders have used successfully on emerging futures markets. It is legendary thirties have created an entire galaxy of stars and technical analysis is not a surprise - so much was the influence of the "Great Depression" by brokers and analysts that the development of analytical prediction had been the best effect.

In 1948, Edwards and Magee have published the book "The technical analysis of stock trends." There, they identified the models such as triangles, rectangles, "head and shoulders, and other graphical models, as well as the trend line, support and resistance. Almost all of the classic technical analysis of the figures were discovered in the first half of this century, but their authorship is difficult to establish.

Since the beginning of the war and the subsequent recovery of world economy in need as such technical analysis, and again there was no longer only in the early sixties with the advent of a new crisis. In this period were systematized the basic concepts and rules of technical analysis, but also developed algorithms that reduce the labor of basic techniques. This period includes the emergence on the American stock markets moving averages (MOP), which according to the market veterans were perenyaty from antiaircrafters, which in turn used them to laying on the aircraft. The founders of the exchange of MOP were Richard Donchian and Dzh.M.Hrest. Donchian was serving firm Merrill Lynch, he developed a method of stock market games based on several SS and Hrest was an engineer in the book "Miracle profitability early deals with shares, which became classics, he described the principle of the SS in relation to transactions with the shares.

With the advent of computers has become a technical analysis to be more matematizirovannuyu form, started with great speed to develop analytical methods that use mathematical aproksimatsiyu and filtering. By that time, the creation of Dzh.Vels Uaydlerom grid system that can detect trends and to determine the appropriateness of the speed of their work in their direction. Indicators per cent variation Williams, balance the volume of Joseph Granville has also been established and used for the first time at this time as many other indicators of the founders of which history is silent.

In the late 70's with such financial instruments to reduce the risk of futures and options. It should be noted, the practice of trade with empty baskets of rice (futures in Japanese) has been known to indigenous Japanese carriers have three hundred years ago.

The beginning of the eighties glorified the emergence of such names as John Murphy and Robert Prihter that honor belongs to systematize the methods and presentation of technical analysis as a separate application of science.

Nineties also brought its own contribution to the history of technical analysis, but no longer at the world level: since ancient times in history, there were the so-called "guru" - is the market cult figure who, by making a loud name on a few successful predictions began to circulate for a reasonable fee newsletters, which provide advice to investors to buy or sell any shares. Based on these recommendations have been different types of forecasting, ranging from analytical methods to ugadyvaniem in the form of clouds signs the purchase or sale. Gradually, some investors began to rely on these letters, then the entire market in the mass hysteria began to follow the visions. And as soon as this happened, then there is not predicted such a "specialist", the collapse (or growth). At the same time, thousands of market participants ??????????, and now "former Guru" disappear from the market. Such a definition with some adjustments to fit, and Elliott, and Gannu, and Murphy and many others. More information about this phenomenon can be found in a remarkable book, Alexandra Eldera "Trading for a living."

Currency non-stop

2009-11-23T02:43:00.000-08:00

Maximum speculative profits have investments in asset price fluctuations that occur most often and have the maximum amplitude. In other words, the more "good" and expensive desheveet per unit of time, the more it is suitable for speculators. Today, Russia's individual investor or speculator has access to virtually any financial market, including international. Perhaps the most volatilnym of the most accessible is the futures market, or flash market. Major turnover on fixed-term contracts are currently on the market FORTS, organized stock exchanges RTS and St. Petersburg. " Fluctuations in the prices of certain securities in the most active days may exceed 10%. However, the maximum possible profit of the investor is not restricted.

In trading on the matter of the market can make a transaction, for example, for 100 rubles, making only 15-20% of this amount. That is, if run in turnover of 20 thousand rubles, and contracts to buy 100 thousand, every percentage of increase in their value will increase in 5% of your capital. Accordingly, a 10-percent increase in quotes, you can increase the capital in half.

One per cent - and zero on the account. Market forex - a virtual marketplace where 24-hour operation carried out on the buying and selling currencies. This is the most voluminous and liquid market on the planet. Today, it has access to any Russian, which has a small capital. Unlike the market FORTS currency fluctuations quite small. For example, the maximum daily variation of quotations pair euro / dollar (EUR / USD) this year was recorded on 17 March and amounted to only 2.38%. For the foreign exchange market is a lot. The average daily range for the EUR / USD in 2003 was about 0.9%. This umudritsya catch the "bottom" and "comb" almost unreal. You can take a good result "saddle" half of this wave, that is an average of 0,45% per day. Profit was not serious. However, the forex can be increased, for example, 100 times, using the so-called leverage - borrowed funds from bank customers or broker. In this case, each movement of the market in your side at 1% will double your capital (excluding costs). And some companies may offer a more broad shoulders. " However, the movement of the market against your position (up, if you are playing down the course, or down, if the game is on the increase) at 1% may lead to a complete loss of capital. Therefore, forex, and is the most risky financial market. And yet, potentially very profitable. For example, the pair EUR / USD this year for one day with shoulder-1: 100 theoretically could earn 238% (amateur sensations can translate these figures into annual). But this is only theory. In practice, mindful of the cost of overhead costs, and that the currency market does not always support your idea of an impending rise or fall in a given currency.

Pick a couple. "Tickets" in the community currency speculators can now be purchased at brosovym prices. Some companies agree to serve customers with only a hundred dollars. However, with the amount you can realistically expect to gain only confident in his absolute luck. The most acceptable minimum initial deposit is today considered to be $ 2000, a minimum amount of transactions - 100 thousand units of the base currency. Such conditions make it possible risk in the transaction, only half the amount paid.

