Fundamental analysis
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In order to predict the future dynamics of a currency pair a huge number of techniques have been developed. Nevertheless, quantity has not turned into quality and getting a fairly effective forecast is not the easiest task. Let's take a look at the four most common methods of forecasting currency pair rates. Purchasing power parity theory (PPP) Purchasing power parity (PPP) is probably the most popular method. It is the most often cited in economics textbooks. PPP theory is based on the principle of the "law of one price," which states that the cost of identical goods in different countries must be the same. For example, the price of a cabinet in Canada must be the same as the price of the same cabinet in the United States, taking in...
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Отслеживая краткосрочные колебания валютных пар, так же легко упустить из виду общие рыночные тренды, как и не заметить более широкую торговую экосистему, сосредоточившись на незначительных колебаниях курсов по открытым позициям. Рынок – это полноценный мир с широчайшим диапазоном участников от частных трейдеров, как вы, до межбанковских сетей и центробанков. Выступая в качестве индивидуального розничного трейдера, вы находитесь внизу пищевой цепочки, вы – мелкая рыбёшка. Хотя имеете возможность покупать и продавать те же самые валютные пары, что и другие участники, тем не менее, вам необходимо преодолевать более длинные цепочки транзакций, в сравнении с другими, чтобы получить ликвидность, так как вы не…
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Замечали ли вы когда-нибудь, что некоторые валютные пары движутся в одинаковых направлениях? Например, пара NZD/USD в большинстве случаев повторяет траекторию движения пары AUD/USD. Это явление называется «корреляция». Итак, валютная корреляция – мера взаимной зависимости двух валютных пар. Коэффициент корреляции представляется в десятичном формате и варьируется в диапазоне от +1.0 до -1.0. Корреляция +1 (положительная, прямая) означает, что две валютные пары 100% времени движутся в одном направлении. Корреляция -1 (отрицательная, обратная), наоборот, означает, что две пары 100% времени движутся в противоположных направлениях. Нулевая корреляция означает, что две пары никак не зависят друг от друга. Наиболее яркими примерами пар, имеющих прямую корреляцию,…
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This article considers an algorithm for probing the state of the market for randomness and algorithms for trading in a chaotic and trending market. As numerous researches of the market[1] have shown, (20 -25)% time it is in a state of trends, and (75-80)% time it is in a quiet state of motion similar to Brownian motion, i.e. "chaos". Thus, the main qualitative characteristic of the market state is the chaotic mode of its behavior in time. Chaotic market 80% time is stable with respect to small perturbations. It is these considerations that underlie the modern notion of dynamic chaos. The mathematical representation of the established regime of the chaos state of the market is the limit cycle, and the disruptor of the regime is the trend market state with resonance phenomena (continuous jumps) .....
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In the last issue of ForTrader.org, we learned about the general fundamental factors that cause exchange rates to move. Now we will take a look at the specifics inherent to specific currencies. To begin with, it is worth mentioning that currencies are divided into "shelter currencies" and "risky currencies" in terms of how investors view risk. Refugee currencies strengthen during times of market anxiety and uncertainty as investors seek to preserve their assets. Risky currencies are the currencies of commodity-exporting countries. The demand for them grows during the periods of relative stability in the world economy and politics. Indicators of investors' appetite for risk can be seen in the dynamics of global stock markets (growth points to the appetite for risk, decline - the aversion of investors to risk). Now let us turn to...
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Forex market analysis is divided into technical and fundamental. Technical analysis relies solely on the price chart and shows what is and has been happening in the market. Fundamental analysis explains what fundamental, or in other words, economic factors caused the price movement. Traders who want more than "buy on the green and sell on the red" must understand these factors. We will begin our master class with a general overview of the fundamental factors. In the following issues, you will learn how to use them in trading for maximum efficiency. Economic Indicators In general, a currency can rise in value for two reasons - if its supply (volume in circulation) in the world market decreases, or if...
