четверг, 13 марта 2014 г.
четверг, 30 мая 2013 г.
Lesson 12. Continuation about the stock market
By the beginning of this chapter you receive an overview of the stock market, and know that conduct securities transactions can be through a broker. But where do you start? First you need to choose the right broker. Currently on the site there is a list of FFMS brokers who operate in the stock market.
When choosing a broker to assess its financial viability. For this purpose there are various ratings agencies. Naturally, it is better to choose a brokerage company, which occupy the top positions in such ratings, which indicates a high level of reliability. It is advisable to make a list of the most trusted brokers and through its already choose the company with the appropriate terms of trade for you.
On top of that it is important and the physical location of the brokerage company. The fact is that you will need about once a month or quarter (depending on the conditions that offer certain brokerage companies) to come to the broker to the office to sign some reports. Naturally, it is desirable to choose a broker of your city. Some brokerage firms have offices in many cities, for a list of which can be on their Internet sites.
Speaking of the terms of trade offered by brokers, it must be said that they are offering different tariff plans, with a complex system of fines and fees, interest on depository services and rate loan for margin lending. All of this should be carefully considered, because the smaller the interest charges, the more money you can save. You also need to know about the existence of the minimum monthly payment and the amount thereof.
The most popular at the moment form of work with a broker - through the Internet. In this case, you set the application from your home computer or laptop from any location where there is a connection to the World Wide Web. Internet trading service provides almost all brokers. And there is a common way for applications - on the phone. Such orders are made using a password that will give you a broker. For reliability of the transactions in this way, all telephone calls are recorded.
To all this, you have to verify the contact information for customer support in place to provide advice, as on the specifics of the broker and the use of software for Internet commerce. Will be important for trade and margin lending conditions. By this term is meant making deals "with the shoulder," during which the possible purchase of securities with borrowed money or sale of securities, provided broker (open short positions). In carrying out the operation "with the shoulder," you can buy or sell the securities at a substantial amount than the one that is on your brokerage account. Therefore it is necessary to know how much will be paid for the use of leverage, and which securities will be able to provide you with a loan broker.
It will be useful to know about the additional services provided by the broker. This may be a free consultation and analysis, as well as news feeds. They can provide substantial assistance, important for beginners. You also need to consider the size of the minimum deposit is enough to participate in the bidding. Typically, brokers allow operations with deposits of 10-50 thousand rubles. After gathering all the information you need to analyze it and to choose a broker with the most appropriate for you conditions.
With tips for choosing a broker for currency trading in the Forex market, as well as a number of other trade finance instruments the stock market can be found in the relevant section of our news portal.
After choosing a broker with him now have to sign a package of documents for the provision of brokerage services for which it is necessary to take your passport and come to the office broker. As a result, your name will open a brokerage account and a custody account, which will be considered and you acquired the securities.
In addition you will be given the keys of electronic digital signature (EDS), used by the Internet trading and the password for transactions over the phone. Now you just need to put the money into the account. The money made as a cashier, and with the help of non-cash payments, depending on the conditions of the broker. Some brokers, for example, does not require a personal meeting for the contract - enough for them to sign your contract offer and then send a scanned copy by e-mail or fax.
And that's enough! Now you need to select and install the program to access the exchange. It will provide you with the broker. Once the software is installed, you can connect via the Internet to the server broker, and get the opportunity to carry out transactions on the stock exchange.
What kind of software will provide you with the broker? This may be the software of its own design, and versatile, with which will be able to trade through other brokers. To do this, brokers in the contract specify the list of programs that you can use.
We will not consider their own software development of individual brokers, since it is specific to each broker. We would not be advised to open an account with a broker who is a trader exclusively proprietary trading platform. Traders often change their brokers because of the differences, and re-re-learn to use the trading platform at each change of broker - not a pleasant pastime. Moreover, sales terminals, usually have a built-in programming language for writing scripts, indicators and expert advisors. It is better to learn a language in a universal trading platform than to relearn every time a new one.
Let's look at one of the most common by far trading platform - MetaTrader4 (MT4). It should be noted that on the Internet sites of brokers application to be installed on your computer may have different names, but be based on a single trading platform MT4.
MT4 Trading Terminal is a program through which you can gain access to the exchange trading system. MT4 software will allow you to send an application for the purchase and sale of securities, currencies, contracts for difference (CFD), futures broker's server, as well as track the status of their own funds. In the trading system is automatic execution of applications. MT4 trading terminal supports margin lending, and provides a range of other possibilities. The program interface is simple and intuitive. MT4 Client Terminal is the fourth generation of online trading platforms on the developer - the company MetaQuotes Software Corp. Due to the high level of automation of many processes and increase convenience and speed of the trader, the terminal is recommended for novice investors. All transactions (issuance and withdrawal of applications, transactions, etc.) occur in real time using real market data, all the delays are minimal. With the functions of the terminal MT4 is quick to read and proceed directly to the performance of operations.
To summarize, we say that a variety of programs for Internet trading, though have small functional differences in general are simple and functional, so the trade will suit any of them.
Exchange trading scheme
For operations with securities broker you need to give an instruction to make the transaction on the exchange. In the past, orders were given over the phone, and now all the orders you can give the program through Internet trading. In such programs, the order is the application form, which contains the action, the number of lots and the asking price sale.
Let us see what is the mechanism of trading on the stock exchange. So, traders (investors) will give the application (do errands broker) to sell or purchase a variety of investment instruments (securities, etc.) of the selected value. The very sight of applications in different software varies, but the essence of all and one by reading a single interface, you can easily do the same in the other.
Trading on the stock market, you have to select the trading platform FORTS (special section RTS) or MICEX, the instrument (in the form of so-called ticker) that you as an investor want to sell or buy, the number of items selected tool and the purchase price and sales tool.
After setting the application on the stock exchange will be made automatically checks all the competing demands that are specified or better price (thus, for example, to sell searched counter orders with a price equal to or greater than specified in your application). Transaction occurs when such a counter claim is found. If no suitable bids, then your application will remain on the exchange, and will expect the appropriate counter orders well, or until you cancel.
During trading, at any time, the database is the exchange of all outstanding applications for sale (offers) and to buy (bids). It has the following form: offers are above (while not wishing to buy them so expensive), and below are bids (which was not wishing to sell so cheap). Typically, the interval between them is (spread). At the upper boundary of the spread is the best application for the sale, at the bottom - the best buy order. These requests, a so-called exchange nozzle having a shape shown in the figure.
As we said - are located at the bottom of a glass of exchange bids, starting with the highest price are issued to customers (in this figure bids for shares "RAO UES" have a maximum price equal to 10.985 rubles) to the lowest (10,971 rubles). Figures exchange glasses standing close by, indicate the number of lots that buyers are willing to purchase at the designated price.
At the top of a glass of fruitful exchange applications for sale (offers), starting with a low (below 10,986 it) to the highest price (11,005 rubles in our example), in which investors are willing to sell. Just as with bids - in front of the glass in the stock price indicates the number of lots.
On admission to the stock exchange sale application, in which the price higher than the maximum sales price, she immediately met by "eating" the appropriate volume of a piece of the application offers. Well, if the application is sent for sale at the best price with the purchase price, "eaten", respectively, the upper part of the bids.
In his exchange terminal, you can see the same exchange for a glass of selected tools. In the MetaTrader4 trading platform as a tool of exchange glass is not provided, since the platform was originally developed for trading in the Forex market, where, because of the high volatility, demand always meets proposal. However, the recently released Version 5 of the trading platform (MT5), where in addition to other improvements present and exchange the glass.
By the beginning of this chapter you receive an overview of the stock market, and know that conduct securities transactions can be through a broker. But where do you start? First you need to choose the right broker. Currently on the site there is a list of FFMS brokers who operate in the stock market.
When choosing a broker to assess its financial viability. For this purpose there are various ratings agencies. Naturally, it is better to choose a brokerage company, which occupy the top positions in such ratings, which indicates a high level of reliability. It is advisable to make a list of the most trusted brokers and through its already choose the company with the appropriate terms of trade for you.
On top of that it is important and the physical location of the brokerage company. The fact is that you will need about once a month or quarter (depending on the conditions that offer certain brokerage companies) to come to the broker to the office to sign some reports. Naturally, it is desirable to choose a broker of your city. Some brokerage firms have offices in many cities, for a list of which can be on their Internet sites.
Speaking of the terms of trade offered by brokers, it must be said that they are offering different tariff plans, with a complex system of fines and fees, interest on depository services and rate loan for margin lending. All of this should be carefully considered, because the smaller the interest charges, the more money you can save. You also need to know about the existence of the minimum monthly payment and the amount thereof.
The most popular at the moment form of work with a broker - through the Internet. In this case, you set the application from your home computer or laptop from any location where there is a connection to the World Wide Web. Internet trading service provides almost all brokers. And there is a common way for applications - on the phone. Such orders are made using a password that will give you a broker. For reliability of the transactions in this way, all telephone calls are recorded.
To all this, you have to verify the contact information for customer support in place to provide advice, as on the specifics of the broker and the use of software for Internet commerce. Will be important for trade and margin lending conditions. By this term is meant making deals "with the shoulder," during which the possible purchase of securities with borrowed money or sale of securities, provided broker (open short positions). In carrying out the operation "with the shoulder," you can buy or sell the securities at a substantial amount than the one that is on your brokerage account. Therefore it is necessary to know how much will be paid for the use of leverage, and which securities will be able to provide you with a loan broker.
It will be useful to know about the additional services provided by the broker. This may be a free consultation and analysis, as well as news feeds. They can provide substantial assistance, important for beginners. You also need to consider the size of the minimum deposit is enough to participate in the bidding. Typically, brokers allow operations with deposits of 10-50 thousand rubles. After gathering all the information you need to analyze it and to choose a broker with the most appropriate for you conditions.
With tips for choosing a broker for currency trading in the Forex market, as well as a number of other trade finance instruments the stock market can be found in the relevant section of our news portal.
After choosing a broker with him now have to sign a package of documents for the provision of brokerage services for which it is necessary to take your passport and come to the office broker. As a result, your name will open a brokerage account and a custody account, which will be considered and you acquired the securities.
In addition you will be given the keys of electronic digital signature (EDS), used by the Internet trading and the password for transactions over the phone. Now you just need to put the money into the account. The money made as a cashier, and with the help of non-cash payments, depending on the conditions of the broker. Some brokers, for example, does not require a personal meeting for the contract - enough for them to sign your contract offer and then send a scanned copy by e-mail or fax.
And that's enough! Now you need to select and install the program to access the exchange. It will provide you with the broker. Once the software is installed, you can connect via the Internet to the server broker, and get the opportunity to carry out transactions on the stock exchange.
What kind of software will provide you with the broker? This may be the software of its own design, and versatile, with which will be able to trade through other brokers. To do this, brokers in the contract specify the list of programs that you can use.
We will not consider their own software development of individual brokers, since it is specific to each broker. We would not be advised to open an account with a broker who is a trader exclusively proprietary trading platform. Traders often change their brokers because of the differences, and re-re-learn to use the trading platform at each change of broker - not a pleasant pastime. Moreover, sales terminals, usually have a built-in programming language for writing scripts, indicators and expert advisors. It is better to learn a language in a universal trading platform than to relearn every time a new one.
Let's look at one of the most common by far trading platform - MetaTrader4 (MT4). It should be noted that on the Internet sites of brokers application to be installed on your computer may have different names, but be based on a single trading platform MT4.
MT4 Trading Terminal is a program through which you can gain access to the exchange trading system. MT4 software will allow you to send an application for the purchase and sale of securities, currencies, contracts for difference (CFD), futures broker's server, as well as track the status of their own funds. In the trading system is automatic execution of applications. MT4 trading terminal supports margin lending, and provides a range of other possibilities. The program interface is simple and intuitive. MT4 Client Terminal is the fourth generation of online trading platforms on the developer - the company MetaQuotes Software Corp. Due to the high level of automation of many processes and increase convenience and speed of the trader, the terminal is recommended for novice investors. All transactions (issuance and withdrawal of applications, transactions, etc.) occur in real time using real market data, all the delays are minimal. With the functions of the terminal MT4 is quick to read and proceed directly to the performance of operations.
To summarize, we say that a variety of programs for Internet trading, though have small functional differences in general are simple and functional, so the trade will suit any of them.
Exchange trading scheme
For operations with securities broker you need to give an instruction to make the transaction on the exchange. In the past, orders were given over the phone, and now all the orders you can give the program through Internet trading. In such programs, the order is the application form, which contains the action, the number of lots and the asking price sale.
Let us see what is the mechanism of trading on the stock exchange. So, traders (investors) will give the application (do errands broker) to sell or purchase a variety of investment instruments (securities, etc.) of the selected value. The very sight of applications in different software varies, but the essence of all and one by reading a single interface, you can easily do the same in the other.
Trading on the stock market, you have to select the trading platform FORTS (special section RTS) or MICEX, the instrument (in the form of so-called ticker) that you as an investor want to sell or buy, the number of items selected tool and the purchase price and sales tool.
After setting the application on the stock exchange will be made automatically checks all the competing demands that are specified or better price (thus, for example, to sell searched counter orders with a price equal to or greater than specified in your application). Transaction occurs when such a counter claim is found. If no suitable bids, then your application will remain on the exchange, and will expect the appropriate counter orders well, or until you cancel.
During trading, at any time, the database is the exchange of all outstanding applications for sale (offers) and to buy (bids). It has the following form: offers are above (while not wishing to buy them so expensive), and below are bids (which was not wishing to sell so cheap). Typically, the interval between them is (spread). At the upper boundary of the spread is the best application for the sale, at the bottom - the best buy order. These requests, a so-called exchange nozzle having a shape shown in the figure.