As an object of speculation are currency pairs. The most popular are the EUR / USD (euro / dollar), JPY / USD (yen / dollar), GBP / USD (British pound / dollar). At the opening of the so-called long positions on the euro against the dollar, you expect that the rate of the single European currency against the U.S. will grow. In the opposite case, your position will be called short. Suppose you opened a long position in EUR / USD at a price of 1.1000. During the day, very good news came from Europe (or very negative from the U.S.) and the euro rose to 1.1234. Its growth was 2.13%. However, if you invested $ 2000 and made a deal for 100 thousand euros, your daily profit will be 117% - again, without the overhead. The costs for trade in exchange for the forex market today, most companies are expressed in the so-called spreads. Spread - the difference between buying and selling rate of one currency against another, set your broker or bank. In other words, the commission your broker. If you care for your transactions, it simply reduces the price a little bit of buying and selling currencies overcharge. These cost increases are less active than the currency pair traded in the market, that is less than it is liquidity. Spredbrokera on EUR / USD could make with the 3-5 "pips" (the fourth decimal place in the listing, such as 0.03 cents on every dollar) and the GBP / CHF (British pound / Swiss franc) - 10 pips. "

The market for the curious. To achieve success in currency trading is far more complex than completely losing the invested capital. Consolation is that the deposited amount is not more to lose. Therefore, access to forex with money from the sale of a single apartment, car or cottages - inheritance extreme. To get started is to read the literature on the basic elements of trade. Many of the books on this subject written by a "national" language. In addition, BRD-kery now providing services for learning to play the currency market. The two-week courses, including theory and practical exercises, a student at an average cost of about $ 100. After receiving initial knowledge can be trained in the game mode, closest to the "fighting", not using real money. Do not interfere with a clear conscience and play the first real capital, the most valuable experience of the commission and analysis of their own oshibok.Etu amount can be considered as an additional fee for the school. But in the future is already with the new forces and the money more carefully analyze the macroeconomic news from around the world, follow the diagrams and technical indicators, trends in interest rates of central banks, unemployment and inflation, the major transnational mergers and acquisitions transactions, etc. But at the same time Always remember that the currency - not the best asset for investment. And if you're not ready to lose the entire investment, it is better to search a suitable financial instruments.

What is Mobile Trading?

2009-11-21T05:14:00.000-08:00

What is Mobile Trading?

Our readers will be interested to know what is happening in the market of mobile trading today. Correspondent of "FM", met with the lead programmer for mobile trading company MetaQuotes Software Corp. (Www.metaquotes.ru) Dennis Mezentseva and tried to find it otvet.Gospodin Mezentsev, what is a mobile Trading?

This new direction in the development of online trading. Modern technology makes it possible to trade operations and technical analysis, even with the help of the so-called naladonnikov - PDA connected to the Internet. It is now possible to conduct full-fledged trade from any place on Earth where you can operate a mobile phone. It should also be noted that the telecommunication services in Russia now has enough quality and the same is also have a reasonable price. And this, in turn, further contributes to the development of mobile trading.
And how do you feel the boom of mobile trading has already passed or is yet to be overcome?

Of course, as this new direction, the boom is yet to come. Some companies have yet to come to the conclusion that this is a promising direction. Others are already busy designing and developing their own systems. Still others may have something to present. However, the market is still very few players, and all of them can be counted on the fingers. Our company is one of the first to develop programmnogoobespecheniya for mobile trading and today offers the best solutions in this field.
Tell us more in detail about how it all began.

In recent years, the number of traders who have a need to constantly keep abreast of developments in financial markets started to rise sharply. Taking all this into account, in November 2002, we began the development of terminals for the CPC. We wanted to create awareness immediately Trading platform, that is, the terminal can not only provide information about the current state of the market, but also to undertake trading activities. A first software product was the terminal MetaTrader for Palm, running the operating system Palm OS. Having successfully completed and released to the market the first version of the terminal, we have begun the second product - MetaTrader CE, working under the operating system Microsoft Pocket PC. Thus, we created two programs to the two major platforms on the market of CPC, but in this work on the terminals have not ended. Since the first version did not stop work to improve the programs and the introduction of new functions.

And what happens now represent these programs?

First, it is full of information and trading terminals, that is, they can not only receive data in real time to display them in graphical form, but to make commercial transactions and manage orders. Secondly, the MetaTrader CE integrated technical analizv a set of indicators. This set is much less than that achieved in the terminal for desktop computers, but should not forget that this is not an ordinary personal computer, a pocket. Hence, together with all its advantages and limitations arise. Unfortunately, because of restrictions platforms, technical analysis has not been realized in the terminal MetaTrader for Palm. But with the development of the CPC, I think we will be able to include in its composition and technical indicators. Show it is very difficult to judge the future of computers Palm.

Summing up, I want to say that, to date, terminals for the CPC has to compete with some of the terminals for desktop computers. And given that will be further development of this class of computers, and, therefore, will increase the possibility of the software, then I think that mobile trading - a great future.

Play or earn

2009-11-21T04:36:00.000-08:00

What are the roots of the popularity of exchange of instruments of one over the other?
Coglasites, trading on the stock exchange in the first place is associated with securities?