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When a player performs a technical analysis of an exchange, he analyzes the changes that have already taken place in the exchange rate. He studies what exactly is happening to the currency pair, which he is interested in. During the fundamental analysis, the player is trying to get to the bottom of what caused certain changes, why the market moves in a certain way and not otherwise. This approach is usually more effective, because in this case a trader can make a forecast about the future course of the currency rate. Well, fragmentary analysis, in fact, combines both of these methods and their methods of economic analysis. Plus with the passage of time, with a certain practice the player can make...
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Among active traders actively working in all kinds of stock markets, including the foreign exchange market, there are two basic approaches to the analysis of price movements. These are technical and fundamental analysis. It can be noted that the differences between these two approaches are, we can say, fundamental and somewhere even philosophical in character, at that extreme representatives of these two schools of analysis of exchange markets do not admit each other, considering their direction as the only right one. The golden mean a It has happened historically that most of private traders in our country preach mainly technical analysis, sometimes rejecting the advantages of the other approach. Ardent adherents of technical analysis, as a rule, are not interested in anything but charts,...
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Если бы курсы валют не менялись, нам не приходилось бы каждый день интересоваться, каков сегодняшний курс доллара, евро, фунта стерлингов. Мы бы всегда знали, что один британский фунт равняется такому-то количеству долларов США. Когда-то так оно и было. Все изменилось в начале семидесятых годов ХХ века, когда ведущие мировые державы сделали курсы своих национальных валют плавающими. С тех пор курс каждой национальной валюты определяет рынок. А что значит – «определяет рынок»? То есть курс валюты (другими словами, ее цена) определяется основным законом рынка – законом спроса и предложения. Валюта, спрос на которую растет, дорожает. Валюта, спрос на которую падает, –…
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With the onset of the global financial crisis, the economies of many countries were threatened by the onset of recession. Governments reacted quickly and began to help their economies by rolling out stimulus programs. Within a year, governments around the world had already spent more than $10 trillion on stimulus. Such injections have borne fruit, and economies have shown the first signs of recovery. Observing the positive shifts, many scientists and experts began to talk about the strategy of stopping the stimulus. This article will discuss why it is important to end the stimulus in time and how to know when to end the stimulus. Why is it important to end the stimulus on time? The question of the timing of stopping the stimulus is important because both too early and...
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If we look at the structure of the Central Bank's reserves, we find that part of the reserves are held in SDRs (Special Drawing Rights). The essence and purpose of SDRs is the subject of this article. The concept of SDRs SDR is the potential right to a portion of the money of the International Monetary Fund. The SDR is also often referred to as a synthetic currency. When a country joins the IMF, it makes a contribution. The Fund, in turn, issues SDRs and distributes them to countries in proportion to their contributions. At this point, part of the money contributed is actually exchanged for SDRs. At the end of these operations, the country has those same SDRs in its accounts. If the country needs the money, it can sell some of it.
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На мировом валютном рынке в сформировалась особая специфика. Валютные пары распределяются по степи влияния и степени зависимости от тех или иных факторов на ряд блоков. Основные валютные пары на Forex Основной блок включает в себя валютные пары с долларом США. Исключительная роль этих трех валют на мировых рынках заключается в нескольких факторах: Первое – это особая роль доллара США, закрепленная Бреттон-вудским, а в последствии Ямайским соглашениями. Согласно этим соглашениям мировая финансовая система строится на национальной валюте США. Доллар несет в себе три важнейшие функции: USD является универсальным средством расчета в международной торговле, кроме этого jy выступает в качестве базового актива…
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Only in the period from November 1636 to February 1637 the price of tulip bulbs in Holland increased more than hundred times, reaching the price that is now equivalent to tens of thousands of dollars per bulb. But already on February 3, 1637 it became clear that no one was buying bulbs at those prices anymore, and the prices went down sharply: by May 1 the prices had dropped more than a hundred times and reached the level of 1636, while they kept on dropping. Thus unfolded the events of one of the most famous financial crises in history - the tulip speculation bubble. Many bubbles have burst since then, and economists are faced with the task of...
