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Trade Fundamentals in Exchange Markets

Trade Fundamentals in Exchange Markets. !!!!!!!Intentionally left blank!!!!!!!!. Content. The Exchange Trade History and Its Concept Fundamental Analysis Factors affecting the market tendencies Monetary policy Economic calendar Technical Analysis Chart types Trend and tendencies

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Trade Fundamentals in Exchange Markets

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  1. Trade Fundamentals in Exchange Markets !!!!!!!Intentionally left blank!!!!!!!!

  2. Content • The Exchange Trade History and Its Concept • Fundamental Analysis • Factors affecting the market tendencies • Monetary policy • Economic calendar • Technical Analysis • Chart types • Trend and tendencies • Reversal patterns • Capital Management • Market enter signals • Trading plan

  3. The Exchange Trade History and Its Concept • Exchange (Bursa lat.) • Found in 15th century, Brugge. • Exchange Market Types • Stock • Mercantile (Commodity Exchange) • FOREX “In usum negotiatorum cujuseungue nationis ac Linguae” (“For sales people of all nations and languages”)

  4. Commodity Exchange • Instruments: • Highly liquid goods and raw materials • Subjects • Clearing organizations • Professional participants • Private investors • Organizers

  5. Stock Exchange • Instruments: • Shares of leading companies • Subjects • Clearing organizations • Depositories • Professional participants • Private investors • Organizers

  6. Foreign Exchange • Instruments: • Currency • Ingots • Precious metals ware • Subjects • Central banks • Commercial banks • Professional participants • Pension funds • Insurance companies • Multinational corporations • Private investors

  7. FOREX Market Advantages • Minimal capital investments • High liquidity • No direct sales • Exchange at any time • High yield • Large trade volume

  8. FOREX What is it?

  9. Concepts CFD (Contract for difference) • Contract for Difference allows to earn on both rise and fall of price value Margin • Amount taken as a collateral for position opening • Taken at the time of trade opening at the open price and does not change anymore Margin trading • The system works through a brokerage company providing leverage

  10. Margin Trading Features • Small start-up capital • Loans are granted in any currency • Trading is carried out without real money • Loan granting is charge-free in case of intraday trading • Broker allows interest on customer’s available funds • Trade is conducted remotely

  11. Exchange rates

  12. FOREX: Predictable!

  13. Capital movement • Data release and its expectation • Policymakers announcements

  14. Fundamental Analysis • Definition • Method of price change forecasting through studying macroeconomic factors that influence the price • Purpose • Determination ofa financial asset true value based on some macroeconomics factors • News type • Unexpected • Scheduled

  15. Factors Affecting the Market

  16. Monetary Policy • CB Interest rate correction • CB Interest rate – a rate at which commercial banks borrow funds from the Central Bank. • Change of required reserves rate • Required reserves is a share of bank deposits in the Central Bank • Open market operations – is a purchase/sale of government securities (bonds)

  17. Currency Intervention • Definition • Market enter of the CB for the purpose of forced adjustment of the national currency rate • Target • National currency cheapening of countries-exporters

  18. Country’s Economic Development Data • Inflation • Depreciation of paper money due to its issue in sizes exceeding the turnover needs that is accompanied by commodities price upturn and real wages drop. • Unemployment • Socioeconomic phenomenon when a part of population cannot find a job • GDP • Consumption + government spending + investments + export – import • Trade Balance • The difference between exports and imports of goods

  19. Economic Calendar

  20. Trading Sessions

  21. Technical Analysis • Definition • Research method for market dynamics based on studying historical data • Purpose • Forecasting of the future price movement • Axioms • Price includes everything • Price moves in a certain direction • History repeats itself

  22. Chart Types • Line - closing price is marked only for every next period. • Bar – showsmaximal (high) and minimal prices (low), opening and closing prices. • Japanese candlestick – a rectangle between opening and closing prices called candlestick body. A dash from a candlestick body to maximal (high) and minimal (low) price values ​​within this timeframe is called shadow.

  23. Line Chart

  24. Japanese Candlestick

  25. Chart Timeframes • М1, М5, М15, М30, H1, H4, D1, W1, MN 1M 5M high 1M 1M 1M close 1M open low

  26. Black Candle Formation max high open close min low

  27. White Candle Formation high max close open low min

  28. Trend Reversal Signals Evening star Morning star Shooting star

  29. Doji Open price = Close price

  30. Trend • Trendis a vector of price movement Main rule: “Trend is your friend” Conclusion: “Do not work against trend”

  31. Trend Classification • By duration • Long-term– from 6 months to several years • Medium-term– from 2 weeks to 6 months • Short-term– up to 2 weeks • By movement direction • Ascending – price goes up. • Descending – price goes down. • Flat – no certain move direction

  32. Trend Line • Definition • The line connecting successive data values ​​for determining market direction. • Lines • Support line – connects key lows of the market. • Resistance line – connects key highs of the market. • Levels • Historical level– distinguishing level which the market remembers for a very long time. • Psychological level – level occurring near round price values.

  33. Downtrend

  34. Uptrend and Local Trend

  35. Flat

  36. Head 1st shoulder 2nd shoulder = sell Neck’s line = Reverse Pattern • 1. Head & Shoulders

  37. = buy 3 1 5 4 2 = sell Min= 200 pips Continuation or Reverse Pattern • Triangle

  38. Capital Management • Investors • Positional • Speculative • Tactics • Averaging • Locking • Pyramid • Theory of probability

  39. Trading Plan • Definition • Systematic description of individual trading • Sections • Descriptive part • Information Analysis • Forecast • Market enter signals • Target levels calculation • Threats • Trade opening or closing • Results analysis

  40. FOREX entered the modern life and took its important place in it • FOREX gives opportunity to earn money by your own effort and intellect • FOREX and everything related to it are destined for success • History of FOREX is just beginning Everyone has a chance to do part for the history of FOREX development!

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