Until now, there are a number of myths and beliefs, which do not allow many people to take a step in the direction of the market "Forex". It is obvious that this is the consequences of past closed exchange transactions from the time when these were only the banks.
Trading on the FOREX market to the average person looks like a kind of mystery, accessible only to professionals with vast sums of money, expertise and special education. However, for most people in the world of buying and selling, for example, shares of corporations that have long been present no problem. Little GM, IBM, Coca Cola or Microsoft can afford to buy a student and a housewife.
But if you look at market rates from another angle - the banknotes, it shares the same states. A gosudarstvo - are the same corporations, large or small, strong or weak. The interior of the device is very similar to the administrative structure of large private companies. Even the titles and functions often coincide. The President and President of the company, the Ministry of Finance and the Finance Department, Ministry of Trade and Commercial Department, police and internal security service, etc.
If the economy are good, and manages the skillful leader - its currency just as shares of private corporations is growing. If the economy is poorly both at home and in the company, this leads to a loss of value of the currency or stock.

There is a widespread view that the market "Forex" very risky compared to stock?

There are many similarities between the stocks of large corporations and the currencies of countries. But there are some differences.
Daily trading volume on the forex market is about 1 trillion U.S. dollars, in 6-8 times the volume of trade on the stock market around the world. It should be obvious conclusion - the market rates simple investor more immune to the action of the major players, with insider information, because at a volume market with a huge number of participants, a very large speculator difficult to play in their game. "
Not a single case in the history of the foreign exchange market when the money would be developed obestsenivalis to absolute zero.
Bankruptcy is the largest corporations in the modern history of everyday business, is to remember the most striking examples of modern times - the company WORLDCOM and ENRON. Then the ordinary equity holders do not receive a penny for their cheap paper in one day.
After the events of 11 September in New York, the vast majority of the shares have not recovered from the losses, which are now the majority of investors make up 10-35% of the capital. On the same currency, this is not possible - all currencies can not be cheaper once or appreciate because They are listed on each other. Obviously, if desheveet USD, EUR expensive and vice versa. Ie always have a choice of currency, which is currently growing.
It's very interesting to see what happened to shares of companies Microsoft Dzhenera Motors, Coca-Cola and AyBiEm (unquestionable "blue chips" American stock market), and with the same "blue chips" currency market - the dollar / franc, the dollar / yen and pound / dollar and euro / dollar.
Consider the year 1998 - the year preceding the introduction of the euro, in this sense, the year is nervous for the currency markets. This year, shares of Coca-Cola first went up by 33%, then fell by 66%, then again went up by 25%.
Shares of General Motors went up by 27%, then fell by 62%, then again went up by 55%. Shares AyBiEm steadily grown throughout the year and grew by 81%. Shares of Microsoft first went up by 84%, then fell by 37%, then went up by 76%.
At the same time, Swiss franc oslabel at 5%, then strengthened by 18%, then again oslabel at 6%. The Japanese yen has weakened by 13%, then matured at 30%. Pound was stable throughout the year, magnitude between the maximum and minimum of the year amounted to only 7%, and by the end of the year the price was different from the price of the beginning of the year Sunday at his 0,6% (!).
Currencies show much greater stability.
Even the celebrated in the history of Forex market drop pounds and strengthen the yen against the backdrop of the shares are fairly light - 39% weakening of the pound in five months in 1992-93 (by the legendary George Soros speculation), and 50% of the strengthening of the yen over five years (1990-95 biennium ).
Year 1998 was another year of relatively stable movement of the U.S. stock market. Began in the fall and subsequent panicheskie ups expectations made the situation even less predictable. In doing so, you need to keep in mind that "leverage" in the stock market is no more than 1 to 4, on the currency market as "shoulder" may vary at will the investor relations from 1 to 1 to 1 to 100. Prone to risk traders can make the price change interest rates in hundreds of percent changes in the deposit, so the forex market as the stock market can meet and desperate speculators and investors cautious.
Yes, in the Forex market the interests huge number of participants. This leads to unpredictable changes in exchange rates in the short term. But here you need to remember that the risk of investment in a specific financial asset is determined not by the difficulty of predicting changes in its value, and so the notion of volatility. It may seem incredible, but on the Forex market rate second only to the market of government bonds in developed countries. In comparison, the volatility of the shares of Russian companies is between 30% to 50%, while the world's major currencies - only about 11%. Courses leading currencies are rarely changed in one day more than 1%.

Well, what with choosing a broker? So, whom to choose? Russian companies or foreign?

Of course, at first glance a foreign company is preferable. And why not? The main argument of many traders - the money will be tselee, and away from our tax. The logic of those words are. Major, what it involves - this is how to distinguish genuine, solid foreign companies from offshore pomoyki established as our fellow citizens.
It is no secret that now anyone can buy American, British, Cypriot, or other similar companies are not more than $ 2.000-5.000, this amount includes the opening of accounts in the normal west bank. Then rent a computer program for trade, a modest (or not so small) office, hired several people staff, and business is ready to work. It is clear that the financial business, these organizations will have no relations.

And how to distinguish a forgery from the original?