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As the global financial crisis unfolded, it turned out that securities backed by U.S. mortgages were very widespread: many companies, from giant investment banks to small investment funds, owned them. When these securities turned out to be problematic, it caused a lot of trouble, and the widespread nature of these securities ensured that the problems were truly systemic in nature. In this article, however, we are not going to touch on the causes of the crisis, but rather examine another phenomenon: the securitization mechanism that makes securities, such as mortgages, so widely available. The concept of securitization Formally, securitization (from the English word "securities") is a way of raising finance that involves the issuance of asset-backed securities,...
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I think you have seen more than once how the market seems to react paradoxically to certain news. Yesterday on the increase of inflation in the UK the pound went up by 50 points, although a year ago it hardly reacted to this news, yesterday on Consumer Confidence the market did not react at all, and in a couple of months it will make flights of wounded woodcock at the slightest deviation of the released data from consensus forecasts of Reuters or Bloomberg. So what's the point? The point is that the market reacts differently to the same news at different stages of the economic cycle. But it's all "blah, blah, blah, blah," as they used to say in one...
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Financial crises are a very common phenomenon in today's economy and bring a lot of trouble to both businesses and governments. Financial crises, their mechanisms and consequences are quite diverse. In order to better understand the essence of the phenomena taking place, it is useful to be able to identify crises. To "get acquainted" with financial crises we will look at their typology and the general characteristics of each type. A financial crisis can be defined as a situation where some financial companies or assets (like stocks or bonds) lose a large amount of their value. Clearly, financial crises primarily affect the financial sector of the economy. However, due to the fact that the real sector is closely...
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Еврозона – 12 стран, которые используют евро в расчете валового национального продукта: Германия, Франция, Италия, Испания, Нидерланды, Бельгия, Австрия, Финляндия, Португалия, Ирландия, Люксембург и Греция. Европейский Центральный Банк (ЕЦБ) Контролирует валютную политику Еврозоны. Орган принятия решений – Совет Управляющих, который состоит из Правления и управляющих национальных центральных банков. В Правление входят Президент ЕЦБ, Вице-президент, и четыре других члена. Цели политики Европейского Центробанка Основная цель ЕЦБ – ценовая стабильность. Здесь два основных “столпа” валютной политики. Первый – перспектива ценовых событий и риски ценовой стабильности. Ценовая стабильность определяется как удержание Согласованного Индекса Потребительских Цен (Harmonized Index of Consumer Prices – HICP) на…
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Knowledge of economic cycles helps us understand the meaning of changes in the currency or stock market, in a company or enterprise, and in the economy as a whole. The development of economic processes is cyclical: growth is necessarily accompanied by a decline, followed by recovery and new growth. Economic cycles are periodic fluctuations in the levels of production and consumption (supply and demand). Usually the dynamics of the economic cycle can be divided into the following phases: 1. Recession or downturn. There is a decline in business activity, a drop in production, a decrease in employment and income. Depending on the degree of economic decline and the time factor of the recession, a distinction is made between a crisis and a depression. A crisis is an imbalance in the economy,...
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Exchange rates of the world's major currencies are created when banks trade on the world market and are determined by supply and demand for a particular currency. The currency of the country will be in demand and competitive in the market, if the economic and political state of the country is stable. The central bank of any country has a large number of financial instruments to support the stability of its own national currency. The main method for this task is to regulate the amount of money in circulation. An oversupply of one currency in the market creates an increase in its supply and causes a decline in the rate of that currency in relation to others. In turn, a shortage of currency in the market generates a demand for it and will lead to an increase in the exchange rate....
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Currently, there are many quantitative approaches based on the search for nonlinear and chaotic dynamics in the behavior of financial markets. Among these approaches, a significant role is played by fractal and multifractal methods, which are also used to predict stock market crises. Among them, a class based on the study of the local regularity of financial time series can be distinguished. For this purpose, various indicators are usually constructed, analyzing which it is possible to draw conclusions regarding the regularity of the exchange rate series. In order to get an effective forecasting model it is necessary to thoroughly analyze the nature of the influence of factors which influence the formation of the exchange rate. The important role is played here by the availability of statistical data related to the considered factors and exchange rate dynamics. The development of the market is determined by fundamental...
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