As we said - are located at the bottom of a glass of exchange bids, starting with the highest price are issued to customers (in this figure bids for shares "RAO UES" have a maximum price equal to 10.985 rubles) to the lowest (10,971 rubles). Figures exchange glasses standing close by, indicate the number of lots that buyers are willing to purchase at the designated price.
At the top of a glass of fruitful exchange applications for sale (offers), starting with a low (below 10,986 it) to the highest price (11,005 rubles in our example), in which investors are willing to sell. Just as with bids - in front of the glass in the stock price indicates the number of lots.
On admission to the stock exchange sale application, in which the price higher than the maximum sales price, she immediately met by "eating" the appropriate volume of a piece of the application offers. Well, if the application is sent for sale at the best price with the purchase price, "eaten", respectively, the upper part of the bids.
In his exchange terminal, you can see the same exchange for a glass of selected tools. In the MetaTrader4 trading platform as a tool of exchange glass is not provided, since the platform was originally developed for trading in the Forex market, where, because of the high volatility, demand always meets proposal. However, the recently released Version 5 of the trading platform (MT5), where in addition to other improvements present and exchange the glass.
Lesson 11. Stock market 2
So, in the previous chapters, we learned what the exchange and met with leaders of the world's stock exchanges. Now we will discuss the main participants of the Stock Exchange. You already know that the activities of the stock exchange can be carried out only by its members. So you know that to participate in the exchange they have to comply with the established laws and stock exchange requirements. The presence of a special license - one of these requirements. License issued by the Federal Financial Markets Service (FFMS). She is licensed implementation of operations on the stock exchanges. Dealers and brokers are the only members who can trade on the stock exchange. Let's see how they differ and what are their functions?
Dealers - professional participants of the stock exchange, which include banks and investment firms who trade securities. They do business on their own behalf, for my money and do not engage in brokering. Transactions they enter into with clients, brokers, and each other. On the difference between bid and ask prices, as well as on changes in securities prices and currency they make their profit.
Brokers - professional participants of the stock exchange, which have the right to make transactions with securities on behalf of the customer and at his expense. It intermediaries asking for transactions between buyers and sellers of currencies, securities and other financial assets. Do you know on what they earn? Simple! Their income - a commission for brokering activities, which they receive when making transactions with securities. Depends on the volume of transactions amount to be received by the broker as a reward. At the moment, the bulk of brokerage operations performed by large brokerage firms that have a large network of branches and links with the banking institutions.
Job broker is simple: the client gives him an order to buy or sell securities and the broker shall make this request in the market, which sought a counter claim, after which they both performed. In the broker's obligation is fair and accurate execution of client orders.
We found that the participants of the Stock Exchange are the dealers and brokers. Now accentuate the main difference from the broker dealer: dealer does business on its own behalf and at its own expense, while working as a broker on behalf of the client, and is, in fact, an intermediary. The dealer operates independently on the stock exchange and is not engaged in brokering activities - all invested in securities, metals and currency of the money belongs to him.
Along with the dealers and brokers, discussed in the previous chapter, the following members Stock Exchange: receptionist, clearing company and depository to ensure its functioning. Their activities are also subject to licensing by the Federal Exchange Commission. Let's see what are the main functions of these institutions and how they differ among themselves.
Registrar (or Registrar) - is party to the Stock Exchange, the activity of which is reduced to maintaining a register of all the owners of the securities. This activity is an exclusive, which means that the registrar can not provide other services and combine their activities. The collection, storage and transmission of documents and information about the personal accounts is the main function of the registrar. On the stock exchange through these accounts and keep records of the securities. Registrar shall:
provide information from the registry;
open personal accounts and perform operations on them;
check the authority of the persons signing the documents;
inform registrants about their rights and about the procedure and how to implement them.
Clearing Company - is a member of the stock exchange, which provides non-cash payments for sold and delivered goods and securities, as well as for services rendered, which are realized by mutual offset.
Clearing is the collection, verification, correction of information on market transactions and the preparation of the relevant accounting documents. So determined by the mutual obligations of the parties. Just clearing setoff and supply estimated.
The Registrar and the clearing company formed and exist to protect the interests of members of the exchange and their clients, and to ensure the financial integrity of the stock markets as a whole. Clearing Company reserves the buyer and seller of a free and independent of each other, as if breaking the direct link between them formed in the process of buying and selling. Thus, a single buyer or seller can be replaced with another, who also made a deal on the exchange, and was in contact only with the clearing company. You do not need any permission from the original partner in the transaction is made. Clearing Company is the guarantor of transactions and bears full responsibility.
Clearing companies prevent default by companies in various economic shocks or increased volume of speculative transactions, which may lead to termination of the stock market and the bankruptcy of its members.
The depositary is a legal person, a stock exchange that is based on the license of the professional leads depository activities. The activities of the Depositary shall:
in implementing the settlement of transactions by conducting operations in the exchange and over the counter market;
in the calculation and payment of dividends, the payment of taxes on income;
in accounting and storage of securities that may be in store as the depositary, and exist in the form of records;
in securities lending, as well as providing other services.
The responsibility of the depositary is to ensure the safety of securities or rights to them, and actions solely to the depositor (the person who has entered into an agreement with the depositary). The Depositary has no right to carry out transactions in securities, to dispose of or control them. Because the securities are not owned by the depositary, they can not be presented for collection by its obligations. At this point in our country's largest depositories are: Depository Clearing Company and the National Depository Center.
Taking into account the possibility of combining several types of professional activities, the organizational structure of each exchange is unique and quite complex. For example, the depositary may exercise at the same time dealer, clearing and brokerage activities.
We have examined the activities of professional participants of the stock market. We must not forget that the law governs all relations between them, and assigned to duty on the exchange only experienced, reliable and qualified participants allows licensing activities.
Along with the dealers and brokers, discussed in the previous chapter, the following members Stock Exchange: receptionist, clearing company and depository to ensure its functioning. Their activities are also subject to licensing by the Federal Exchange Commission. Let's see what are the main functions of these institutions and how they differ among themselves.
Registrar (or Registrar) - is party to the Stock Exchange, the activity of which is reduced to maintaining a register of all the owners of the securities. This activity is an exclusive, which means that the registrar can not provide other services and combine their activities. The collection, storage and transmission of documents and information about the personal accounts is the main function of the registrar. On the stock exchange through these accounts and keep records of the securities. Registrar shall:
provide information from the registry;
open personal accounts and perform operations on them;
check the authority of the persons signing the documents;
inform registrants about their rights and about the procedure and how to implement them.
Clearing Company - is a member of the stock exchange, which provides non-cash payments for sold and delivered goods and securities, as well as for services rendered, which are realized by mutual offset.
Clearing is the collection, verification, correction of information on market transactions and the preparation of the relevant accounting documents. So determined by the mutual obligations of the parties. Just clearing setoff and supply estimated.
The Registrar and the clearing company formed and exist to protect the interests of members of the exchange and their clients, and to ensure the financial integrity of the stock markets as a whole. Clearing Company reserves the buyer and seller of a free and independent of each other, as if breaking the direct link between them formed in the process of buying and selling. Thus, a single buyer or seller can be replaced with another, who also made a deal on the exchange, and was in contact only with the clearing company. You do not need any permission from the original partner in the transaction is made. Clearing Company is the guarantor of transactions and bears full responsibility.
Clearing companies prevent default by companies in various economic shocks or increased volume of speculative transactions, which may lead to termination of the stock market and the bankruptcy of its members.
The depositary is a legal person, a stock exchange that is based on the license of the professional leads depository activities. The activities of the Depositary shall:
in implementing the settlement of transactions by conducting operations in the exchange and over the counter market;
in the calculation and payment of dividends, the payment of taxes on income;
in accounting and storage of securities that may be in store as the depositary, and exist in the form of records;
in securities lending, as well as providing other services.
The responsibility of the depositary is to ensure the safety of securities or rights to them, and actions solely to the depositor (the person who has entered into an agreement with the depositary). The Depositary has no right to carry out transactions in securities, to dispose of or control them. Because the securities are not owned by the depositary, they can not be presented for collection by its obligations. At this point in our country's largest depositories are: Depository Clearing Company and the National Depository Center.
Taking into account the possibility of combining several types of professional activities, the organizational structure of each exchange is unique and quite complex. For example, the depositary may exercise at the same time dealer, clearing and brokerage activities.
We have examined the activities of professional participants of the stock market. We must not forget that the law governs all relations between them, and assigned to duty on the exchange only experienced, reliable and qualified participants allows licensing activities.
So, in the previous chapters, we learned what the exchange and met with leaders of the world's stock exchanges. Now we will discuss the main participants of the Stock Exchange. You already know that the activities of the stock exchange can be carried out only by its members. So you know that to participate in the exchange they have to comply with the established laws and stock exchange requirements. The presence of a special license - one of these requirements. License issued by the Federal Financial Markets Service (FFMS). She is licensed implementation of operations on the stock exchanges. Dealers and brokers are the only members who can trade on the stock exchange. Let's see how they differ and what are their functions?
Dealers - professional participants of the stock exchange, which include banks and investment firms who trade securities. They do business on their own behalf, for my money and do not engage in brokering. Transactions they enter into with clients, brokers, and each other. On the difference between bid and ask prices, as well as on changes in securities prices and currency they make their profit.
Brokers - professional participants of the stock exchange, which have the right to make transactions with securities on behalf of the customer and at his expense. It intermediaries asking for transactions between buyers and sellers of currencies, securities and other financial assets. Do you know on what they earn? Simple! Their income - a commission for brokering activities, which they receive when making transactions with securities. Depends on the volume of transactions amount to be received by the broker as a reward. At the moment, the bulk of brokerage operations performed by large brokerage firms that have a large network of branches and links with the banking institutions.
Job broker is simple: the client gives him an order to buy or sell securities and the broker shall make this request in the market, which sought a counter claim, after which they both performed. In the broker's obligation is fair and accurate execution of client orders.
We found that the participants of the Stock Exchange are the dealers and brokers. Now accentuate the main difference from the broker dealer: dealer does business on its own behalf and at its own expense, while working as a broker on behalf of the client, and is, in fact, an intermediary. The dealer operates independently on the stock exchange and is not engaged in brokering activities - all invested in securities, metals and currency of the money belongs to him.
Along with the dealers and brokers, discussed in the previous chapter, the following members Stock Exchange: receptionist, clearing company and depository to ensure its functioning. Their activities are also subject to licensing by the Federal Exchange Commission. Let's see what are the main functions of these institutions and how they differ among themselves.
Registrar (or Registrar) - is party to the Stock Exchange, the activity of which is reduced to maintaining a register of all the owners of the securities. This activity is an exclusive, which means that the registrar can not provide other services and combine their activities. The collection, storage and transmission of documents and information about the personal accounts is the main function of the registrar. On the stock exchange through these accounts and keep records of the securities. Registrar shall:
provide information from the registry;
open personal accounts and perform operations on them;
check the authority of the persons signing the documents;
inform registrants about their rights and about the procedure and how to implement them.
Clearing Company - is a member of the stock exchange, which provides non-cash payments for sold and delivered goods and securities, as well as for services rendered, which are realized by mutual offset.
Clearing is the collection, verification, correction of information on market transactions and the preparation of the relevant accounting documents. So determined by the mutual obligations of the parties. Just clearing setoff and supply estimated.
The Registrar and the clearing company formed and exist to protect the interests of members of the exchange and their clients, and to ensure the financial integrity of the stock markets as a whole. Clearing Company reserves the buyer and seller of a free and independent of each other, as if breaking the direct link between them formed in the process of buying and selling. Thus, a single buyer or seller can be replaced with another, who also made a deal on the exchange, and was in contact only with the clearing company. You do not need any permission from the original partner in the transaction is made. Clearing Company is the guarantor of transactions and bears full responsibility.
Clearing companies prevent default by companies in various economic shocks or increased volume of speculative transactions, which may lead to termination of the stock market and the bankruptcy of its members.
The depositary is a legal person, a stock exchange that is based on the license of the professional leads depository activities. The activities of the Depositary shall:
in implementing the settlement of transactions by conducting operations in the exchange and over the counter market;
in the calculation and payment of dividends, the payment of taxes on income;
in accounting and storage of securities that may be in store as the depositary, and exist in the form of records;
in securities lending, as well as providing other services.
The responsibility of the depositary is to ensure the safety of securities or rights to them, and actions solely to the depositor (the person who has entered into an agreement with the depositary). The Depositary has no right to carry out transactions in securities, to dispose of or control them. Because the securities are not owned by the depositary, they can not be presented for collection by its obligations. At this point in our country's largest depositories are: Depository Clearing Company and the National Depository Center.
Taking into account the possibility of combining several types of professional activities, the organizational structure of each exchange is unique and quite complex. For example, the depositary may exercise at the same time dealer, clearing and brokerage activities.
We have examined the activities of professional participants of the stock market. We must not forget that the law governs all relations between them, and assigned to duty on the exchange only experienced, reliable and qualified participants allows licensing activities.
Along with the dealers and brokers, discussed in the previous chapter, the following members Stock Exchange: receptionist, clearing company and depository to ensure its functioning. Their activities are also subject to licensing by the Federal Exchange Commission. Let's see what are the main functions of these institutions and how they differ among themselves.
Registrar (or Registrar) - is party to the Stock Exchange, the activity of which is reduced to maintaining a register of all the owners of the securities. This activity is an exclusive, which means that the registrar can not provide other services and combine their activities. The collection, storage and transmission of documents and information about the personal accounts is the main function of the registrar. On the stock exchange through these accounts and keep records of the securities. Registrar shall:
provide information from the registry;
open personal accounts and perform operations on them;
check the authority of the persons signing the documents;
inform registrants about their rights and about the procedure and how to implement them.