Foreign organizations can be divided into two groups - banks and financial companies. Banks have a banking license state, while confirming its existence, is in many public sites on the Internet, in particular at the Central Bank's country-specific. Therefore, if you choose a broker from the bank to check for licenses.
The true financial companies under the supervision of special organs. For example, American companies are controlled by NFA (www.nfa.futures.org), controlled by the UK FSA (www.fsa.gov.uk), Malaysia - LOFSA (www.lofsa.gov.my). If the company complies with the requirements of controlling the organization, it is assigned the appropriate number (ID). Does your potential partner ID, can and should be verified on the official websites of these bodies. Consider the existence of a registration number NFA or FSA test of reliability. By the way, please note that the regulation of the FOREX market in the UK is much stricter than in the United States. In this respect, British companies are preferable to others - the client is protected in an order of magnitude worse than anywhere else. The absence of such registration in the NFA or FSA means that you are faced with an organization that only masquerades under foreign.

Finally the theme of psevdoinostrantsami, I would like to emphasize the main point. There are no problems that the financial business in Russia is forced to resort to all kinds of offshore schemes. Around the world, their legal purpose - minimizing taxes, all the major global brands are subsidiaries anywhere in the Virgin Islands, Panama, Uruguay, and so on. As a living example of the world famous English bank Barclays (www.barclays.co.uk) and its special unit for wealthy clients, registered in the area of tax in the Isle of Man (www.barclaysprivatebanking.co.uk). Or, here at least another major U.S. bank CITIBANK (www.citibank.com) has a "daughter" CITIBANK IPB (www.citibank.com/ipb/europe/global/centres/1.htm) at about strove Jersey. The list goes on, moving in the telephone directory alphabetically otodnogo big name to another. In all this, there is absolutely nothing wrong and reprehensible. If the company openly claims that such a foreign firm is a subsidiary unit under full Russian control, the honor and praise for her candor and openness! In such a situation, the Client has full information to assess their risks, advantages and disadvantages encountered in the process of cooperation with such a partner. There are already in the first place stands clear and tangible reputation of the parent company in the Russian Federation, and any person can easily determine whether imozhet whether he wants to trust their money this organization.

And what about Russian companies?

Legal authority to conduct operations on purchase and sale of foreign currency in our country, only those banks which are licensed currency Central Bank of Russian Federation. The second option is Bookmaker license from GOSKOMSPORTA. Then, the company provides services that are referred to in the West as the "Financial Spread Bettingservice". Many well-known companies, such as SMS (http://www.deal4free.com/spreadbet/benefits_details02.jsp) and IF Markets (http://www.finspreads.com/spread.asp) using this scheme. In any case, it is regulated at the state level, and therefore has legal force.

It is dangerous to "play" on Forekse? What is the probability of losing an attachment?

Forex - it is just normal business, such as, for example, the contents of the restaurant, salon or fitness center. There are interesting statistics of the World Bank refers to the success of small and medium-sized businesses. According to the statistics, not all people can be successful. In the long run, the percentage of successful people become close to the percentage of success in the usual business.

AVG. Daily Range Of Currency Pair

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Forex Global Market Trading Hours

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The main timing characteristics of the Forex market are the following:

* Forex is 24 hour market It starts from Sunday 5pm EST through Friday 4pm EST. Rollover at 5pm EST

* Forex Trading begins in New Zealand, followed by Australia, Asia, the Middle East, Europe, and America

* The US & UK account for more than 50% of the market transactions

* Forex Major markets: London, New York, Tokyo

* Nearly two-thirds of NY activity occurs in the morning hours while European markets are open

* Forex Trading activity is heaviest when major markets overlap.

From this timing facts, it is quite visible that at any given time, somebody somewhere in the world is buying and selling currencies. As one market closes, another market opens. Business hours overlap, and the exchange continues as day becomes night and night becomes day.

Forex market volume of transactions remains high during the whole day, but peaks highest when the Asian market(including Australia & New Zealand), the European market and the U.S. market are open simultaneously. And these are the trading hours you must target in order to find the most dynamic movements in price.

This is the breakdown of OPEN Market Times for your reference:

* New York Market trade times: 8am-4pm EST
* London Market trade times: 2am-12Noon EST
* Great Britain Market trade times: 3am-11am EST
* Tokyo Market trade times: 8pm-4am EST
* Australia Market trade times: 7pm-3am EST

THE CHANNEL PATTERN

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Channel Patterns should generally be considered as a continuation patterns. They are indecision areas that are usually resolved in the direction of the trend. Research has shown that this is true far more often than not, of course, the trendlines run parallel in a rectangle. Supply and demand seems evenly balanced at the moment. Buyers and sellers also seem equally matched. The same 'highs' are constantly tested, as are the same 'lows'. The stock vacillates between two clearly set parameters.
While volume doesn't seem to suffer like it does in other patterns, there usually is a lessening of activity within the pattern. But like the others, volume should noticeably increase on the breakout.

HERE IS A SAMPLE CHART WITH A CHANNEL FORMATION

THE WEDGE FORMATION PATTERN

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The Wedge Formation is also similar to a symmetrical triangle in appearance, in that they have converging trendlines that come together at an apex. However, wedges are distinguished by a noticeable slant, either to the upside or to the downside. As with triangles, volume should diminish during its formation and increase on its resolve.

The Following is a Typical Wedge Formation Trend Pattern
" A falling wedge is generally considered bullish and is usually found in up-trends. But it can also be found in downtrends as well. The implication however is still generally bullish. This pattern is marked by a series of lower tops and lower bottoms.
" A rising wedge is generally considered bearish and is usually found in downtrends. They can be found in uptrends too, but would still generally be regarded as bearish. Rising wedges put in a series of higher tops and higher bottoms.

