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O Guia Definitivo para Negociar Tendências com Ichimoku Cloud Resumo do Artigo: Trend trading com Ichimoku não precisa ser confuso porque o nome não é familiar. Muitos comerciantes preferem trocar com Ichimoku, uma vez que aprendem a ver a tendência de uma nova maneira com o Ichimoku. Este artigo é uma repartição completa dos componentes do indicador, bem como a forma como você pode transformar esse indicador em uma tendência que segue o sistema. A paciência é uma virtude elevada. Muitos comerciantes são questionados sobre o indicador de que eles nunca desejariam. Minha resposta nunca vacilou, pois há um indicador que ilustra claramente a tendência atual, ajuda você a inserir o tempo, exibir suporte e resistência, esclarecer o momento e mostra quando uma tendência provavelmente se inverteu. Esse indicador é Ichimoku Kinko Hyo ou mais conhecido como Ichimoku. Aprenda Forex: Após uma lição rápida, Ichimoku mostra claramente o gráfico de oportunidades de negócios criado por Tyler Yell, CMT Ichimoku é um indicador técnico ou gráfico que também é um sistema de negociação de tendências por si só. O criador do indicador, Goichi Hosada, apresentou o Ichimoku como um indicador ldquoone glancerdquo, de modo que em alguns segundos você possa determinar se uma tendência negociável está presente ou se você deve esperar uma melhor configuração em um par específico. Antes de quebrar os componentes do indicador de forma clara e confiável, há algumas coisas úteis para entender. Ichimoku pode ser usado tanto em mercados crescentes como em queda e pode ser usado em todos os prazos para qualquer instrumento de negociação líquida. A única vez para não usar Ichimoku é quando nenhuma tendência clara está presente. Gostaria de receber meus artigos Ichimoku Junte-se à lista de distribuição de e-mail da Tylerrsquos, clique aqui. Conheça os 5 membros da família Ichimoku Sempre comece com a nuvem A nuvem é composta por duas linhas dinâmicas que servem para várias funções. No entanto, o objetivo principal da nuvem é ajudá-lo a identificar a tendência do preço atual em relação à ação do preço passado. Dado que a proteção de sua capital é a principal batalha que todo comerciante deve enfrentar, a nuvem ajuda você a colocar paradas e reconhecer quando você deve ser otimista ou bajista. Muitos comerciantes se concentrarão em candelabros ou análise de ação de preço em torno da nuvem para ver se um padrão decisivo de reversão ou continuação está tomando forma. Aprenda Forex: a nuvem sozinha pode ajudar a fornecer um gráfico de direção criado por Tyler Yell, CMT Nos termos mais simples, os comerciantes que utilizam Ichimoku devem procurar as entradas de compras quando o preço estiver acima da nuvem. Quando o preço está abaixo da nuvem, os comerciantes devem procurar correções temporárias maiores para entrar em uma ordem de venda na direção da tendência. A nuvem é a pedra angular de toda a análise de Ichimoku e, como tal, é o aspecto mais importante para o indicador. Entradas de tempo com a linha base do amplificador de disparo Uma vez que você tenha construído um viés de procurar comprar ou vender sinais com a nuvem, você pode recorrer às duas médias móveis únicas fornecidas pelo Ichimoku. A média rápida é uma média móvel de 9 períodos e a média lenta é uma média móvel de 26 períodos por padrão. O que é exclusivo sobre essas médias móveis é que, ao contrário de suas contrapartes ocidentais, o cálculo é construído a preços médios em oposição aos preços de fechamento. Muitas vezes me refiro à média rápida como a linha de gatilho e a média lenta como a linha de base. Aprenda Forex: Procure o Trigger Crossing the Base em favor do gráfico Tendência criado por Tyler Yell, CMT Os componentes Ichimoku são introduzidos em uma ordem específica porque é assim que você deve analisar ou negociar o mercado. Uma vez que você tenha confirmado a tendência ao reconhecer o preço como sendo abaixo ou acima da nuvem, você pode mudar para as médias móveis. Se o preço estiver acima da nuvem e o gatilho cruza acima da linha de base, você tem os ingredientes de um sinal de compra. Se o preço estiver abaixo da nuvem e o gatilho cruza abaixo da linha de base, você tem os ingredientes de um sinal de venda. Confirmar entradas com a misteriosa linha de atraso Além do mistério da nuvem, a linha de atraso geralmente confunde comerciantes. Isso não deve ser o caso, pois a itrsquos é uma