Clearing Company - is a member of the stock exchange, which provides non-cash payments for sold and delivered goods and securities, as well as for services rendered, which are realized by mutual offset.
Clearing is the collection, verification, correction of information on market transactions and the preparation of the relevant accounting documents. So determined by the mutual obligations of the parties. Just clearing setoff and supply estimated.
The Registrar and the clearing company formed and exist to protect the interests of members of the exchange and their clients, and to ensure the financial integrity of the stock markets as a whole. Clearing Company reserves the buyer and seller of a free and independent of each other, as if breaking the direct link between them formed in the process of buying and selling. Thus, a single buyer or seller can be replaced with another, who also made a deal on the exchange, and was in contact only with the clearing company. You do not need any permission from the original partner in the transaction is made. Clearing Company is the guarantor of transactions and bears full responsibility.
Clearing companies prevent default by companies in various economic shocks or increased volume of speculative transactions, which may lead to termination of the stock market and the bankruptcy of its members.
The depositary is a legal person, a stock exchange that is based on the license of the professional leads depository activities. The activities of the Depositary shall:
in implementing the settlement of transactions by conducting operations in the exchange and over the counter market;
in the calculation and payment of dividends, the payment of taxes on income;
in accounting and storage of securities that may be in store as the depositary, and exist in the form of records;
in securities lending, as well as providing other services.
The responsibility of the depositary is to ensure the safety of securities or rights to them, and actions solely to the depositor (the person who has entered into an agreement with the depositary). The Depositary has no right to carry out transactions in securities, to dispose of or control them. Because the securities are not owned by the depositary, they can not be presented for collection by its obligations. At this point in our country's largest depositories are: Depository Clearing Company and the National Depository Center.
Taking into account the possibility of combining several types of professional activities, the organizational structure of each exchange is unique and quite complex. For example, the depositary may exercise at the same time dealer, clearing and brokerage activities.
We have examined the activities of professional participants of the stock market. We must not forget that the law governs all relations between them, and assigned to duty on the exchange only experienced, reliable and qualified participants allows licensing activities.
Lesson 10.Stock market.
In this part of our financial training institute is considered the stock market and its theoretical foundations. We learn the story of the appearance of the stock exchange, faced with its basic terms and definitions will study the global stock indices and their role in investment decisions. Will be considered separately Russian stock indexes and features of the realities of Russian trade fondomvom market.
We get a basic idea of the Institute of the stock market by learning basic types of securities and investment features of each of them. We have studied the equity and debt securities, as well as their derivatives, will find out what their difference from each other. We have an exciting journey into the world of financial knowledge, as well davayzhe start right now.
The study of the stock market, like any other field of knowledge, we begin with a description of the main terms and concepts. The time has come to settle a series of new definitions that will help in the study of the rules of the stock market. For a start made a small excursion into the past. Once in Italy, came to the Belgian merchant Van der Burse, to found a profitable business. Over time, he has earned the respect of other merchants and bankers, and they began to hold meetings in the square in front of his house, and sometimes at his home. From the name of the merchant (Burse) and there was the word "exchange". But this "friendly" exchange lasted not long. Very quickly it turned into a separate entity called the Antwerp market, and its building is adorned with the inscription: "For the benefit of merchants all languages and nations." At this point originates history of the stock exchanges. Antwerp market functioning in order to facilitate transactions, familiarize visiting merchants with an assortment of goods and facilitate the negotiations. Its excellent location, great communication of its members and the rules under which trade relations were all equal, it quickly gained worldwide popularity.
Continuing acquainted with the history of the stock exchanges, it should be noted that the word "exchange" can have several different definitions, such as:
a set of concluded transactions on the site (in the phrase: "tomorrow's market will be quiet");
set of traders who regularly appear in the same place for mutual trade relations ("crowded market");
specific place where traders gather ("St. Petersburg Stock Exchange on the Avenue").
Today associated with the exchange last two definitions that are understood by the exchange or the place where the trade or merchants themselves meeting at which the transaction set and builds mutual trade relations. To say briefly, the market promotes contact of supply and demand, just like fairs and markets. Identify the similarities with the exchange fairs can be an example of wholesale trade. Between them, there are only three differences:
Fair participants are the people to move out from different cities and countries, while focusing on the exchange patrons tend to live near her location;
Fair is a big market where you can find a variety of goods of varying quality. And on the commodity or stock exchange goods, as such, no. It is stored in the warehouses, and appear only on the exchange of its characteristics;
Fair from time to time brings together supply and demand, while the market contributes to their constant contact.
There exists the following exchanges: securities and commodities, depending on the subject of transactions entered into by them. They have their own specific and particular properties. In this chapter, we will look at the stock exchanges.
The stock exchange is used for trading stocks and bonds of private organizations, public debt, bills, currencies and precious metals. The stock exchange is an intermediary in the securities market. She regularly participates in the auction, implementing activities for trade. In the following chapters, we will consider in more detail the meaning of "professional participant of the securities market." And now let's go ahead and get acquainted with the features we are considering type of exchanges.
The stock markets are closed to the SEC. This means that they can only trade participants in these exchanges. Russian law indicates that the stock exchange members can only be members of a professional securities market. The participants of the Stock Exchange are requirements: both the stock exchange and the law. Often, the law provides general requirements and regulations of their exchanges detail, exposing additional requirements. It also provides penalties carried out in violation of the rules and procedures of collection. But the fees levied by the stock exchange for the parties to transactions remain at their sole discretion. Exchange is the responsibility of the approval of the procedure and rules for admission to trading and, in fact, holding these trades.
The participants of the Stock Exchange have the following features:
serve as a dealer by trading on their own behalf and for their money, or on behalf of the customer and at his expense (performing brokerage functions);
participate in the management of the Stock Exchange and its meetings;
participate in the electoral process controls and exchange controls, as well as to be elected to any of the available positions.
On top of that stock market participants should be provided with information about the places and the time of the auction, and the list of quotations of securities that would be involved in trading on the exchange. The stock exchange must also ensure publicity of the results of trading sessions.
The following types of exchanges: securities and commodities that depend on the subject of transactions entered into by them. They have their own specific and particular properties. In this chapter we look at commodity exchanges.
Commodity exchange is designed to trade in food, raw materials and energy, as well as other products of mass consumption. Traded commodity exchange can use a wide range of goods, and may specialize in certain types of, for example, on oil, grain or fur. Commodity exchanges are of great importance in international trade relations. With them is the establishment of a market price for the goods.
Today, commodity exchanges remain in some countries, and their turnover is quite low. Usually they are a way of wholesale products of local importance, which is characterized by low concentrations of consumption, distribution and production. The largest commodity exchanges operate in Malaysia, India and Indonesia.
Commodity exchange is determined by the laws of the Russian Federation as an organization with a legal personality, which forms the wholesale market, regulating and organizing exchange trading, which is conducted as a public auction held by certain rules in a certain place.
Many functioning commodity exchanges operate in a continuous auction, taking place throughout the day. At this time, the sellers make offers, and buyers submit bids. The deal is when the interests of both sides are the same.
Money for some goods are paid at the same time with their delivery. But, increasingly on commodity exchanges are pending transaction on the terms of delivery when the goods are bought at a price set at the time of the transaction, but it comes after a certain time. It's - futures trading. In today's world, where market relations are developing with rapid speed, commodity exchanges have not lost their significance, their institution was transformed into the market to the goods.
Here we are familiar with the concept of exchange and learned about two kinds of exchanges, their features and basic functions. The other concepts with which we will introduce in the future will be associated only with the stock exchanges, the more common and comfortable. In the next chapter we look at the largest participants in the stock exchange.
Currently the world there are about 200 exchanges. The leading role in the global exchange turnover belongs to them. Major stock exchanges are also an indicator of the regulator and the state of the global economy. The appearance of species due to the presence of stock exchanges formed and developed commercial and consumer or industrial structure. Therefore, it is in countries that have had a great development in middle age and retained their potential, and are the most famous and largest stock exchange. Returning to the subject of consideration, we consider the most famous in our time, the types of stock exchanges.
In the U.S. there are 13 stock exchanges, among them are the largest in the world - the New York Stock Exchange (New York Stock Exchange, NYSE). At its turnover accounted for about half of the total turnover of foreign stock exchanges. New York Stock Exchange is located in Manhattan at Wall Street, 11. For several decades, it is a symbol of financial power of the United States and throughout the financial industry. It is in terms of its shares traded on industrial companies and is defined by well-known Dow Jones (Dow Jones Industrial Average) and the equally well-known index NYSE Composite.
An important role in the stock market in the U.S. has created in 1911, the American Stock Exchange (American Stock Exchange, AMEX). Since the nineties of the last century it began to be the world's first electronic trading using wireless terminals.
Also worth mentioning, and NASDAQ (National Association of Securities Dealers Automated Quotation) - OTC market, which specializes in high-tech stocks of companies (the sphere of the production of software, electronics, etc.).
22 stock exchanges operate in major UK cities such as London, Birmingham, Liverpool and Glasgow. We can single out the LSE (London Stock Exchange, LSE), which is the most international of all stock exchanges UK. LSE - one of the world's leading financial centers.
In Japan, is now 9 stock exchanges, among which the largest is the Tokyo Stock Exchange (Tokyo Stock Exchange). This is the old stock exchange (founded in 1878), with its own rules and traditions. Its main specialization - trade in shares of corporations and financial institutions.
In all of these countries have their own national system of exchanges based on the historical features that define a specific place in the stock exchange system and the functioning of the system as a whole. Well, what happens to the stock exchanges views with us? Currently in Russia there are more than 10 stock exchanges, but the main trades are conducted on only two of them:
The Russian Trading System (RTS) was founded in 1995 and is currently one of the largest stock exchanges in Russia. It RTS is recognized center of pricing of bonds and stocks a wide range of issuers. This site is served by a large proportion of foreign portfolio investment in the country, so that information about trading on the Russian Trading System is the source of the condition of the Russian securities market. But now the main trading volume gradually moving other leading Russian exchanges - MICEX.
Moscow Interbank Currency Exchange (MICEX) - the oldest (founded in 1992) and at the moment the main stock exchange in Russia. It is a universal trading platform on which operations are carried out in the stock and foreign exchange markets. It is the largest exchange in Russia, the CIS and Eastern Europe, on the basis of its national systems of trading in all major segments of the Russian financial market, namely the foreign exchange, equities and derivatives. MICEX also provides depository and settlement and clearing services to more than a thousand organizations that are members of the exchange market.
We have examined the basic concepts associated with stock exchanges. In the following chapters, you will be able to find out who exactly can make transactions on the Stock Exchange. In addition, we will touch upon the important question for us as an individual (the Internet trader) may carry out transactions on the stock exchange, and who it can help.
We get a basic idea of the Institute of the stock market by learning basic types of securities and investment features of each of them. We have studied the equity and debt securities, as well as their derivatives, will find out what their difference from each other. We have an exciting journey into the world of financial knowledge, as well davayzhe start right now.
The study of the stock market, like any other field of knowledge, we begin with a description of the main terms and concepts. The time has come to settle a series of new definitions that will help in the study of the rules of the stock market. For a start made a small excursion into the past. Once in Italy, came to the Belgian merchant Van der Burse, to found a profitable business. Over time, he has earned the respect of other merchants and bankers, and they began to hold meetings in the square in front of his house, and sometimes at his home. From the name of the merchant (Burse) and there was the word "exchange". But this "friendly" exchange lasted not long. Very quickly it turned into a separate entity called the Antwerp market, and its building is adorned with the inscription: "For the benefit of merchants all languages and nations." At this point originates history of the stock exchanges. Antwerp market functioning in order to facilitate transactions, familiarize visiting merchants with an assortment of goods and facilitate the negotiations. Its excellent location, great communication of its members and the rules under which trade relations were all equal, it quickly gained worldwide popularity.
Continuing acquainted with the history of the stock exchanges, it should be noted that the word "exchange" can have several different definitions, such as:
a set of concluded transactions on the site (in the phrase: "tomorrow's market will be quiet");
set of traders who regularly appear in the same place for mutual trade relations ("crowded market");
specific place where traders gather ("St. Petersburg Stock Exchange on the Avenue").
Today associated with the exchange last two definitions that are understood by the exchange or the place where the trade or merchants themselves meeting at which the transaction set and builds mutual trade relations. To say briefly, the market promotes contact of supply and demand, just like fairs and markets. Identify the similarities with the exchange fairs can be an example of wholesale trade. Between them, there are only three differences:
Fair participants are the people to move out from different cities and countries, while focusing on the exchange patrons tend to live near her location;
Fair is a big market where you can find a variety of goods of varying quality. And on the commodity or stock exchange goods, as such, no. It is stored in the warehouses, and appear only on the exchange of its characteristics;
Fair from time to time brings together supply and demand, while the market contributes to their constant contact.
There exists the following exchanges: securities and commodities, depending on the subject of transactions entered into by them. They have their own specific and particular properties. In this chapter, we will look at the stock exchanges.
The stock exchange is used for trading stocks and bonds of private organizations, public debt, bills, currencies and precious metals. The stock exchange is an intermediary in the securities market. She regularly participates in the auction, implementing activities for trade. In the following chapters, we will consider in more detail the meaning of "professional participant of the securities market." And now let's go ahead and get acquainted with the features we are considering type of exchanges.