THE PARABOLIC CURVE PATTERN

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The Parabolic Curve is probably one of the most highly prized and sought after pattern. This pattern can yield you the biggest and quickest return in the shortest possible time. Generally you will find a few of these patterns at or near the end of a major market advance. The pattern is the end result of multiple base formation breaks.

HERE IS A SAMPLE CHART WITH A PARABOLIC FORMATION

ForexClub

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ExpressFX - zero-spread trading with a particularly user-friendly platform

ExpressFX is one of our most recent innovations. This trading platform features zero-spreads. With this platform, you pay only $0.6 for every $1,000 traded and get commission refunds for non-profitable trades. This features combined mean that you pay commissions to your broker only when you make profits on your trades.

Zero-spreads
$0.6 for every $1,000 traded
Instant commission refunds on non-profitable trades
And a built-in wizard that teaches you how to make trades, limit losses and make profits.
Dow Jones news, candle charts and simple orders

ExpressFX Rules

Trading Forex for profit

How do you make money on Forex? Try selling or buying some currency with a free ExpressFX demo account and see how you can make or lose money as currency rates fluctuate.

Selecting the size of the trade

The larger your trade size, the more profits you will make if the price goes in your favor and the more you will lose if it goes against you. The Demo account is a great way to practice making trades of different sizes because you are not putting money at risk.

The minimum trade size is $1,000. But thanks to the leverage of up to 100:1 you can trade $1,000 when you have just $10 in your trading account. It is easy to calculate the maximum trade size. All you need to do is take the amount that is in your account and multiply it by 100.(!!! The high degree of leverage can work against you as well as for you)

Opening and closing a position

When you buy a currency you open a position. When you sell the same amount of the same currency, you close the position. During when your position is open you will be making or losing money depending on how currency rates change. If you bought a USD for EUR (USD/EUR) and its rate goes up, you are making money. If it goes down, you are losing money.

Take Profit and Stop Loss

Market prices move almost every moment, but this does not mean that you have to keep an eye on your positions every second. You can set a Take Profit order, which is a command to the dealing desk to automatically close your position when your profits reach a certain level. You can also set a Stop Loss order, which is a command to the dealing desk to close your position when your losses reach a certain level except for extraordinary market conditions. It is a good idea to set both of these orders simultaneously to establish a price range of how much you are willing to make and how much you are ready to risk.

Take Profit and Stop Loss II

The minimum stop-loss and take-profit limits are is $1.20 for every 1000 units of the base currency. For example, if your position size is $3000, the minimum limit for stop-loss and take-profit is 3 x $1.20 = $3.60. The Company retains the right to reject any trade with limit orders that violate this rule.

When you are changing your take-profit order on an open position that is currently making a profit, the new take-profit level should be set at not less than $1.20 for every 1000 units of the base currency from the current P/L.

When you are changing your stop-loss order on an open position that is currently making a loss, the new stop-loss level should be set at not less than $1.20 for every 1000 units of the base currency from the current P/L.

Commissions

Commission is a one time charge for opening a position. Forex Club charges just 60 cents for every $1,000 traded (or 1,000 pounds; or 1,000 Euro). Forex Club returns commission charges to you automatically and instantaneously on non-profitable trades.

Calculating Profit and Loss

You don't need to worry about doing any math because expressFX will do all calculations for you. However, if you would like to know how profits and losses are calculated there is one simple formula.

For the currency pairs where dollar is the base currency (USD/***):

Where dollar is not the base currency (***/USD):

Carrying positions over to the next day

Even though Forex market works around the clock, technically, each trading day ends at 21:00 GMT and the next trading day starts just a few moments after. 21:00 GMT is equivalent to 4 pm New York time in the winter and 5 pm New York time in the summer.All opened positions are automatically closed at the end of each trading day.

However, you don't have to close your positions each day as we offer an option of carrying positions over to the next day for a small fee of 15 cents for every 1,000. Please note, fees for carrying positions over are non-refundable.

Adjusting your positions

In addition to closing your position, you can also downsize, upsize or reverse it. To downsize a position you just need to sell some part of the currency that you have purchased. For example, if you have purchased 1000 Euro for dollars (BUY 1,000 EUR/USD) you can downsize your position by selling 500 Euro. You can upsize your position the same way by buying additional 500 Euros for dollars. You can also reverse a position altogether by selling 2000 Euro for dollars. This way your position will become SELL 2,000 EUR/USD. Please note downsizing or upsizing a position is not necessarily beneficial. It is merely a trading strategy.

Essential Elements of a Successful Currency

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Courage Under Stressful Conditions When the Outcome is Uncertain

All the foreign exchange trading knowledge in the world is not going to

help, unless you have the nerve to buy and sell currencies and put your

money at risk. As with the lottery “You gotta be in it to win it”. Trust me

when I say that the simple task of hitting the buy or sell key is extremely

difficult to do when your own real money is put at risk.

You will feel anxiety, even fear. Here lies the moment of truth. Do you

have the courage to be afraid and act anyway? When a fireman runs into

a burning building I assume he is afraid but he does it anyway and

achieves the desired result. Unless you can overcome or accept your fear

and do it anyway, you will not be a successful trader.

However, once you learn to control your fear, it gets easier and easier and

in time there is no fear. The opposite reaction can become an issue –

you’re overconfident and not focused enough on the risk your taking.

Start by analyzing yourself. Are you the type of person that can control

their emotions and flawlessly execute trades, oftentimes under extremely

stressful conditions? Are you the type of person who’s overconfident and

prone to take more risk than they should? Look inside yourself and get

the answers. You can correct any deficiencies before they result in

paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge

loss can prematurely ends your trading career, or prolong your success

until you can raise additional capital.