linha muito simples que é o fim da vela atual, atrasou 26 períodos. Ao estudar Ichimoku, achei que essa linha era considerada pela maioria dos comerciantes japoneses tradicionais que utilizam principalmente Ichimoku como um dos componentes mais importantes do indicador. Aprenda Forex: A Linha de Lagagem Exibe o Momento do Gráfico de Mover Criada por Tyler Yell, CMT Uma vez que o preço foi quebrado acima ou abaixo da nuvem e a linha de gatilho está cruzando a linha de base com a tendência, você pode olhar para a linha de atraso como confirmação. A linha de atraso pode melhor confirmar o comércio, quebrando acima da nuvem em uma nova tendência de alta ou abaixo da nuvem em uma tendência de baixa em desenvolvimento. Olhando acima, você pode ver que a tendência muitas vezes junta vapor muito bem depois que a linha de atraso quebra a nuvem. Outro benefício de usar a linha de atraso como um indicador de confirmação é que a linha de atraso pode criar paciência e disciplina na sua negociação, porque você não está perseguindo o impulso inicial, mas sim esperando a correção para jogar antes de entrar na direção da tendência geral . Trading With Ichimoku Checklist Agora que você conhece os componentes do Ichimoku aqui é uma lista de verificação que você pode imprimir ou usar para manter os principais componentes dessa tendência dinâmica seguindo o sistema: 1. Onde está o preço em relação à nuvem. Acima da nuvem - filtrada para comprar apenas sinais Na Nuvem - seja cauteloso, mas pronto para entrar na tendência anterior ou finesse uma posição atual. O que as formas de vara se formam fortemente Abaixo da nuvem - filtrada para trocas curtas apenas 2. O preço é consistente em um lado da nuvem ou o preço que chicoteia em ambos os lados de forma consistente Ichimoku é melhor usado com tendências claras e deve ser reservado durante mercados variados . 3. Qual nível do Ichimoku gostaria de usar para colocar a sua parada. Se você usa Ichimoku para colocar paradas, você pode usar a nuvem ou a linha base. - Escrito por Tyler Yell, Instrutor de Negociação Interessado em Nossos Analistas Melhores Opiniões sobre Mercados Principais Confira nossos Guias de Negociação Grátis Aqui esta dissertação foi enviada por um aluno. Este não é um exemplo do trabalho escrito por nossos escritores de dissertação profissional. Reconhecimento Gostaria de expressar o meu profundo sentimento de gratidão ao Dean do Instituto Internacional de Planejamento e Gestão, Sr. Pabitra Chakravorthy, que me deu uma oportunidade de ouro para fazer tese sobre ldquoFive Fatores-chave que movem o Forex Marketrdquo Estou muito agradecido Ao Prof. Tarak Shah, guia da Faculdade da minha tese, por me dar uma orientação de ampliação de oportunidade durante toda a tese. As obras são insuficientes para agradecer ao Sr. Paresh Shah pelo seu incondicional amplificador de suporte maravilhoso para a conclusão bem-sucedida do nosso projeto. Também estou muito grato ao Sr. Darshan Soni de Darshan Forex e ao Sr. Girish Shah amp Bharat Mehta de shah amp shah Investors. Eles nos guiaram ao longo da tese. Eles resolveram o meu cada amplificador, cada amplificador de consulta me fornece bons conhecimentos sobre como o derivado forex funciona praticamente. Assim como o caminho mais estranho no último amplo alcance no seu projeto de destino, o trabalho é como um caminho após a caminhada em que os alunos podem ganhar experiência com o conhecimento do amplificador que pode ser um pisar em direção ao seu sucesso. É um trabalho que melhora cada amplificador em cada conhecimento de amplificação de capacidade de trabalho individual. A Importância da Tese é que é a mistura de ambos os conhecimentos práticos teóricos. Através da tese, obtive uma mudança de ouro para ter orientação sob profissionais e executivos seniores que definitivamente podem ser uma plataforma de estabelecer-se. Durante o trabalho da tese, visitei a AMA Library, a Câmara de Comércio de Gujarat e o SBI, o que nos ajudou muito a obter informações sobre os derivados de Forex. Esta oportunista de tese fornecida para mim não era apenas uma plataforma para desenvolver o amplificador, aumentando meu apetite de aprendizagem, mas também serviu uma fusão do conceito teórico de sua aplicação prática no mundo corporativo. INTRODUÇÃO: Para obter lucros com o mercado cambial do comércio internacional, você tem um controle sobre principalmente cinco fatores-chave que afetam o valor da moeda. Ao fazer