The stock markets are closed to the SEC. This means that they can only trade participants in these exchanges. Russian law indicates that the stock exchange members can only be members of a professional securities market. The participants of the Stock Exchange are requirements: both the stock exchange and the law. Often, the law provides general requirements and regulations of their exchanges detail, exposing additional requirements. It also provides penalties carried out in violation of the rules and procedures of collection. But the fees levied by the stock exchange for the parties to transactions remain at their sole discretion. Exchange is the responsibility of the approval of the procedure and rules for admission to trading and, in fact, holding these trades.
The participants of the Stock Exchange have the following features:
serve as a dealer by trading on their own behalf and for their money, or on behalf of the customer and at his expense (performing brokerage functions);
participate in the management of the Stock Exchange and its meetings;
participate in the electoral process controls and exchange controls, as well as to be elected to any of the available positions.
On top of that stock market participants should be provided with information about the places and the time of the auction, and the list of quotations of securities that would be involved in trading on the exchange. The stock exchange must also ensure publicity of the results of trading sessions.
The following types of exchanges: securities and commodities that depend on the subject of transactions entered into by them. They have their own specific and particular properties. In this chapter we look at commodity exchanges.
Commodity exchange is designed to trade in food, raw materials and energy, as well as other products of mass consumption. Traded commodity exchange can use a wide range of goods, and may specialize in certain types of, for example, on oil, grain or fur. Commodity exchanges are of great importance in international trade relations. With them is the establishment of a market price for the goods.
Today, commodity exchanges remain in some countries, and their turnover is quite low. Usually they are a way of wholesale products of local importance, which is characterized by low concentrations of consumption, distribution and production. The largest commodity exchanges operate in Malaysia, India and Indonesia.
Commodity exchange is determined by the laws of the Russian Federation as an organization with a legal personality, which forms the wholesale market, regulating and organizing exchange trading, which is conducted as a public auction held by certain rules in a certain place.
Many functioning commodity exchanges operate in a continuous auction, taking place throughout the day. At this time, the sellers make offers, and buyers submit bids. The deal is when the interests of both sides are the same.
Money for some goods are paid at the same time with their delivery. But, increasingly on commodity exchanges are pending transaction on the terms of delivery when the goods are bought at a price set at the time of the transaction, but it comes after a certain time. It's - futures trading. In today's world, where market relations are developing with rapid speed, commodity exchanges have not lost their significance, their institution was transformed into the market to the goods.
Here we are familiar with the concept of exchange and learned about two kinds of exchanges, their features and basic functions. The other concepts with which we will introduce in the future will be associated only with the stock exchanges, the more common and comfortable. In the next chapter we look at the largest participants in the stock exchange.
Currently the world there are about 200 exchanges. The leading role in the global exchange turnover belongs to them. Major stock exchanges are also an indicator of the regulator and the state of the global economy. The appearance of species due to the presence of stock exchanges formed and developed commercial and consumer or industrial structure. Therefore, it is in countries that have had a great development in middle age and retained their potential, and are the most famous and largest stock exchange. Returning to the subject of consideration, we consider the most famous in our time, the types of stock exchanges.
In the U.S. there are 13 stock exchanges, among them are the largest in the world - the New York Stock Exchange (New York Stock Exchange, NYSE). At its turnover accounted for about half of the total turnover of foreign stock exchanges. New York Stock Exchange is located in Manhattan at Wall Street, 11. For several decades, it is a symbol of financial power of the United States and throughout the financial industry. It is in terms of its shares traded on industrial companies and is defined by well-known Dow Jones (Dow Jones Industrial Average) and the equally well-known index NYSE Composite.
An important role in the stock market in the U.S. has created in 1911, the American Stock Exchange (American Stock Exchange, AMEX). Since the nineties of the last century it began to be the world's first electronic trading using wireless terminals.
Also worth mentioning, and NASDAQ (National Association of Securities Dealers Automated Quotation) - OTC market, which specializes in high-tech stocks of companies (the sphere of the production of software, electronics, etc.).
22 stock exchanges operate in major UK cities such as London, Birmingham, Liverpool and Glasgow. We can single out the LSE (London Stock Exchange, LSE), which is the most international of all stock exchanges UK. LSE - one of the world's leading financial centers.
In Japan, is now 9 stock exchanges, among which the largest is the Tokyo Stock Exchange (Tokyo Stock Exchange). This is the old stock exchange (founded in 1878), with its own rules and traditions. Its main specialization - trade in shares of corporations and financial institutions.
In all of these countries have their own national system of exchanges based on the historical features that define a specific place in the stock exchange system and the functioning of the system as a whole. Well, what happens to the stock exchanges views with us? Currently in Russia there are more than 10 stock exchanges, but the main trades are conducted on only two of them:
The Russian Trading System (RTS) was founded in 1995 and is currently one of the largest stock exchanges in Russia. It RTS is recognized center of pricing of bonds and stocks a wide range of issuers. This site is served by a large proportion of foreign portfolio investment in the country, so that information about trading on the Russian Trading System is the source of the condition of the Russian securities market. But now the main trading volume gradually moving other leading Russian exchanges - MICEX.
Moscow Interbank Currency Exchange (MICEX) - the oldest (founded in 1992) and at the moment the main stock exchange in Russia. It is a universal trading platform on which operations are carried out in the stock and foreign exchange markets. It is the largest exchange in Russia, the CIS and Eastern Europe, on the basis of its national systems of trading in all major segments of the Russian financial market, namely the foreign exchange, equities and derivatives. MICEX also provides depository and settlement and clearing services to more than a thousand organizations that are members of the exchange market.
We have examined the basic concepts associated with stock exchanges. In the following chapters, you will be able to find out who exactly can make transactions on the Stock Exchange. In addition, we will touch upon the important question for us as an individual (the Internet trader) may carry out transactions on the stock exchange, and who it can help.
Lesson 9. Secrets of Money Management
This part of the Forex training is about how to manage capital in the Forex market. Trading currencies is not enough just to learn the basics of technical and fundamental analysis - should also be a clear pattern of management of funds on your deposit. Only together, these tools can lead you to a stable earnings in Forex.
In addition, we should not forget the material preceding sections - to build a profitable trading system requires a mechanism predictions based on historical data and a good psychological preparation. Thus, the secrets of successful trading include four components:
methods of analysis (technical and fundamental);
prediction system on historical data;
psychological training;
scheme management.
You can add to this list as intuition - it is not superfluous in any case. But in this part of the emphasis will be placed precisely on the schemes of capital management.
Martingale strategy has come to us from the world of gambling. Its essence is so trivial, it will be clear even to a child. For simplicity, the "Move" in the casino and "play" in the most common of his game - roulette. For those who are not familiar with a tape measure to clarify that betting on roulette, you can do both on the numbers and the odds. By chance here means loss of even and odd numbers of black and red numbers, numbers, certain sectors, a certain number, etc. In the context of our example, we are interested in a 50/50 chance.
Suppose that the minimum rate at roulette - $ 1. The essence of the martingale strategy is the following. We set the minimum bid for any of the 50/50 chance, suppose on black. If the outcome of throwing the ball has the opposite result (fallen red number), then double the bet and then bet on black. And so on until all the same not want us to fall color. In this case we have a profit again and reset the rate to the original value of $ 1.
It is easy to calculate that profit from such a series of bets will be only $ 1, regardless of the number of unsuccessful outcomes, and the rates for unsuccessful outcome are increasing exponentially. That is, if the red number fell to 6 times in a row, which is quite a common phenomenon in the casino, then to win $ 1 you will have to risk $ 64, but if it fell row 10 times, then $ 1024. As you can see, in this case, the rate commensurate with the size of the payout, but the essence of the martingale strategy is precisely this approach.
Casino is insured against loss due to fans of the strategy, limiting the maximum bet. Therefore, if the maximum bet on the roulette wheel is set at $ 1024, then the following unsuccessful outcome of rotation roulette destroy algorithm martingale strategy and will lead to the inevitable large losses.
An interesting fact is that the martingale strategy can be with no less successfully applied in the Forex market. Its essence is not changed - with each failed transaction we are increasing twice the current size of the lot and re-open the position. This approach is convenient to apply for micro accounts when increasing the size of the lot in geometric progression can not quickly lead to a lack of funds on deposit for your next transaction. By the way, one of the drawbacks of the martingale strategy is precisely the lack of money to cover the wagering. If the size of your deposit will not allow you after yet another failed deal to increase the size of the lot in half, then you will incur huge losses.
The more you make losing trades in a row, the less will be your gain relative to investment, ie percent return on equity (ROI, Return on Investment). With a very large number of failed transactions the process reaches the point of absurdity - to win a few cents, you need to risk a few hundred or even thousands of dollars. It should be noted that the use martingale strategy in its pure form in Forex is not necessary - it will lead to inevitable losses. After all, if it were that simple, then all traders would be millionaires. But to implement this strategy in the already developed a trading system is possible, and sometimes even necessary.
In conclusion, it is worth noting that there is a variety of the above strategy - the strategy of "soft" martingale. The gist of it is that when each failed transaction we increase rate is not twice, but on a number of interest, and at each profitable trade in proportion to its decline. This strategy insures the rapid emptying of the deposit, but not as fast as it returns losses classic version.
In addition to that described in the previous chapter martingale strategy, there is also a strategy "antimartingeyl", the essence of which is as follows. We are increasing at twice the rate (lot size) for each successful transaction and throw it in the minimum allowable bid for each failed.
Consider a simple example. We open position 8th mini lots and close the warrant at a loss. Then, following a strategy "antimartingeyl", we reset the "bid" and open the deal 1st mini lot. When a failed transaction we remain all the same 1st mini lot, and when you close the deal with a profit doubled lot of the open position and continue to trade under this scheme.
An interesting fact is that the strategy "antimartingeyl" gets its common name applied to the financial markets. Many traders embed this strategy in the current trade system in order to organize a competent scheme management. This approach often leads to a significant improvement in the trading system.
For the beginners it is recommended to use this strategy only after the creation of its own mechanical trading system. Otherwise, follow the rules of the strategy is quite difficult, because the emotional component of trading often outweighs the predetermined mathematical algorithm.
No serious organization does not allow itself to waste money right and left. One means of achieving the goal of the organization is the maximum possible reduction in production costs. In other words, any organization in some way produce for themselves the rules of money management. As you know, a lot of capital of large companies is more protected from losses than small private equity investor. Therefore, Internet trader like no other has to work out for themselves the postulates of money management and follow without questions.
Such is human psychology that, having the specific amount of money they want to spend either quickly or rapidly multiply. Neither one nor the other, they cause an increase in capital as the mismanagement of funds can only lead to ruin. Living without money from paycheck to paycheck and can, in fact, so do most Russians. But, reading material of this website, you are most likely looking for an answer to the question of how to break out of the vicious circle of the working week. Therefore, the first postulate in this way it should stand normally follow the postulates listed below:
Trading on the Forex market, do not use open positions more than 10-15% of the free equity. Opening the position of a large amount, you run the risk of margin call before the price will be developed in the desired direction.
When you open a position is always expose the stop-loss level and, if possible, take-profit. This approach in itself reflects a systematic and disciplined trading, which is the key to success in the financial markets. The level of stop-loss should not exceed 5% available to the trader's capital.
It is not recommended to open positions more than 5 different currency pairs, it is known that a person's attention can not simultaneously hold more than 4-6 objects.
Diversify risks and at the same time, do not open positions in currencies that have a high degree of correlation. This approach can be detrimental affect on your deposit.
With the proper level of training is desirable to trade in several financial markets at the same time, performing operations not only with the currency, but also equities, futures, options and precious metals. This will further diversify your risks, because, as you know, "do not put all your eggs in one basket."
Currencies of some countries are heavily dependent on the export of certain types of raw materials, ie, are trademarks, trade should therefore take this into account and use it to their advantage. It is not necessary to open the same position on the correlated trading tools.
We have listed the basic tenets of money management, but each of you has the right to develop its own inherent in his character and temperament. Regardless of the set of postulates you use in trade fair is one - it is their importance to trade in the Forex market.
Every trader sooner or later begins to excite the question of taxation received forex income, because as they say in the famous quote - "Pay taxes and live peacefully." Unfortunately, with the payment of taxes on the Forex is not that easy as we would like, so this part of our study we will examine this issue in detail.
At first glance, Forex refers to the financial markets, even as the stock market (stock market). At first glance it may seem that the principle of taxation is the same in both markets. In fact this is not true. Security - a financial asset and the Russian law very strictly prescribed all the nuances of working with this type of asset.
From the point of view of taxation of securities transactions should note the following. The tax is paid only when the security is sold, and if the bid price of the security to the tax agent is unknown, the seller is obliged itself to pay tax on the income of natural persons (PIT) and submit an income tax return. If the tax agent known purchase price of the securities prior to the sale, then he shall pay for the income tax and the client is obliged to provide him with a form 2-PIT on demand.
When it comes to the stock exchange, then in relation to private traders to purchase online securities are without supplies, with the obligatory reverse a sale. Hence, the broker knows the purchase price and the selling price of a financial asset and must itself pay tax to the State. Of course, this is true only brokers registered in the Russian Federation. Brokers registered, for example, in offshore areas, will not take you for any returns were - in this case, the burden of taxes fall on your shoulders at your own risk.
As for the Forex market, the concept of a financial asset as such it is not. There is a pure currency trading, but without its actual delivery. Moreover, trading on a mini account, a trader, in fact, playing against a broker, as a warrant for mini accounts in the interbank market is not exposed. Consequently, this type of activity can be safely classified as a species of gambling, and the broker is not much different from the bookmaker.