Both the inability to initiate a trade, or close a losing trade can create

serious psychological issues for a trader going forward. By calling

attention to these potential stumbling blocks, you can properly prepare

and develop good trading habits.

The difficulty doesn’t end with “pulling the trigger”. In fact what comes

next is equally or perhaps more difficult. Once you are in the trade the

next hurdle is staying in the trade. When trading foreign exchange you

exit the trade as soon as possible after entry when it is not working. Most

people who have been successful in non-trading ventures find this

concept difficult to implement.

For example, real estate tycoons make their fortune riding out the bad

times and selling during the boom periods. The problem with trying to

adapt a hold on until it comes back strategy in foreign exchange is that

most of the time the currencies are in long-term persistent, directional

trends and your equity will be wiped out before the currency comes back.

The other side of the coin is staying in a trade that is working. The most

common pitfall is closing out a winning position without a valid reason.

Once again, fear is the culprit. Your subconscious demons will be scaring

you non-stop with questions like “what if news comes out and you wind

up with a loss”. The reality is if news comes out in a currency that is

going up, the news has a higher probability of being positive than

negative.

So your fear is just a baseless annoyance. Don’t try and fight the fear.

Accept it. Have a laugh about it and then move on to the task at hand,

which is determining an exit strategy based on actual price movement. As

Garth says in Waynesworld “Live in the now man”. Worrying about what

could be is irrational. Studying your chart and determining an objective

exit point is reality based and rational.

Another common pitfall is closing a winning position because you are

bored with it; its not moving. In Football, after a star running back breaks

free for a 50-yard gain, he comes out of the game temporarily for a

breather. When he reenters the game he is a serious threat to gain more

yards – this in indisputable. So when your position takes a breather after

a winning move, the next likely event is further gains – so why close it?

If you can be courageous under fire and strategically patient, foreign

exchange trading may be for you. If you’re a natural gunslinger and

reckless you will need to tone your act down a notch or two by making

the necessary adjustments. If putting your money at risk makes you a

nervous wreck its because you lack the knowledge base to be confident in

your decision making; develop your knowledge base.

Patience to Gain Knowledge through Study and Focus

Many new traders believe all you need to profitably trade foreign

currencies are charts, technical indicators and a small bankroll. Most of

them blow up (lose all their money) within a few weeks or months; some

are initially successful and it takes as long as a year before they blow up.

A tiny minority with good money management skills, patience, and a

market niche go on to be successful traders. Armed with charts, technical

indicators, and a small bankroll, the chance of succeeding is probably 500

to 1.

To increase your chances of success requires knowledge; acquiring

knowledge takes hard work, study, dedication and focus. Learn all

aspects – fundamental and technical.

Do the work and you will succeed.

ADVANTAGES OF FOREX VS. FUTURES

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Liquidity

The Forex market is the heavyweight of all markets with $1.5 trillion daily transactions, as opposed to the $30 billion daily volume limited liquidity available in the futures market. Stop-loss orders and limit orders are executed without slippage and requoting.

100:1 Leverage

One of the factors that sets the Forex market apart from all other markets is the substantial leverage offered. With US$1,000 per position, the trader holds US$100,000 worth of a currency (a 100:1 leverage, compared to a 15:1 leverage offered by the futures market). FX International Group stands to offer up to 400:1 leverage depending on size of funds and risk level.

Forex Trades 24-Hours A Day

Like the equities market, the futures market offers limited trading hours, whereas the Forex market trades around the globe 24 hours a day, opening Sunday at 5:00PM Eastern Time, and closing on Friday at 4:00PM.

Commission Free Trading

There are no commission charges when trading currencies. With consistently low spreads on the major pairs, trading Forex with FX International Group is less expensive than trading any other market, including the Futures market which normally carries a commission and exchange fee.

Flexibility

Unlike the futures market, where a trader is locked into a position, the spot currency market offers traders the flexibility to respond to news, events, or catastrophes in a matter of seconds in order to profit from changing market conditions or prevent greater losses.

ADVANTAGES OF FOREX VS EQUITIES

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Forex Brings Profit In Bear And Bull Markets

Unlike the equity market, the foreign exchange market does not got through bullish and bearish cycles. Due to the lack of restriction on short-selling, theopportunity to profit from a currency is ever present, whether its value is going up or down.

Superior Liquidity And 24-Hour Trading

The foreign exchange market is the largest and most liquid market in the world, with a daily turnover of $1.5 trillion and trades around the clock, starting on Sunday at 5:00 PM Eastern Standard Time with the opening of the markets in Australia and Singapore. Trading follows in Japan, and Europe, which open at 2:00 AM and 3:00 AM Eastern Time on Monday, respectively. The market closes on Friday 4:00PM Eastern Standard Time. Meanwhile, the equity market is only open from 9:30AM to 4:00 PM Eastern Standard Time, thus limiting your opportunity to trade and make profits.

100:1 Leverage

Leverage refers to the buying power an instrument gives its holder. A 2:1 leverage, for example (a standard value for equity accounts), will give the holder an exposure twice the size of his investment. FX International Group offers an average leverage of 100:1 and as much as 400:1, depending on the platform used. Trading with FX International Group on average will provide you with 100:1 leverage and even up to 400:1 in some circumstances, which exceeds the 2:1 margin offered in equity accounts. This means that a standard position of $1,000 provides you with the buying power of $100,000 currencies.