nossos negócios, analisamos cinco fatores-chave que são os seguintes. Middot Taxas de juros middot Crescimento econômico middot Comércio e fluxos de capital middot Fusões e atividades de aquisição Taxas de juros: a receita de juros e a valorização do capital desses dois métodos que podemos usar para obter lucro de diferentes em termos de taxas de juros dos países. Rendimentos de juros. Toda moeda do mundo vem anexada com uma taxa de juros que é definida pelo seu banco central do país. Todas as coisas sendo iguais, você sempre deve comprar moedas de países com altas taxas de juros e financiar essas compras com moeda de países com baixas taxas de juros. Por exemplo, a partir do outono de 2006, as taxas de juros nos Estados Unidos ficaram em 5,25, enquanto as taxas no Japão foram fixadas em 0,25. Você poderia ter aproveitado essa diferença de taxa emprestando uma grande soma de iene japonês, trocando por dólares americanos e usando dólares americanos para comprar títulos ou cds na taxa de US $ 5,25. Em outras palavras, você poderia ter emprestado dinheiro em .25, emprestou-o em 5,25 e fez um 5 retorno. Você poderia salvar-se todo o incômodo de se tornar um emprestador de dinheiro simplesmente negociando o par de moedas afetando a mesma transação. Apreciação de capital. A taxa de juros do país da Ásia aumenta, o valor da moeda do país também tende a aumentar - esse fenômeno dá-lhe uma chance de lucrar com o seu valor aumentado ou a valorização do capital. No caso do spread USDJPY em 2005 e 2006, à medida que as taxas de juros dos EUA ficaram mais altas do que os japoneses, o dólar continuou a aumentar de valor. Os investidores que negociaram ienes por dólares obtidos com a receita de juros, bem como a apreciação do capital em dólares norte-americanos. Crescimento econômico. O crescimento econômico é o próximo fator ao prever os movimentos cambiais do país. Mais forte a economia, maior a possibilidade de o banco central elevar suas taxas de juros para o crescimento da inflação. E quanto maior as taxas de juros do país, maior a probabilidade daqueles Investidores estrangeiros investirão em mercados financeiros do país. Outros investidores estrangeiros significam uma maior demanda pela moeda do país. Uma demanda maior resulta em um aumento no valor de moeda. Por isso, o crescimento econômico inspira taxas de juros mais elevadas, suscita maior investimento estrangeiro, o que estimula uma maior demanda de moeda, o que estimula o aumento do valor de câmbio. Geopolítica. O mercado de divisas é o único mercado do mundo que pode ser negociado com sucesso em notícias políticas, bem como em lançamentos econômicos. Por exemplo, as moedas representam paises em vez de empresas e qualquer distúrbio na paisagem política, muitas vezes afetará a direção em que a taxa de câmbio se move. A chave para entender o comportamento especulativo em relação a qualquer agitação geopolítica é que os especuladores correm primeiro e fazem perguntas mais tarde. Em outras palavras, sempre que os investidores temem qualquer ameaça ao seu capital, eles rapidamente se retirarão para o lado de fora até que estejam certos de que o risco político Desapareceu. Portanto, a regra geral no mercado de moeda é que a política quase sempre supera a economia. Fluxos de comércio e de capital Antes de fazer uma previsão final sobre o movimento (ou tendência) de uma determinada moeda, você deve determinar se a moeda é ou não dependente do seu capital de comércio ou comércio. O fluxo de capital refere-se à quantidade de investimento que um país recebe de fontes internacionais. O fluxo comercial é a renda resultante do comércio. Alguns países podem ser muito dependentes do seu fluxo de capital, enquanto outros países são extremamente sensíveis aos fluxos comerciais. Fusões e aquisições A atividade de fusão e aquisição é o fator menos importante na determinação da direção de longo prazo das moedas. Pode ser a força mais poderosa nos movimentos cambiais temporários de prazo. A atividade de fusão e aquisição ocorre quando uma empresa de uma região econômica quer fazer uma transação transnacional e comprar uma empresa de outro país. Por exemplo, uma empresa europeia quer comprar um ativo canadense por 20 bilhões, teria que entrar no mercado de câmbio e adquirir a moeda para afetar esta transação. Típicamente, esses negócios não são sensíveis ao preço, mas são sensíveis ao tempo porque o adquirente pode ter uma Data em que a transação