Until recently, the picture with the payment of taxes in the Forex market has been eroded. But the February 4, 2009 the Ministry of Finance of the Russian Federation issued a letter № 03-04-05-01/41 «On taxation of personal income tax on the same basis income of an individual, resulting from transactions in the market Forex». The text of the letter is provided below.
The Tax and Customs Tariff Policy considered the letter on taxation of income derived from transactions in Forex, and in accordance with Art. 34.2 of the Tax Code of the Russian Federation (hereinafter - the Code) explain the following.
In accordance with paragraph 1 of Art. 209 of the Code subject to taxation for individuals who are tax residents of the Russian Federation shall be income derived by them from sources in the Russian Federation and (or) from sources outside the Russian Federation.
In addition, Art. 210 of the Code establishes that in determining the tax base all the income of the taxpayer, he received both in cash and in kind, or the right to dispose of whom had arisen, as well as income in the form of material benefit, as determined in accordance with Art. 212 of the Code.
Thus, the income derived by the taxpayer from transactions in the Forex, is liable to tax on income of individuals on the same basis using rates set by Section 1, Art. 224 of the Code.
Deputy director
Department of Tax
Customs and Tariff Policy
N.A.KOMOVA
As you can see, in the government's attempt to find new sources of tax revenues to the treasury, under a broom and hit trade in the Forex market. Despite this, the tax is unlikely in the near future to arrange a "crackdown on traders", because to determine the fact of trading with a broker registered in an offshore zone is problematic. As for the Russian brokerage companies and banks, it is likely, such a tax would be paid automatically when you try to withdraw funds to the account. In the end, decide whether to pay tax or not, it's certainly you.
This part of the Forex training is about how to manage capital in the Forex market. Trading currencies is not enough just to learn the basics of technical and fundamental analysis - should also be a clear pattern of management of funds on your deposit. Only together, these tools can lead you to a stable earnings in Forex.
In addition, we should not forget the material preceding sections - to build a profitable trading system requires a mechanism predictions based on historical data and a good psychological preparation. Thus, the secrets of successful trading include four components:
methods of analysis (technical and fundamental);
prediction system on historical data;
psychological training;
scheme management.
You can add to this list as intuition - it is not superfluous in any case. But in this part of the emphasis will be placed precisely on the schemes of capital management.
Martingale strategy has come to us from the world of gambling. Its essence is so trivial, it will be clear even to a child. For simplicity, the "Move" in the casino and "play" in the most common of his game - roulette. For those who are not familiar with a tape measure to clarify that betting on roulette, you can do both on the numbers and the odds. By chance here means loss of even and odd numbers of black and red numbers, numbers, certain sectors, a certain number, etc. In the context of our example, we are interested in a 50/50 chance.
Suppose that the minimum rate at roulette - $ 1. The essence of the martingale strategy is the following. We set the minimum bid for any of the 50/50 chance, suppose on black. If the outcome of throwing the ball has the opposite result (fallen red number), then double the bet and then bet on black. And so on until all the same not want us to fall color. In this case we have a profit again and reset the rate to the original value of $ 1.
It is easy to calculate that profit from such a series of bets will be only $ 1, regardless of the number of unsuccessful outcomes, and the rates for unsuccessful outcome are increasing exponentially. That is, if the red number fell to 6 times in a row, which is quite a common phenomenon in the casino, then to win $ 1 you will have to risk $ 64, but if it fell row 10 times, then $ 1024. As you can see, in this case, the rate commensurate with the size of the payout, but the essence of the martingale strategy is precisely this approach.
Casino is insured against loss due to fans of the strategy, limiting the maximum bet. Therefore, if the maximum bet on the roulette wheel is set at $ 1024, then the following unsuccessful outcome of rotation roulette destroy algorithm martingale strategy and will lead to the inevitable large losses.
An interesting fact is that the martingale strategy can be with no less successfully applied in the Forex market. Its essence is not changed - with each failed transaction we are increasing twice the current size of the lot and re-open the position. This approach is convenient to apply for micro accounts when increasing the size of the lot in geometric progression can not quickly lead to a lack of funds on deposit for your next transaction. By the way, one of the drawbacks of the martingale strategy is precisely the lack of money to cover the wagering. If the size of your deposit will not allow you after yet another failed deal to increase the size of the lot in half, then you will incur huge losses.
The more you make losing trades in a row, the less will be your gain relative to investment, ie percent return on equity (ROI, Return on Investment). With a very large number of failed transactions the process reaches the point of absurdity - to win a few cents, you need to risk a few hundred or even thousands of dollars. It should be noted that the use martingale strategy in its pure form in Forex is not necessary - it will lead to inevitable losses. After all, if it were that simple, then all traders would be millionaires. But to implement this strategy in the already developed a trading system is possible, and sometimes even necessary.
In conclusion, it is worth noting that there is a variety of the above strategy - the strategy of "soft" martingale. The gist of it is that when each failed transaction we increase rate is not twice, but on a number of interest, and at each profitable trade in proportion to its decline. This strategy insures the rapid emptying of the deposit, but not as fast as it returns losses classic version.
In addition to that described in the previous chapter martingale strategy, there is also a strategy "antimartingeyl", the essence of which is as follows. We are increasing at twice the rate (lot size) for each successful transaction and throw it in the minimum allowable bid for each failed.
Consider a simple example. We open position 8th mini lots and close the warrant at a loss. Then, following a strategy "antimartingeyl", we reset the "bid" and open the deal 1st mini lot. When a failed transaction we remain all the same 1st mini lot, and when you close the deal with a profit doubled lot of the open position and continue to trade under this scheme.
An interesting fact is that the strategy "antimartingeyl" gets its common name applied to the financial markets. Many traders embed this strategy in the current trade system in order to organize a competent scheme management. This approach often leads to a significant improvement in the trading system.
For the beginners it is recommended to use this strategy only after the creation of its own mechanical trading system. Otherwise, follow the rules of the strategy is quite difficult, because the emotional component of trading often outweighs the predetermined mathematical algorithm.
No serious organization does not allow itself to waste money right and left. One means of achieving the goal of the organization is the maximum possible reduction in production costs. In other words, any organization in some way produce for themselves the rules of money management. As you know, a lot of capital of large companies is more protected from losses than small private equity investor. Therefore, Internet trader like no other has to work out for themselves the postulates of money management and follow without questions.
Such is human psychology that, having the specific amount of money they want to spend either quickly or rapidly multiply. Neither one nor the other, they cause an increase in capital as the mismanagement of funds can only lead to ruin. Living without money from paycheck to paycheck and can, in fact, so do most Russians. But, reading material of this website, you are most likely looking for an answer to the question of how to break out of the vicious circle of the working week. Therefore, the first postulate in this way it should stand normally follow the postulates listed below:
Trading on the Forex market, do not use open positions more than 10-15% of the free equity. Opening the position of a large amount, you run the risk of margin call before the price will be developed in the desired direction.
When you open a position is always expose the stop-loss level and, if possible, take-profit. This approach in itself reflects a systematic and disciplined trading, which is the key to success in the financial markets. The level of stop-loss should not exceed 5% available to the trader's capital.
It is not recommended to open positions more than 5 different currency pairs, it is known that a person's attention can not simultaneously hold more than 4-6 objects.
Diversify risks and at the same time, do not open positions in currencies that have a high degree of correlation. This approach can be detrimental affect on your deposit.
With the proper level of training is desirable to trade in several financial markets at the same time, performing operations not only with the currency, but also equities, futures, options and precious metals. This will further diversify your risks, because, as you know, "do not put all your eggs in one basket."
Currencies of some countries are heavily dependent on the export of certain types of raw materials, ie, are trademarks, trade should therefore take this into account and use it to their advantage. It is not necessary to open the same position on the correlated trading tools.
We have listed the basic tenets of money management, but each of you has the right to develop its own inherent in his character and temperament. Regardless of the set of postulates you use in trade fair is one - it is their importance to trade in the Forex market.
Taxation on Forex
Every trader sooner or later begins to excite the question of taxation received forex income, because as they say in the famous quote - "Pay taxes and live peacefully." Unfortunately, with the payment of taxes on the Forex is not that easy as we would like, so this part of our study we will examine this issue in detail.
At first glance, Forex refers to the financial markets, even as the stock market (stock market). At first glance it may seem that the principle of taxation is the same in both markets. In fact this is not true. Security - a financial asset and the Russian law very strictly prescribed all the nuances of working with this type of asset.
From the point of view of taxation of securities transactions should note the following. The tax is paid only when the security is sold, and if the bid price of the security to the tax agent is unknown, the seller is obliged itself to pay tax on the income of natural persons (PIT) and submit an income tax return. If the tax agent known purchase price of the securities prior to the sale, then he shall pay for the income tax and the client is obliged to provide him with a form 2-PIT on demand.
When it comes to the stock exchange, then in relation to private traders to purchase online securities are without supplies, with the obligatory reverse a sale. Hence, the broker knows the purchase price and the selling price of a financial asset and must itself pay tax to the State. Of course, this is true only brokers registered in the Russian Federation. Brokers registered, for example, in offshore areas, will not take you for any returns were - in this case, the burden of taxes fall on your shoulders at your own risk.
As for the Forex market, the concept of a financial asset as such it is not. There is a pure currency trading, but without its actual delivery. Moreover, trading on a mini account, a trader, in fact, playing against a broker, as a warrant for mini accounts in the interbank market is not exposed. Consequently, this type of activity can be safely classified as a species of gambling, and the broker is not much different from the bookmaker.
Until recently, the picture with the payment of taxes in the Forex market has been eroded. But the February 4, 2009 the Ministry of Finance of the Russian Federation issued a letter № 03-04-05-01/41 «On taxation of personal income tax on the same basis income of an individual, resulting from transactions in the market Forex». The text of the letter is provided below.
The Tax and Customs Tariff Policy considered the letter on taxation of income derived from transactions in Forex, and in accordance with Art. 34.2 of the Tax Code of the Russian Federation (hereinafter - the Code) explain the following.
In accordance with paragraph 1 of Art. 209 of the Code subject to taxation for individuals who are tax residents of the Russian Federation shall be income derived by them from sources in the Russian Federation and (or) from sources outside the Russian Federation.
In addition, Art. 210 of the Code establishes that in determining the tax base all the income of the taxpayer, he received both in cash and in kind, or the right to dispose of whom had arisen, as well as income in the form of material benefit, as determined in accordance with Art. 212 of the Code.
Thus, the income derived by the taxpayer from transactions in the Forex, is liable to tax on income of individuals on the same basis using rates set by Section 1, Art. 224 of the Code.
Deputy director
Department of Tax
Customs and Tariff Policy
N.A.KOMOVA
As you can see, in the government's attempt to find new sources of tax revenues to the treasury, under a broom and hit trade in the Forex market. Despite this, the tax is unlikely in the near future to arrange a "crackdown on traders", because to determine the fact of trading with a broker registered in an offshore zone is problematic. As for the Russian brokerage companies and banks, it is likely, such a tax would be paid automatically when you try to withdraw funds to the account. In the end, decide whether to pay tax or not, it's certainly you.
вторник, 28 мая 2013 г.
Lesson 7: Fundamental Analysis
In this part of our study we will look at Forex fundamental analysis, which is the study of macroeconomic phenomena, political news and other events in the world that have an impact on exchange rates. Proponents of fundamental analysis of forex market are of the opinion that the primary in relation to changes in exchange rates is the event (news). It entails a chain of trading on Forex, which in turn is reflected in the change in exchange rates. As can be seen, the fundamentalists, unlike the followers of technical analysis, have diametrically opposed views on the source of the price movement. After all, as we remember, technical analysts are of the opinion that future changes in prices laid solely at their historical trends.
In order to become a guru of fundamental analysis may take many years of studying such disciplines as "Economy", "Finance and Credit", "International Economic Relations". Of course, that ordinary internet trader has neither the time nor the inclination to spend as much time training. Therefore, the majority of Forex traders have only a superficial understanding of the basics of fundamental analysis - in the course of their work in the foreign exchange market, they listened to the views of professional financial analysts. Analysts' forecasts are published in newspapers and magazines, they are referred to in the financial announcements on special television and radio channels. Most brokers on the Internet provide their clients with access to information systems that publishes information of a fundamental nature. Such systems include Reuter, Dow Jones Telerate, Bloomberg, etc.
But despite the abundance of Forex market analysts, to understand the basics of fundamental analysis is necessary for every online trader. Drawing an analogy, let's say that you can not understand the device the car, but you have to understand the principles of management and they know the rules of the road. Otherwise, you've done a lot of trouble on the road - the same is true for the Forex market. Before you start trading for real money you need to clearly understand what is the role of fundamental analysis in the prediction of changes in exchange rates.
As we have said, the basis of fundamental analysis is an event. Events can be classified as macro-economic, political, natural, etc. Examples of events include also rumors that at times can lead to perceptible changes in the Forex currency quotes, especially if they come from a well-known and influential people in the world politics.
Events can be divided into two broad categories: the expected and random. The expected time of occurrence of the event is known in advance. These events include the output of various economic indicators, the onset of various seasonal events. For example, the trade balance data (trade balance) in the United States is published in the second half of each month for the last month, so is the expected event. By random events include natural disasters, political upheaval, acts of terrorism. Such events are usually instantly recognized on the exchange rate dynamics involved in these countries. This once again underlines the fact that trading in the Forex, you must have good information support to not miss an important global event.
An interesting fact is that almost all economic indicators for a given country are published with a delay - for the last or before last reporting period. This means that the estimated value of the index can be calculated prior to the date of its official publication. Typically, the world's leading financial analysts are speculating on such indicators and Forex market at the time of their release has already adapted to the expected value. Thus, if the published values is the same as predicted, the dynamics of the exchange rate does not change. Interesting things happen in Forex, if the published values of economic indicators is very different from the forecast, especially if the difference is going in the opposite direction. In such cases, the more unpredictable - the faster the reaction of the market. It is important to understand that the financial markets, including the Forex market is not so much the value of the value of the economic indicator, as its deviation from the expected value.