Although trading with highly leveraged positions is very risky and can result in the loss of the entire initial investment, substantial leverage is also a powerful moneymaking tool if managed appropriately. This high degree of leverage is essential in the Forex market because a major currency moves less than 1% per day, on average.

Commission-Free Trading

The lack of commission charges in the foreign exchange market combined with the consistently narrow spreads on major exchange rate pairs offered by FX International Group, make Forex the most inexpensive market to trade in. Forex

The Role of Forex in the Global Economy

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Since most, if not all, of the transactions in the world involve currencies, the foreign exchange market has an incredible reach of influence into every financial facet such as the equities and bond markets, private property, and manufacturing assets. The currency rates determined by this market play a vital role in the financing of government deficits, as well as equity ownerships in real estate holdings and in other companies. The influence of the Forex market affects your purchasing power, hence your every day consumption decisions.
History of the Forex Market
In an effort to keep cash from draining out of war-ravaged Europe and provide international monetary stability, the Bretton Woods Agreement was initiated in 1944. This agreement pegged the U.S. dollar to the price of gold, and other currency values to the U.S. dollar. Then in 1971, the disintegration of the Bretton Woods Agreement led to the emergence of the modern era of the foreign exchange market. The U.S. dollar was no longer convertible into gold, signaling an increase in currency market volatility and trading opportunities.
Following the collapse in 1973 of the subsequent Smithsonian and European Joint Float Agreements, we saw the true beginning of the free-floating currency exchange system among the major industrialized nations, which meant that the Forex market would now be driven by the forces of supply and demand.
The rapid growth of the euro-dollar market –the market for US dollar deposits in banks outside the US- was a major catalyst in the development of foreign exchange trading. It was the precursor to the broader Euromarkets; those in which assets are deposited outside the currency of origin. The Eurodollar market was born in the 1950s when Russia's oil revenue - all in dollars -- was deposited outside the US in fear of it being frozen by US regulators.
The U.S. government responded to the growth in the pool of offshore dollars with laws restricting lending of that currency to foreigners. U.S. companies found the euro market attractive for its higher yields, as well as a favorable center for holding excess liquidity, providing short-term loans and financing imports and exports. Thus, London became the preeminent offshore market and the leader in global finance for its convenient location and its ability to link Asian and American markets.
In the 1980s, the advent of computers and technology brought about the acceleration of cross-border capital movements, extending the market continuum through Asian, European and American time zones. Transactions in foreign exchange rocketed from about $70 billion a day in the 1980s, to more than $1.5 trillion a day two decades later. Additionally, the popularity and increasing reliability of online currency trading offered to private investors and financial institutions has led to the democratizing of the foreign exchange market and the widening of the retail market.
Market Players
In the last few years, the foreign exchange market has evolved into one not only transacted by banks but also by many other kinds of financial institutions such as brokers and market-makers, non-financial corporations, investment firms, hedge funds, and day traders.
Foreign exchange is an 'over the counter' (OTC) market, meaning there is no central exchange. The foreign exchange market moves through the trading ‘centers’ (in order of importance): London, New York, Tokyo, Singapore, Frankfurt, Geneva & Zurich, Paris, and Hong Kong. In the retail market, customers demand a written, legally accepted contract between themselves and their broker in exchange of a deposit of funds on which basis the customer may trade.
Market participants have various reasons for involvement in foreign exchange. Asset managers, sophisticated investors, and major corporations such as importers and exporters utilize the Forex market to diversify their portfolio holdings, hedge against their foreign or domestic currency denominated assets, and/or profit from price fluctuations. Whatever their motive may be, they all play a role in the demand and supply for currencies.
Understanding Forex Quotes
The first step in trading is to understand currency quotes. Since foreign exchange is the simultaneous purchase and sale of two currencies, the quote will always be given in pairs. Each pair has a base currency, which is the first listed currency (e.g. USD/CHF). When the quote rises, it means that the base rate has strengthened in value, since $1 could buy more francs, and vice versa. The base rate, which is normally the U.S. dollar, is set to a value of $1. There are a few major pairs in which the dollar is not the base currency, such as the British pound (GBP/USD), the euro (EUR/USD), and the Australian and New Zealanddollars (AUD/USD, NZD/USD). If the GBP/USD rises in price, then the British pound is rising in purchasing power versus the US dollar.

FOREX Trading Philosophy

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Keen on starting FOREX trading? Why would you not be… Many beginning FOREX traders are captivated by the allure of easy money. FOREX websites offer 'risk-free' trading, 'high returns' and 'low investment' – these claims have a grain of truth in them, but the reality of FOREX is a bit more complex. As with anything in life, what you put in will determine what you get out.

There are two common mistakes that many beginner traders make – trading without a strategy and letting emotions rule their decisions. After opening a FOREX account it may be tempting to dive right in and start trading. Watching the movements of EUR/USD for example, you may feel that you are letting an opportunity pass you by if you don't enter the market immediately. You buy and watch the market move against you. You panic and sell, only to see the market recover.

This kind of undisciplined approach to FOREX is guaranteed to lose you money, and have you waste your time. FOREX traders need to have a rational trading strategy and not allow emotions to rule their trading decisions.

The two emotions prevalent in the above example is greed (entering the market immediately) and fear (selling when the market temporarily moves against you). Investing and these two emotions do not gel at all. Keep them out of your trading and you will see results.