deve ser concluída. Devido a esta dinâmica subjacente, o fluxo de fusão e aquisição pode exercer uma força temporária muito forte na negociação de FX, às vezes desviando o curso natural do fluxo de moeda por dias ou semanas. OBJETIVO: Objetivo principal é obter conhecimento aprofundado do meu tópico. Analisar criticamente o mercado Forex do comércio internacional. Para analisar os cinco fatores-chave que movem o mercado Forex e como tirar proveito deles. Para analisar os dados atuais e prever um movimento futuro do mercado Forex. METODOLOGIA: Introdução do tema em detalhes. Para prever o movimento do mercado, estou usando dois métodos como análise fundamental e análise técnica. A análise técnica inclui gráficos de castiçal e médias móveis (simples e exponencial) Middot de fonte primária. Tomando a entrevista da experiência no mercado Forex. Fonte secundária middot Use livros, revistas, jornais, documentos de pesquisa e Internet como fontes secundárias LIMITAÇÕES: middot Eu tenho que seguir apenas esses cinco fatores para mover o mercado Forex. Middot Entrevista é a única pesquisa primária no mercado Forex. Middot A inflação é o principal fator que move o mercado Forex, mas que não está incluído nos cinco fatores. Middot Fusion e Aquisição é o fator menos importante. CAPÍTULO 1: INTRODUÇÃO DE INTERCÂMBIO EXTERNO O câmbio é o método ou processo de conversão que converte uma moeda em outra moeda. A moeda torna-se dinheiro e curso legal para um país. Mas, para um país estrangeiro, torna-se o valor como mercadoria. Uma vez que a mercadoria tem um valor, sua relação com a outra moeda determina o valor cambial de uma moeda com a outra. É apenas o jogo de oferta e demanda. Por exemplo, o dólar dos EUA nos EUA é a moeda nos EUA, mas para a Índia é como uma mercadoria que tem um valor que varia de acordo com a demanda e a oferta. O câmbio é uma das atividades econômicas que lida com os meios e métodos pelos quais os direitos à riqueza expressados ​​em termos da moeda de um país são convertidos em direitos de riqueza em termos de atuação de outro país. Envolve a investigação do método que troca a moeda de um país para o outro. O câmbio também pode ser definido como o meio de pagamento em que as moedas são convertidas entre si e pelo qual as transferências internacionais são feitas também a atividade de transação de negócios em outros meios. A maioria dos países do mundo tem suas próprias moedas. Os EUA têm seu dólar, a França é franco, o Brasil é o cruzeiro e a Índia tem sua Rúpia. O comércio entre os países envolve a troca de moedas diferentes. O mercado cambial é o mercado em que as moedas são compradas e vendidas uma contra a outra. É o maior mercado do mundo. As transações realizadas nos mercados de câmbio determinam as taxas nas quais as moedas são trocadas umas para as outras, o que, por sua vez, determina o custo de compra de ativos financeiros de bens estrangeiros. O mais recente banco de pesquisas internacionais de liquidação afirmou que mais de 900 bilhões foram negociados em todo o mundo a cada dia. Durante o período do pico de volume, a figura pode atingir mais de US $ 2 trilhões por dia. O correspondente a 160 vezes o volume diário da NYSE. CAPÍTULO 2: ORIGEM DO MERCADO FOREX O comércio FOREX traça sua história há séculos. Diferentes moedas e a necessidade de trocas tinham existido desde os babilônios. Eles são creditados com o primeiro uso de notas e recibos de papel. Naquele tempo, o valor dos bens foi expresso em termos de outros bens que foram chamados de sistema Barter. As limitações óbvias de tal sistema incentivaram o estabelecimento de meios de troca mais geralmente aceitos. Era importante que uma base comum de valor pudesse ser estabelecida. Em algumas economias, itens como dentes, penas até pedras serviram esse objetivo, mas logo vários metais, em particular ouro e prata, estabeleceram-se como meios de pagamento aceitos, além de um armazenamento confiável de valor. O comércio foi realizado entre pessoas da África, Ásia etc. através deste sistema. Coins foram inicialmente cunhadas do metal preferido e em regimes políticos estáveis, a introdução de uma forma de papel de governo I. O.U. Durante o meio da idade também ganhou aceitação. Este tipo de I. O.U. Foi introduzido com mais sucesso através da força do que através da persuasão e agora é a base das moedas modernas de hoje. Antes da Primeira Guerra Mundial, a maioria dos bancos centrais apoiava suas moedas