Various fundamental news have different effects on the dynamics of exchange rates. For the duration of impact on the Forex market news to classify on the news with a long cycle and short cycle life. Long cycle lasting from a few weeks to several years. This cycle is caused by factors in the general state of the economy, such as the dynamics of inflation, unemployment, interest rates. On the basis of such news can build strategic forecasts of exchange rate changes to long-term investment. Short cycle lasts several minutes to several days and can be caused by a release of some not very important economic indicators and various political events.
Exchange rate and its economic condition of the country are interconnected. This relationship can be associated only with a neural network - it is so complex that it is unlikely for it can display a single "magic" formula. Fundamental analysis aims to systematize this relationship, but sometimes it leaves more questions than answers. Forex market does not always behave as described in textbooks - often leads to a news outlet opposite reaction. We can only with a certain probability to talk about this or that statement. And, nevertheless, have more or less working system - it's better than nothing. Fundamental analysis is important when analyzing the forex market. Together with the technical analysis it provides Internet trader a distinct advantage over other, less knowledgeable participants in the FX market. Understanding the basics of macroeconomics, financial systems, devices biggest powers in the world - an important step on the way to becoming a successful Forex trader. Subsequent chapters Portal Forex Arena will focus on key aspects of fundamental analysis.
Forex reaction to the political instability
The political developments worldwide, usually immediately find their resonance in the international foreign exchange market. Despite the fact that such events directly from foreign currency transactions are not related, psychological sentiment of currency exchange their effect on the painting of currency rates. The world's main reserve currency today is the U.S. dollar, so all the events affecting in any way the American politicians or military operations of the U.S. Army are reflected on the balance of demand and supply of the U.S. currency, which means that almost all traded on the Forex currency pairs.
July 19, 1990 The Iraqi army invaded Kuwait, triggering Middle East crisis. In response, the U.S. military command has decided to go to war in the Persian Gulf. January 17, 1991 began "Operation Desert Storm". As part of Operation Joint UN army began to put missile and bomb strikes on the Iraqi army. Forex market reacted to the strengthening of the U.S. dollar. February 24th launch a ground phase of the operation, and on February 27 the Iraqi army was defeated, and Kuwait was liberated. The forex market responded with an even stronger appreciation of the U.S. dollar relative to other currencies.
Events August 19, 1991 marked the collapse of the Soviet Union and in the annals of history were recorded as "August coup." USSR at the time of the event was the largest debtor in Germany, so the Forex market on that day the German mark collapsed. But once the debts have been recognized by Russia, the course of German Marks returned to their former positions.
October 30, 1998 NATO air forces begin to check flights over Kosovo. November 13, 1998 NATO decides to drop troops in Macedonia in order to assist the observers of the OSCE Mission in Kosovo, if necessary. The U.S. dollar during this period on Forex is growing significantly. 24 March 1999, NATO launched the first phase of the allied operation "Allied Force" with the bombing strategic targets in Serbia and Montenegro, resulting in Belgrade broke off diplomatic relations with key NATO countries - the U.S., Germany, France and Britain. June 9, 1999 between the Serbian military and NATO signed an agreement on the border of Yugoslavia and Macedonia, and June 10, 1999 NATO Secretary General orders the suspension of the bombing. The UN Security Council adopts a resolution to ensure international security presence in Kosovo. All of these events were accompanied by certain strengthening of the U.S. dollar in forex trading.
Events 1998-1999,. around the scandal of sexual relations existing at the time of U.S. President Bill Clinton with intern Monica Lewinsky were reflected in the Forex market. On the agenda of the November 19, 1998 in the House of Representatives was considered the prosecution of Bill Clinton's false testimony at the trial, and a number of other charges. Charges on the two issues were supported and forwarded to the Senate panel of judges, which took place January 7, 1999 On the agenda, thus, the question of impeachment of the President. Because of the uncertainty as to who will be the new president, and what will be the policy of the U.S., the dollar on the Forex market has fallen sharply. The Senate rejected the allegations on both issues, retaining the Bill Clinton presidency, but about the love affairs of the American President has had a long talk in the world.
May 12, 1999 came the news of the resignation of the Prime Minister, EM Primakov stressed that political instability in Russia. As a result of the euro against the U.S. dollar on the Forex dropped significantly. A little later came the news that the U.S. Treasury Secretary Robert Rubin resigned instability that has characterized the U.S. financial system. The forex market has reacted to it reversed the appreciation of the euro relative to the U.S. dollar, that is, the fall of the dollar.
September 11, 2001 shocked the world of the terrorist act in the United States, which claimed thousands of lives. Immediately after the terrorist attack on the U.S. dollar Forex plummeted. The next day trading was suspended, and the day was declared in the United States as non-working. In the next few days the market has consolidated.
August 15, 2003 after the official close of trading in the U.S. as a result of the human factor in large power plants the U.S. and Canada, there have been failures, resulting in the largest cities of the two countries practically left without electricity. While still considered a terrorist act version, the rate of the U.S. dollar against the euro in the Forex market fell nearly 100 points, but after the resolution of the situation has returned to its previous level.
March 21, 2003, the war in Iraq. Initially, the expectation that the military operation forces the anti-Iraq coalition goes according to plan, a positive impact on the U.S. dollar in the foreign exchange market. Positive impact on the dollar and the publication of data on the level of inflation in the United States. But subsequent events of March led to a decline in the U.S. dollar. Analysts attributed this drop in the market's fears that the military presence in Iraq, coalition forces could take longer schedule, which will result in an increase in U.S. government spending on the military. The negative impact on the dollar provided reports on the losses of the American army and reinforce the fighting. But when April 3, 2003 in the U.S. media reports suggested that the coalition forces are located a few kilometers from Baghdad, then there is hope for a speedy end to the possible military campaign in Iraq, causing the dollar to Forex stabilized.
February 20, 2004 exchange rate of the U.S. dollar against the Japanese Yen rose nearly 250 points. Precipitous drop in the yen, analysts attributed the level of preparedness of the Japanese government security forces to the maximum level in connection with the bombings near the building of the Ministry of Defence. Many then described these bombings as a protest against the deployment of Japanese troops to Iraq.
As we can see, the Forex market is very thin mechanism and responds to the events of the political instability in the world. This is not surprising, because such events are inextricably linked to the global economy and its future development. They quickly spread throughout the world by the media. Keep abreast of world events - an integral part of trading on any professional Forex trader. Therefore, if you do not want to be caught off guard, so stay tuned!
In this part of our study we will look at Forex fundamental analysis, which is the study of macroeconomic phenomena, political news and other events in the world that have an impact on exchange rates. Proponents of fundamental analysis of forex market are of the opinion that the primary in relation to changes in exchange rates is the event (news). It entails a chain of trading on Forex, which in turn is reflected in the change in exchange rates. As can be seen, the fundamentalists, unlike the followers of technical analysis, have diametrically opposed views on the source of the price movement. After all, as we remember, technical analysts are of the opinion that future changes in prices laid solely at their historical trends.
In order to become a guru of fundamental analysis may take many years of studying such disciplines as "Economy", "Finance and Credit", "International Economic Relations". Of course, that ordinary internet trader has neither the time nor the inclination to spend as much time training. Therefore, the majority of Forex traders have only a superficial understanding of the basics of fundamental analysis - in the course of their work in the foreign exchange market, they listened to the views of professional financial analysts. Analysts' forecasts are published in newspapers and magazines, they are referred to in the financial announcements on special television and radio channels. Most brokers on the Internet provide their clients with access to information systems that publishes information of a fundamental nature. Such systems include Reuter, Dow Jones Telerate, Bloomberg, etc.
But despite the abundance of Forex market analysts, to understand the basics of fundamental analysis is necessary for every online trader. Drawing an analogy, let's say that you can not understand the device the car, but you have to understand the principles of management and they know the rules of the road. Otherwise, you've done a lot of trouble on the road - the same is true for the Forex market. Before you start trading for real money you need to clearly understand what is the role of fundamental analysis in the prediction of changes in exchange rates.
As we have said, the basis of fundamental analysis is an event. Events can be classified as macro-economic, political, natural, etc. Examples of events include also rumors that at times can lead to perceptible changes in the Forex currency quotes, especially if they come from a well-known and influential people in the world politics.
Events can be divided into two broad categories: the expected and random. The expected time of occurrence of the event is known in advance. These events include the output of various economic indicators, the onset of various seasonal events. For example, the trade balance data (trade balance) in the United States is published in the second half of each month for the last month, so is the expected event. By random events include natural disasters, political upheaval, acts of terrorism. Such events are usually instantly recognized on the exchange rate dynamics involved in these countries. This once again underlines the fact that trading in the Forex, you must have good information support to not miss an important global event.
An interesting fact is that almost all economic indicators for a given country are published with a delay - for the last or before last reporting period. This means that the estimated value of the index can be calculated prior to the date of its official publication. Typically, the world's leading financial analysts are speculating on such indicators and Forex market at the time of their release has already adapted to the expected value. Thus, if the published values is the same as predicted, the dynamics of the exchange rate does not change. Interesting things happen in Forex, if the published values of economic indicators is very different from the forecast, especially if the difference is going in the opposite direction. In such cases, the more unpredictable - the faster the reaction of the market. It is important to understand that the financial markets, including the Forex market is not so much the value of the value of the economic indicator, as its deviation from the expected value.
Various fundamental news have different effects on the dynamics of exchange rates. For the duration of impact on the Forex market news to classify on the news with a long cycle and short cycle life. Long cycle lasting from a few weeks to several years. This cycle is caused by factors in the general state of the economy, such as the dynamics of inflation, unemployment, interest rates. On the basis of such news can build strategic forecasts of exchange rate changes to long-term investment. Short cycle lasts several minutes to several days and can be caused by a release of some not very important economic indicators and various political events.
Exchange rate and its economic condition of the country are interconnected. This relationship can be associated only with a neural network - it is so complex that it is unlikely for it can display a single "magic" formula. Fundamental analysis aims to systematize this relationship, but sometimes it leaves more questions than answers. Forex market does not always behave as described in textbooks - often leads to a news outlet opposite reaction. We can only with a certain probability to talk about this or that statement. And, nevertheless, have more or less working system - it's better than nothing. Fundamental analysis is important when analyzing the forex market. Together with the technical analysis it provides Internet trader a distinct advantage over other, less knowledgeable participants in the FX market. Understanding the basics of macroeconomics, financial systems, devices biggest powers in the world - an important step on the way to becoming a successful Forex trader. Subsequent chapters Portal Forex Arena will focus on key aspects of fundamental analysis.
Forex reaction to the political instability
The political developments worldwide, usually immediately find their resonance in the international foreign exchange market. Despite the fact that such events directly from foreign currency transactions are not related, psychological sentiment of currency exchange their effect on the painting of currency rates. The world's main reserve currency today is the U.S. dollar, so all the events affecting in any way the American politicians or military operations of the U.S. Army are reflected on the balance of demand and supply of the U.S. currency, which means that almost all traded on the Forex currency pairs.
July 19, 1990 The Iraqi army invaded Kuwait, triggering Middle East crisis. In response, the U.S. military command has decided to go to war in the Persian Gulf. January 17, 1991 began "Operation Desert Storm". As part of Operation Joint UN army began to put missile and bomb strikes on the Iraqi army. Forex market reacted to the strengthening of the U.S. dollar. February 24th launch a ground phase of the operation, and on February 27 the Iraqi army was defeated, and Kuwait was liberated. The forex market responded with an even stronger appreciation of the U.S. dollar relative to other currencies.
Events August 19, 1991 marked the collapse of the Soviet Union and in the annals of history were recorded as "August coup." USSR at the time of the event was the largest debtor in Germany, so the Forex market on that day the German mark collapsed. But once the debts have been recognized by Russia, the course of German Marks returned to their former positions.
October 30, 1998 NATO air forces begin to check flights over Kosovo. November 13, 1998 NATO decides to drop troops in Macedonia in order to assist the observers of the OSCE Mission in Kosovo, if necessary. The U.S. dollar during this period on Forex is growing significantly. 24 March 1999, NATO launched the first phase of the allied operation "Allied Force" with the bombing strategic targets in Serbia and Montenegro, resulting in Belgrade broke off diplomatic relations with key NATO countries - the U.S., Germany, France and Britain. June 9, 1999 between the Serbian military and NATO signed an agreement on the border of Yugoslavia and Macedonia, and June 10, 1999 NATO Secretary General orders the suspension of the bombing. The UN Security Council adopts a resolution to ensure international security presence in Kosovo. All of these events were accompanied by certain strengthening of the U.S. dollar in forex trading.
Events 1998-1999,. around the scandal of sexual relations existing at the time of U.S. President Bill Clinton with intern Monica Lewinsky were reflected in the Forex market. On the agenda of the November 19, 1998 in the House of Representatives was considered the prosecution of Bill Clinton's false testimony at the trial, and a number of other charges. Charges on the two issues were supported and forwarded to the Senate panel of judges, which took place January 7, 1999 On the agenda, thus, the question of impeachment of the President. Because of the uncertainty as to who will be the new president, and what will be the policy of the U.S., the dollar on the Forex market has fallen sharply. The Senate rejected the allegations on both issues, retaining the Bill Clinton presidency, but about the love affairs of the American President has had a long talk in the world.
