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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.
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. "
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. 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.
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."
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.