To make rational trading decisions the FOREX trader must be well-educated in market movements. He must be able to apply technical studies to charts and plot out entry and exit points. He must take advantage of the various types of orders to minimize his risk and maximize his profit.

The first step in becoming a successful FOREX trader is to understand the market and the forces behind it. Who trades FOREX and why? Who is successful and why are they successful? This knowledge will allow you to identify successful trading strategies and use them as models for your own.

There are 5 major groups of investors who participate in FOREX – Governments, Banks, Corporations, Investment Funds, and traders. Each group has varying objectives, but the one thing that all the groups (except traders) have in common is external control. Every organization has rules and guidelines for trading currencies and can be held accountable for their trading decisions. Individual traders, on the other hand, are accountable only to themselves.

If you do not keep yourself in check, nobody else will. Why should they worry if you aimlessly waste your money?

This means that the trader who lacks rules and guidelines is playing a losing game. Large organizations and educated traders approach the FOREX with strategies, and if you hope to succeed as a FOREX trader you must play by the same rules. That is studying these strategies and rules before starting to trade is so important.

FOREX Trading Philosophy - Money Management

Money management is part and parcel of any trading strategy. Besides knowing which currencies to trade and recognizing entry and exit signals, the successful trader has to manage his resources and integrate money management into his trading plan. Position size, margin, recent profits and losses, and contingency plans all need to be considered before entering the market.

This may sound like Greek now! If it does, you have more reason to get to know these terms. Knowledge will empower you on any investment market, including FOREX.

There are various strategies for approaching money management. Many of them rely on the calculation of core equity. Core equity is your starting balance minus the money used in open positions. If the starting balance is $10,000 and you have $1000 in open positions your core equity is $9000.

When entering a position try to limit risk to 1% to 3% of each trade. This means that if you are trading a standard FOREX lot of $100,000 you should limit your risk to $1000 to $3000 – preferably $1000. You do this by placing a stop loss order 100 pips (when 1 pip = $10) above or below your entry position.

As your core equity rises or falls you can adjust the dollar amount of your risk. With a starting balance of $10,000 and one open position your core equity is $9000. If you wish to add a second open position, your core equity would fall to $8000 and you should limit your risk to $900. Risk in a third position should be limited to $800.

By the same principal you can also raise your risk level as your core equity rises. If you have been trading successfully and made a $5000 profit, your core equity is now $15,000. You could raise your risk to $1500 per transaction. Alternatively, you could risk more from the profit than from the original starting balance. Some traders may risk up to 5% against their realized profits ($5,000 on a $100,000 lot) for greater profit potential.

As you can see, the novice needs to get through quite a bit of education, understanding and planning before those 'risk-free' trading, 'high returns' and 'low investment' promises will come into play. What are you waiting for? Get yourself a decent FOREX Trading Education. If you need more information, feel free to visit http://www.investing-smarter.com

Getting Started In Forex Trading

2009-11-20T01:10:00.000-08:00

How To Get Started In Forex Trading

You may have been hearing about the foreign exchange market (FOREX) and the investment advantages it offers. You would like to try it out, but don't know where to start. This short guide will give you the basics in FOREX and tell you what you need to participate in this fast growing field.

Foreign exchange used to be limited to large players such as national banks and multi-national corporations. In the 1980's the rules were revised to allow smaller investors to participate using margin accounts. Margin accounts are the reason why FOREX trading has become so popular. With a 100:1 margin account, you can control $100,000 with a $1,000 investment.

FOREX is not simple, however, and education is needed to make wise investment decisions. Although it is relatively easy to start trading on the FOREX, there are risks involved, so finding out as much as possible about the market is a good move for any beginner.

FOREX traders usually require a broker to handle transactions. Most brokers are reputable and are associated with large financial institutions such as banks. A reputable broker will be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

Opening a FOREX account is as simple as filling out a form and providing the necessary ID. The form will include a margin agreement that states that the broker can interfere with any trade it deems to be too risky. This is to protect the interests of the broker – most trades, after all, are done using the broker's money. Once your account has been established, you can fund it and begin trading.

Many brokers have different types of accounts to suit the needs of individual investors. Mini accounts allow you to get involved in FOREX trading for as little as $250, while standard accounts may have a minimum deposit of $1000 to $2500 depending on the broker. The amount of leverage – using borrowed money – varies with accounts. High leverage gives you more money to trade for a given investment.

HOWEVER – beginner traders are advised get accustomed to FOREX by doing paper trades for a period of time. Paper trades are practice transactions that don't involve real capital. They allow you to see how the system works while learning how to use the various software tools that are at provided by most FOREX brokers.

Most online brokers have demo accounts that allow you to make free paper trades for up to 30 days. Every new FOREX investor is strongly advised to use these demo accounts at least until they are showing consistently steady profits.

Each broker has their own set of software tools to aid in making transactions, but there are a few tools that are common to all FOREX brokers. Real time quotes, news feeds, technical analyses and charts, and profit and loss analyses are some of the features you should expect to see on most online brokers' web sites.

Almost every broker operates on the Internet. To access their online services you should have a reasonably modern computer, a fast Internet connection, and an up-to-date operating system such as Windows XP. Once your account is set up, you can access it from any computer – just enter your account name and password. If for some reason you are not able get access to a computer, most brokers will allow you to make trades over the phone.

Trades are commission free, meaning that you can make many trades in one day without worrying about incurring high brokerage fees. Brokers make their money on the 'spread' – the difference between bid and ask prices.