May 12, 1999 came the news of the resignation of the Prime Minister, EM Primakov stressed that political instability in Russia. As a result of the euro against the U.S. dollar on the Forex dropped significantly. A little later came the news that the U.S. Treasury Secretary Robert Rubin resigned instability that has characterized the U.S. financial system. The forex market has reacted to it reversed the appreciation of the euro relative to the U.S. dollar, that is, the fall of the dollar.
September 11, 2001 shocked the world of the terrorist act in the United States, which claimed thousands of lives. Immediately after the terrorist attack on the U.S. dollar Forex plummeted. The next day trading was suspended, and the day was declared in the United States as non-working. In the next few days the market has consolidated.
August 15, 2003 after the official close of trading in the U.S. as a result of the human factor in large power plants the U.S. and Canada, there have been failures, resulting in the largest cities of the two countries practically left without electricity. While still considered a terrorist act version, the rate of the U.S. dollar against the euro in the Forex market fell nearly 100 points, but after the resolution of the situation has returned to its previous level.
March 21, 2003, the war in Iraq. Initially, the expectation that the military operation forces the anti-Iraq coalition goes according to plan, a positive impact on the U.S. dollar in the foreign exchange market. Positive impact on the dollar and the publication of data on the level of inflation in the United States. But subsequent events of March led to a decline in the U.S. dollar. Analysts attributed this drop in the market's fears that the military presence in Iraq, coalition forces could take longer schedule, which will result in an increase in U.S. government spending on the military. The negative impact on the dollar provided reports on the losses of the American army and reinforce the fighting. But when April 3, 2003 in the U.S. media reports suggested that the coalition forces are located a few kilometers from Baghdad, then there is hope for a speedy end to the possible military campaign in Iraq, causing the dollar to Forex stabilized.
February 20, 2004 exchange rate of the U.S. dollar against the Japanese Yen rose nearly 250 points. Precipitous drop in the yen, analysts attributed the level of preparedness of the Japanese government security forces to the maximum level in connection with the bombings near the building of the Ministry of Defence. Many then described these bombings as a protest against the deployment of Japanese troops to Iraq.
As we can see, the Forex market is very thin mechanism and responds to the events of the political instability in the world. This is not surprising, because such events are inextricably linked to the global economy and its future development. They quickly spread throughout the world by the media. Keep abreast of world events - an integral part of trading on any professional Forex trader. Therefore, if you do not want to be caught off guard, so stay tuned!
Lesson 6: The Parabolic SAR (Parabolic Stop and Reverse)
The next indicator of technical analysis, you should pay attention to the process of learning Forex - Parabolic SAR (parabolic stop and reversal, SAR). This indicator was developed by Welles Wilder (J. Welles Wilder Jr.), The famous trader who made a great contribution to the research and development of the technical analysis of financial markets. Applying this indicator properly, you will be able to significantly reduce the number of trading errors, and, consequently, increase profits.
Parabolic SAR indicator system got its name because of the form that it takes a curve on the chart. The parabolic form of the indicator is explained by a mathematical formula for its calculation, which will be discussed below. An important condition for the application of this indicator in the analysis of the Forex market is the presence on the roar explicit trend - in this case, the indicator may give a good signal weakening trend or its reversal, ie good signal for closing position in one direction and its possible opening to another. If the price fluctuation occurs in a horizontal range, this indicator can give a lot of false signals. So, before you use this indicator and rely on its signals should confirm the existing trend in the market analyzed by currency pair. You can use these tools of technical analysis, examined above, and the levels of support and resistance lines, shapes, trend reversal, trend continuation patterns, moving averages, Bollinger bands, convergence-divergence of moving averages, etc.
On the example of quotation USD / JPY indicator Parabolic SAR system is shown in Fig.
As can be seen from the figure, the indicator is the curve formed by dots. Each dot corresponds to your sales period depending on the scale of the price chart, but, as a rule, are used daily charts. If the curve indicator is under the price chart, it indicates an upward trend. If the curve is above the indicator price indicator, indicates a downward trend. In that moment, when the curve crosses the indicator price chart trend strength decreases and there is a high probability of a reversal. Approximation of parabolic curve SAR system to a price chart indicates weakening trend. The distance between adjacent points of the indicator also symbolize the strength of the trend - the greater the distance, the stronger the trend. But remember that the trend may reverse at high speed!
As you can see, the curve of the indicator is not continuous. At the time of intersection of the curve with the price schedule, the next point indicator as it jumps in the opposite direction relative to the price chart. This behavior of the parabolic curve of SAR is sufficiently precise algorithm of its construction. This algorithm is based on two concepts: an extreme point (extreme point) and the acceleration factor (acceleration factor). At the extreme point of the uptrend is considered the highest price recorded in the trend. On a downward trend this point is a minimum fixed price. As soon as the indicator of the parabolic SAR system signals a trend reversal, the algorithm calculating extreme reversed. When a signal occurs, the acceleration factor is reset to the initial value for which in practice is often used value of 0.02, ie 2%. When the closing price of the current trading period on an uptrend surpasses last committed point of extremum, this ratio increases to 2%, and the value of extreme updated. The same increase in acceleration factor and updated extreme occurs if the closing price of the current trading period is less than the extreme points on a downward trend. The indicator is calculated ahead, ie data for the current day are used in the calculation of the indicator value tomorrow. The mathematical formula for calculating the indicator parabolic SAR system is recursive and has the form:
SAR (n +1) = SAR (n) + AF * (EP - SAR (n)),
where the SAR (n +1) - the value of the indicator of tomorrow, SAR (n) - an indicator of the current value of the day, AF - accelerating factor and EP - the last committed an extreme point. In addition, in the process of calculation of the indicator used by several additional conditions:
if its value is tomorrow's SAR (n +1) is within or outside the price range today (n) or yesterday (n-1) of the trading day, then it is set to the lower limit of this range. For example, if an upward trend, the indicator value is more than the minimum price fixed for the last two days, including today, the indicator takes the value of the fixed minimum price, a down trend the opposite is true;
if its value is tomorrow's SAR (n +1) is within or outside the price range of tomorrow, it is a signal of a trend reversal, and the algorithm for calculating the indicator to toggle the "phase".
Once there is a change trend that switch "phase" of the algorithm, the value of the indicator parabolic SAR system for the new trend set in the last committed point of extreme EP old trend. The very extreme point at this point is set to the maxim, if the new trend - rising in the minimum point, if the new trend - downward. Acceleration factor AF is reset to the initial value of 2%.
Parabolic SAR indicator system can be used as a stop-loss signal in the bidding process in the Forex market. The value of technical indicators are always lagging behind the price, so at the time of entry into the market can be easily set stop-loss in the current value of the indicator. But first make sure that such an approach does not violate your strategy for managing capital in trading on the Forex market. Parabolic SAR indicator system can also be used as both a take-profit signals at a time when the curve indicator closely approaching the price chart or crosses it. About types of trading signals will still be covered in later chapters Portal in learning forex trading.
An important observation, as already noticed, is that this indicator can give a lot of false alarms, if trading in the currency pair are in a horizontal range. This indicator should be used only if the trend can be confirmed by other technical analysis tools. Generally speaking, Internet trading should never be accompanied by a decision on the basis of only one tool of technical analysis - always use a few such tools. Take your trading decisions to open or close positions only if the most used tools you give the same trading signal.
After crossing the indicator curve parabolic SAR system with a price schedule, wait until the indicator next few points will confirm the formation of a new trend, and only open position. Close your position at the time when the curve indicator closely approaching the price chart and crosses it. The indicator gives a signal with a delay, so if you close your late position, you will lose some profit. Keep in mind that after the formation of a new trend is confirmed by his power distance between adjacent points of the curve indicator - the more such a distance, the more pronounced trend. Typically, the acceleration of the trend occurs after 4-5 points, so this acceleration can be a good confirmation of the correctness of the decision in the course of trade of trading on the Forex market. To enter the market at a time when the trend has already gained some strength, can be dangerous because of the high probability of the return of corrective movement or trend reversal. So it is risky to open positions at a time when the distance between the points of the curve indicator parabolic SAR system is large. Later in the process of learning Forex trading on the information portal Forex Arena we consider the stochastic indicator, which allows to determine the price chart of the market stress zone - zone "overbought" and "oversold". The combination of the indicator with the indicator parabolic SAR systems can provide good trading results.
Elliott Wave
It's no secret that many of the phenomena and processes in life are cyclical. We have all heard the expression that the story develops in a spiral, and already taking place in the past events are repeated in his new incarnation. Financial markets in this context - is no exception. In this chapter, we will look at Elliott Wave as a tool for wave analysis of the Forex market.
In one of the previous chapters we have considered the Dow theory, which is the foundation of the technical analysis of financial markets. This theory has been redesigned accountant Ralph Nelson Elliott and further developed in his book "The Wave Principle", which was released to the press in the thirties of the 20th century. Initially, Elliott waves have been created to analyze the liquid assets of the stock market, but subsequently were successfully applied to analyze the Forex market.
Elliott began creating his theory after retirement, attempting to find patterns in the seeming chaos of market movement. They had done a tremendous amount of work, which resulted in the calculations for the mass psychology of the market participants. Elliott came to the conclusion that the behavior of the market price is determined by a cyclical, which is based on behavior psychology of traders in the market. This recurrence, according to the author, reflected in the appearance on the chart so-called market assets waves, which became known as the Elliott Wave.
According to the Elliott wave theory, the market can be in two states or phases - bullish and bearish. The current phase of the market is determined by the trend. Elliott drew conclusions that any movement in the financial markets is divided into five waves in the direction of the main trend of the price and three corrective waves in the opposite direction. In order to understand the above, let's look at the figure, which discussed the situation in the bull market.
All Elliott Wave are divided into two types: the pulse wave and the rollback. On the considered wave figure 1-5 are the main market dominated by bullish sentiment. Three of them (1, 3 and 5) are pulsed so as to place the main movement direction, and the remaining two (2 and 4) are the waves roll. AC are corrective waves, and two of them (A & C) are pulsed, as confirmed by the corrective movement. Wave B is a wave retracement correction.
One important property possessed by the Elliott Wave is the principle of nesting. Any wave can be up to a certain limit is subdivided into smaller waves, and she is part of a long wave. Pulse wave thus classified into five fundamental waves and the waves roll into three corrective wave.
Elliott highlights in his theory of the longest cycle and gives it the name "Grand Supercycle", which is 8 waves. Each of these waves are divided into a series of short-wave to a degree resolution hierarchy. But it is worth noting that clearly expand the market for Elliott Wave is not always possible - the theory is often at odds with the practice.
By analyzing a large sample of data, the author of the wave theory came to the conclusion that the Elliott Wave have a certain regularity. In particular the ratio of wavelengths belonging to one series are often interrelated. To express the relationship is often used so-called Fibonacci numbers, which will be discussed in a later chapter.
Thus, the wavelength 2 is often defined as 0.382, 0.5, or 0.618 of the wavelength 1. 3 Wavelength often defined as 0.618, 1.618, or 2.618 of the wavelength 1. Wavelength 4 is often defined as 0.382, or 0.5 times the length of wave 1. The length of wave 5 is often defined as 0.382, 0.5, or 0.618 of the length of wave 1. A wavelength is often defined as 0.618 or 0.5 or 1 of the wavelength 5. Wavelength B is often defined as 0.382, or 0.5 times the length of wave A. Wavelength C is often determined as 0.618, 0.5, or 1.618 of the wavelength A. Several modifications of the original theory, Elliott Wave exhibit and another relationship. The above factors are a sort of "magic numbers" are calculated by a certain algorithm and will be addressed in light of Fibonacci numbers in a later chapter.
It is considered that the above calculations are corroborated by the classic market with an accuracy of 10-20%. The error is the result of various factors, which are an integral part of the financial markets. Objectively speaking, this formula is, of course, very conventional. In addition to the above relationships, the ratio of the size of the Elliott wave to any other wave cycle can also be expressed in terms of Fibonacci numbers. By Elliott Wave size can be understood as its height in the graph of the financial instrument and the actual duration. Each wave has its own characteristics, which will be discussed below for a bull market.
Wave 1 occurs when the market is almost entirely dominated by bearish sentiment, and financial news is still on the side of the bears. This wave is usually very strong, especially if it is accompanied by dramatic changes in the technical or fundamental aspect (for example, breaking through resistance or evidence of an unexpected change in interest rates). If drastic changes in the market does not suffer, then this wave is a little impulsive move.
Wave 2 occurs when you roll back from that just reached the bulls profitable positions. This rollback can almost offset the price movement reached wave 1, but lower than its beginning rollback does not usually happen. Wave 2 can be explained by the fixation of nervous bulls have just achieved profits in fear of the return of the price movement. Wavelength 2 is typically 50-70% of the wavelength 1.
Wave 3 is the subject of "search" of all the supporters of Elliott Wave Theory. It is the "catch this wave" can make the most profit. This wave is characterized by a sharp rise in optimism among professional traders. It is in 90% of cases, is the most powerful and long, it accounts for the maximum acceleration of prices. Typically, wave 3 is accompanied by an increase in trading volumes. In a classic case of wave 3 than wave 1 is at least 1,618 times.
Wave 4 corrects the rapid rise in the opposite direction. Despite the fact that the identification of the waves on historical chart presents no great difficulties in determining initiation of real time is difficult. Rollback is typically at a distance of 35-45% in the wavelength 3, and the duration of corrective movement is small. In a classic case of wave 4 should not overlap wave 2.
Wave 5 is often characterized by the fact that is not supported by an increase in trading volumes. It is sometimes said that the impulse is the divergence, ie, there is an increase in the price dropping to medium volumes. By the end of wave 5, trading volumes are increasing again. At this stage, the main motion (along the prevailing trend) and ends with a transition to a series of corrective waves.
