International financial markets offer unique opportunities to extract huge profits. Constituting a backbone of the leading economies, financial markets regulate the entire process of global trade, beginning with aluminum and oil and even ending with cocoa. An integral part of the global financial markets - with cash transactions on the Forex, trading financial instruments such as stocks, bonds, commodities and financial futures.
Trading volumes are huge. Daily turnover only Forex - international market exchange rates of more than $ 4 trillion a day. This daily turnover is much higher than the total value of shares changing their masters in the world stock exchanges during the whole year. The possibility of fast and unlimited profits while working with these instruments - the reason why many businesses prefer to Forex and commodity markets work on the sites''slow''exchanges. When combined with reasonable and reliable mechanisms for risk control, trading on global markets could be the basis of long-term financial success.
Market Forex - is the interbank market, which was formed just in the 70s of last century, when international trade shifted from fixed exchange rates to floating ones. In this case the rate of one currency against another is determined by the most obvious way - in fact the exchange ratio between them, to which both parties agree.
Strictly speaking, Forex is not a "market" in the traditional sense. He has no specific place of trade, such as the Stock Exchange. Trading occurs over the telephone and through computer terminals simultaneously in hundreds of banks around the world. And another advantage of the Forex market from an investor perspective, is that the Forex is open 24 hours a day, and currency exchange throughout the working week does not stop. Practically in every time zone (that is, in London, New York, Tokyo, Hong Kong, Sydney, etc.) there are dealers who buy or sell a currency. While the stock market stops trading in the late afternoon and will resume the next morning.
Foreign exchange and other related operations in money markets - one of the most difficult, and very specific kind of activity, called the foreign exchange dealing, which carry out highly skilled professionals - dealers.
There are three basic types of operations:
- Operations such as Spot, where a delivery date is the second business day after the trade date.
- Forward transactions where the delivery may take from several days to several years.
- Currency futures and options, where the delivery time specified by the exchange in accordance with exchange rules.
First of all, we should say that currency speculation belong to a class of margin transactions that do not governed by regulatory bodies such as the SEC and the margin loan, or "shoulder" is defined only by agreement between the customer and the bank or brokerage firm that provides him access to the Forex. The size of the margin loan depends, in fact, only the amount of sales collateral and customer is usually 1:50 or 1:100. That is, by making a pledge of $ 2,000 and having a "shoulder" 1:100, the customer can make transactions for an amount equivalent to $ 200,000. And the rest of the currency trading account is functioning as a broker and a margin investment account.
Depending on a variety of commercial, economic and other indicators, interest rates, central bank policies, time of day, preferences and expectations of stock market games from many different causes of quotes, that is, currency prices are in constant motion. Problem dealers try to determine the direction of change in currency price and buy the currency, the price of which rises, or sell the currency price at which the drops, and then, having made a reverse transaction, make a profit.
The key to successful trading activities at the global Forex market is the reliance on such aspects of the investment process as:
Fundamental analysis involves the interpretation and evaluation of key economic indicators, which appear in the news published by news agencies and bodies of state statistics. Fundamental indicators are published in the predetermined dates and hours, as investors and traders are aware of the specially compiled calendars. It is usually given the past value of this index, average, expected at this time, as well as the spread of the maximum to the minimum expected value. Based on this information, an experienced trader can prepare for the exit rate. Usually, traders at the time of publication of significant fundamental indicator trying to close all open positions before or at least reduce it in volume, so that surprise was not able to impair significantly the trader trading account.
Technical analysis is conducted to determine the direction of price movement and time for transactions. Using technical analysis, we can estimate the current direction of price movement. Possible options:
- Move up - Move down - Flat
Estimate the time of the trend:
- Short-term trend - Long-term trend of
Rate this period the trend:
- The beginning of a trend - Maturity trend - Completion of a trend
Rate the amplitude of price fluctuations in the current direction (volatility):
- Slight change of course - Strong change of course
With these components of the dynamics of prices, we can, with some confidence to buy or sell an instrument analyzed. Basic knowledge of technical and fundamental analysis will only affect the percentage of successful transactions in total transactions. But you can have great results on the ratio of successful and unsuccessful transactions, and thus to be constantly at a loss. It is for this problem and there is a risk-management.
Inability to predict the exact outcome of commercial transactions the trader dictates the need to implement a number of key rules aimed at reducing the risk of loss than previously planned or expected for every particular transaction. Strict adherence to these rules guarantee a long life of each financial trader.
Ability to use methods of analysis of the Forex market and a reasonable trading tactics are necessary but not sufficient conditions for being an investor in financial markets. Still need to understand the psychology of market participants, their motivation and driving force that ultimately determines the understanding of what is happening in the market Forex. All positive and negative qualities of the trader as a person displayed in a kaleidoscope of rapidly changing market events and sometimes have a decisive importance for the result of the auction.
Blinkered, and the weak, vacillating and self-confident, indifferent and slow, all of these "financiers" are doomed to fall victim to the market. Knowing their own pros and cons of nature can help avoid bankruptcy. If in addition to this trader to learn how to evaluate the psychological state of the market and the behavior of the market crowd, his chances of success are greatly increased.
We have considered only the basic strokes associated with the activities of traders in financial markets. The activities of this interesting and versatile, it allows each person to find their way to financial freedom, and perhaps a different way of life.