A wave is characterized by a market situation in which the bulls are beginning to boom fix lucrative position. On the market there are players who are inclined to predict a further fall in prices stable. This wave is pulsed and its properties are similar to the one considered wavelength (in the reverse direction).
B is an analogue wave wave 4 in the opposite direction and is also quite difficult to identify in real time. This wave is characterized by a residual price movement upward pressure of the few bulls who believe in a further increase in the price of the underlying asset.
Wave C is an impulse sharp downward movement against the increasing bearish sentiment. This wave by extension, in the classical case, the length of wave 3. By the end of the waves in the market bulls reappear, ready to take risks.
Everything looks good in theory, but in practice the Elliott wave is difficult to identify - the market does not always behave in accordance with the scheme described. What is clearly visible on historical data analysis is often blurred in real time. We have considered only the classical picture of alternating waves. But there are a large number of non-standard configuration patterns of waves and recommendations for action. Elliott wave analysis made using a graphical analysis of the figures (Figures trend reversal and trend continuation patterns), we have discussed earlier. We consecrate the basics of Elliott Wave Theory - for more information, if desired, you need to refer to the literature.
The next indicator of technical analysis, you should pay attention to the process of learning Forex - Parabolic SAR (parabolic stop and reversal, SAR). This indicator was developed by Welles Wilder (J. Welles Wilder Jr.), The famous trader who made a great contribution to the research and development of the technical analysis of financial markets. Applying this indicator properly, you will be able to significantly reduce the number of trading errors, and, consequently, increase profits.
Parabolic SAR indicator system got its name because of the form that it takes a curve on the chart. The parabolic form of the indicator is explained by a mathematical formula for its calculation, which will be discussed below. An important condition for the application of this indicator in the analysis of the Forex market is the presence on the roar explicit trend - in this case, the indicator may give a good signal weakening trend or its reversal, ie good signal for closing position in one direction and its possible opening to another. If the price fluctuation occurs in a horizontal range, this indicator can give a lot of false signals. So, before you use this indicator and rely on its signals should confirm the existing trend in the market analyzed by currency pair. You can use these tools of technical analysis, examined above, and the levels of support and resistance lines, shapes, trend reversal, trend continuation patterns, moving averages, Bollinger bands, convergence-divergence of moving averages, etc.
On the example of quotation USD / JPY indicator Parabolic SAR system is shown in Fig.
As can be seen from the figure, the indicator is the curve formed by dots. Each dot corresponds to your sales period depending on the scale of the price chart, but, as a rule, are used daily charts. If the curve indicator is under the price chart, it indicates an upward trend. If the curve is above the indicator price indicator, indicates a downward trend. In that moment, when the curve crosses the indicator price chart trend strength decreases and there is a high probability of a reversal. Approximation of parabolic curve SAR system to a price chart indicates weakening trend. The distance between adjacent points of the indicator also symbolize the strength of the trend - the greater the distance, the stronger the trend. But remember that the trend may reverse at high speed!
As you can see, the curve of the indicator is not continuous. At the time of intersection of the curve with the price schedule, the next point indicator as it jumps in the opposite direction relative to the price chart. This behavior of the parabolic curve of SAR is sufficiently precise algorithm of its construction. This algorithm is based on two concepts: an extreme point (extreme point) and the acceleration factor (acceleration factor). At the extreme point of the uptrend is considered the highest price recorded in the trend. On a downward trend this point is a minimum fixed price. As soon as the indicator of the parabolic SAR system signals a trend reversal, the algorithm calculating extreme reversed. When a signal occurs, the acceleration factor is reset to the initial value for which in practice is often used value of 0.02, ie 2%. When the closing price of the current trading period on an uptrend surpasses last committed point of extremum, this ratio increases to 2%, and the value of extreme updated. The same increase in acceleration factor and updated extreme occurs if the closing price of the current trading period is less than the extreme points on a downward trend. The indicator is calculated ahead, ie data for the current day are used in the calculation of the indicator value tomorrow. The mathematical formula for calculating the indicator parabolic SAR system is recursive and has the form:
SAR (n +1) = SAR (n) + AF * (EP - SAR (n)),
where the SAR (n +1) - the value of the indicator of tomorrow, SAR (n) - an indicator of the current value of the day, AF - accelerating factor and EP - the last committed an extreme point. In addition, in the process of calculation of the indicator used by several additional conditions:
if its value is tomorrow's SAR (n +1) is within or outside the price range today (n) or yesterday (n-1) of the trading day, then it is set to the lower limit of this range. For example, if an upward trend, the indicator value is more than the minimum price fixed for the last two days, including today, the indicator takes the value of the fixed minimum price, a down trend the opposite is true;
if its value is tomorrow's SAR (n +1) is within or outside the price range of tomorrow, it is a signal of a trend reversal, and the algorithm for calculating the indicator to toggle the "phase".
Once there is a change trend that switch "phase" of the algorithm, the value of the indicator parabolic SAR system for the new trend set in the last committed point of extreme EP old trend. The very extreme point at this point is set to the maxim, if the new trend - rising in the minimum point, if the new trend - downward. Acceleration factor AF is reset to the initial value of 2%.
Parabolic SAR indicator system can be used as a stop-loss signal in the bidding process in the Forex market. The value of technical indicators are always lagging behind the price, so at the time of entry into the market can be easily set stop-loss in the current value of the indicator. But first make sure that such an approach does not violate your strategy for managing capital in trading on the Forex market. Parabolic SAR indicator system can also be used as both a take-profit signals at a time when the curve indicator closely approaching the price chart or crosses it. About types of trading signals will still be covered in later chapters Portal in learning forex trading.
An important observation, as already noticed, is that this indicator can give a lot of false alarms, if trading in the currency pair are in a horizontal range. This indicator should be used only if the trend can be confirmed by other technical analysis tools. Generally speaking, Internet trading should never be accompanied by a decision on the basis of only one tool of technical analysis - always use a few such tools. Take your trading decisions to open or close positions only if the most used tools you give the same trading signal.
After crossing the indicator curve parabolic SAR system with a price schedule, wait until the indicator next few points will confirm the formation of a new trend, and only open position. Close your position at the time when the curve indicator closely approaching the price chart and crosses it. The indicator gives a signal with a delay, so if you close your late position, you will lose some profit. Keep in mind that after the formation of a new trend is confirmed by his power distance between adjacent points of the curve indicator - the more such a distance, the more pronounced trend. Typically, the acceleration of the trend occurs after 4-5 points, so this acceleration can be a good confirmation of the correctness of the decision in the course of trade of trading on the Forex market. To enter the market at a time when the trend has already gained some strength, can be dangerous because of the high probability of the return of corrective movement or trend reversal. So it is risky to open positions at a time when the distance between the points of the curve indicator parabolic SAR system is large. Later in the process of learning Forex trading on the information portal Forex Arena we consider the stochastic indicator, which allows to determine the price chart of the market stress zone - zone "overbought" and "oversold". The combination of the indicator with the indicator parabolic SAR systems can provide good trading results.
Elliott Wave
It's no secret that many of the phenomena and processes in life are cyclical. We have all heard the expression that the story develops in a spiral, and already taking place in the past events are repeated in his new incarnation. Financial markets in this context - is no exception. In this chapter, we will look at Elliott Wave as a tool for wave analysis of the Forex market.
In one of the previous chapters we have considered the Dow theory, which is the foundation of the technical analysis of financial markets. This theory has been redesigned accountant Ralph Nelson Elliott and further developed in his book "The Wave Principle", which was released to the press in the thirties of the 20th century. Initially, Elliott waves have been created to analyze the liquid assets of the stock market, but subsequently were successfully applied to analyze the Forex market.
Elliott began creating his theory after retirement, attempting to find patterns in the seeming chaos of market movement. They had done a tremendous amount of work, which resulted in the calculations for the mass psychology of the market participants. Elliott came to the conclusion that the behavior of the market price is determined by a cyclical, which is based on behavior psychology of traders in the market. This recurrence, according to the author, reflected in the appearance on the chart so-called market assets waves, which became known as the Elliott Wave.
According to the Elliott wave theory, the market can be in two states or phases - bullish and bearish. The current phase of the market is determined by the trend. Elliott drew conclusions that any movement in the financial markets is divided into five waves in the direction of the main trend of the price and three corrective waves in the opposite direction. In order to understand the above, let's look at the figure, which discussed the situation in the bull market.
All Elliott Wave are divided into two types: the pulse wave and the rollback. On the considered wave figure 1-5 are the main market dominated by bullish sentiment. Three of them (1, 3 and 5) are pulsed so as to place the main movement direction, and the remaining two (2 and 4) are the waves roll. AC are corrective waves, and two of them (A & C) are pulsed, as confirmed by the corrective movement. Wave B is a wave retracement correction.
One important property possessed by the Elliott Wave is the principle of nesting. Any wave can be up to a certain limit is subdivided into smaller waves, and she is part of a long wave. Pulse wave thus classified into five fundamental waves and the waves roll into three corrective wave.
Elliott highlights in his theory of the longest cycle and gives it the name "Grand Supercycle", which is 8 waves. Each of these waves are divided into a series of short-wave to a degree resolution hierarchy. But it is worth noting that clearly expand the market for Elliott Wave is not always possible - the theory is often at odds with the practice.
By analyzing a large sample of data, the author of the wave theory came to the conclusion that the Elliott Wave have a certain regularity. In particular the ratio of wavelengths belonging to one series are often interrelated. To express the relationship is often used so-called Fibonacci numbers, which will be discussed in a later chapter.
Thus, the wavelength 2 is often defined as 0.382, 0.5, or 0.618 of the wavelength 1. 3 Wavelength often defined as 0.618, 1.618, or 2.618 of the wavelength 1. Wavelength 4 is often defined as 0.382, or 0.5 times the length of wave 1. The length of wave 5 is often defined as 0.382, 0.5, or 0.618 of the length of wave 1. A wavelength is often defined as 0.618 or 0.5 or 1 of the wavelength 5. Wavelength B is often defined as 0.382, or 0.5 times the length of wave A. Wavelength C is often determined as 0.618, 0.5, or 1.618 of the wavelength A. Several modifications of the original theory, Elliott Wave exhibit and another relationship. The above factors are a sort of "magic numbers" are calculated by a certain algorithm and will be addressed in light of Fibonacci numbers in a later chapter.
It is considered that the above calculations are corroborated by the classic market with an accuracy of 10-20%. The error is the result of various factors, which are an integral part of the financial markets. Objectively speaking, this formula is, of course, very conventional. In addition to the above relationships, the ratio of the size of the Elliott wave to any other wave cycle can also be expressed in terms of Fibonacci numbers. By Elliott Wave size can be understood as its height in the graph of the financial instrument and the actual duration. Each wave has its own characteristics, which will be discussed below for a bull market.
Wave 1 occurs when the market is almost entirely dominated by bearish sentiment, and financial news is still on the side of the bears. This wave is usually very strong, especially if it is accompanied by dramatic changes in the technical or fundamental aspect (for example, breaking through resistance or evidence of an unexpected change in interest rates). If drastic changes in the market does not suffer, then this wave is a little impulsive move.
Wave 2 occurs when you roll back from that just reached the bulls profitable positions. This rollback can almost offset the price movement reached wave 1, but lower than its beginning rollback does not usually happen. Wave 2 can be explained by the fixation of nervous bulls have just achieved profits in fear of the return of the price movement. Wavelength 2 is typically 50-70% of the wavelength 1.
Wave 3 is the subject of "search" of all the supporters of Elliott Wave Theory. It is the "catch this wave" can make the most profit. This wave is characterized by a sharp rise in optimism among professional traders. It is in 90% of cases, is the most powerful and long, it accounts for the maximum acceleration of prices. Typically, wave 3 is accompanied by an increase in trading volumes. In a classic case of wave 3 than wave 1 is at least 1,618 times.
Wave 4 corrects the rapid rise in the opposite direction. Despite the fact that the identification of the waves on historical chart presents no great difficulties in determining initiation of real time is difficult. Rollback is typically at a distance of 35-45% in the wavelength 3, and the duration of corrective movement is small. In a classic case of wave 4 should not overlap wave 2.
Wave 5 is often characterized by the fact that is not supported by an increase in trading volumes. It is sometimes said that the impulse is the divergence, ie, there is an increase in the price dropping to medium volumes. By the end of wave 5, trading volumes are increasing again. At this stage, the main motion (along the prevailing trend) and ends with a transition to a series of corrective waves.
A wave is characterized by a market situation in which the bulls are beginning to boom fix lucrative position. On the market there are players who are inclined to predict a further fall in prices stable. This wave is pulsed and its properties are similar to the one considered wavelength (in the reverse direction).
B is an analogue wave wave 4 in the opposite direction and is also quite difficult to identify in real time. This wave is characterized by a residual price movement upward pressure of the few bulls who believe in a further increase in the price of the underlying asset.
Wave C is an impulse sharp downward movement against the increasing bearish sentiment. This wave by extension, in the classical case, the length of wave 3. By the end of the waves in the market bulls reappear, ready to take risks.
Everything looks good in theory, but in practice the Elliott wave is difficult to identify - the market does not always behave in accordance with the scheme described. What is clearly visible on historical data analysis is often blurred in real time. We have considered only the classical picture of alternating waves. But there are a large number of non-standard configuration patterns of waves and recommendations for action. Elliott wave analysis made using a graphical analysis of the figures (Figures trend reversal and trend continuation patterns), we have discussed earlier. We consecrate the basics of Elliott Wave Theory - for more information, if desired, you need to refer to the literature.
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