com a convertibilidade ao ouro. No entanto, o padrão de troca de ouro teve suas fraquezas de padrões de crescimento-crescimento. À medida que uma economia se fortaleceu, importaria muito do país até que escorregasse as reservas de ouro necessárias para suportar seu dinheiro. Como resultado, a oferta monetária diminuiria, as taxas de juros aumentavam e a atividade econômica desacelerou até a recessão. Em última análise, os preços das commodities atingiram o fundo e parece atraente para outras nações que explorariam a fúria de compra que injetou a economia com ouro até aumentar sua oferta monetária, diminuir as taxas de juros e restaurar a riqueza na economia. No entanto, para este tipo de troca de ouro, não havia necessariamente uma necessidade do banco Centrals para cobertura total das reservas cambiais dos governos. Isso não ocorreu com muita freqüência, no entanto, quando uma mentalidade de grupo promoveu essa noção desastrosa de converter de volta ao ouro em massa, o pânico resultou no chamado quotRun em banksquot. A combinação de uma maior oferta de papel-moeda sem o ouro para cobrir levou a inflação devastadora e a instabilidade política resultante. A Grande Depressão e a remoção do padrão-ouro em 1931 criaram uma grave paralisação na atividade de mercado FOREX. De 1931 a 1973, o mercado FOREX passou por uma série de mudanças. Essas mudanças afetaram consideravelmente as economias globais na época e a especulação nos mercados FOREX durante esses tempos foi pouco. A fim de proteger os interesses nacionais locais, o aumento dos controles cambiais foi introduzido para evitar que as forças do mercado punissem a irresponsabilidade monetária. Perto do final da Segunda Guerra Mundial, o acordo de Bretton Woods foi alcançado por iniciativa dos EUA em julho de 1944. A conferência realizada em Bretton Woods, New Hampshire, rejeitou a sugestão de John Maynard Keynes para uma nova moeda de reserva mundial a favor de um sistema construído sobre O dólar dos EUA. Instituições internacionais como o FMI, o Banco Mundial e o GATT foram criadas no mesmo período em que os vencedores emergentes da Segunda Guerra Mundial buscaram uma maneira de evitar as crises monetárias desestabilizadoras que levaram à guerra. O acordo de Bretton Woods resultou em um sistema de taxas de câmbio fixas que reintegrou o Padrão de Ouro em parte, corrigindo o USD a 35,00 por onça de Ouro e corrigindo as demais moedas principais ao dólar, inicialmente destinado a ser permanente. O sistema de Bretton Woods sofreu uma crescente pressão à medida que as economias nacionais se moviam em direções diferentes durante a década de 1960. Uma série de realinhamentos mantiveram o sistema vivo durante um longo período de tempo, mas, eventualmente, Bretton Woods entrou em colapso no início dos anos 1970, após a suspensão do presidente Nixons da convertibilidade do ouro em agosto de 1971. O dólar não era mais adequado como a única moeda internacional em um momento em que Estava sob forte pressão do aumento do orçamento dos EUA e déficits comerciais. As últimas décadas viram que o comércio cambial se tornou o maior mercado global do mundo. As restrições nos fluxos de capital foram removidas na maioria dos países, deixando as forças do mercado livres para ajustar as taxas de câmbio estrangeiras de acordo com seus valores percebidos. A Comunidade Econômica Européia introduziu um novo sistema de taxas de câmbio fixas em 1979, o Sistema Monetário Europeu. A busca continuou na Europa para a estabilidade da moeda com a assinatura de 1991 do tratado de Maastricht. Isto foi não só para corrigir as taxas de câmbio, mas também substituir muitas delas pelo euro em 2002. Londres era e continua sendo o principal mercado offshore. Na década de 1980, tornou-se o centro-chave no mercado Eurodólar quando os bancos britânicos começaram a emprestar dólares como alternativa aos libras para manter sua posição de liderança nas finanças globais. InAsia, a falta de sustentabilidade das taxas de câmbio fixas já ganhou nova relevância com os eventos no Sudeste Asiático na última parte de 1997, onde a moeda após a moeda foi desvalorizada em relação ao dólar dos EUA, deixando outras taxas de câmbio fixas, em particular na América do Sul, também olhando Muito vulnerável. As empresas japonesas tiveram que enfrentar um ambiente cambial muito mais volátil nos últimos anos, investidores e instituições financeiras descobriram um novo campo de jogos. O mercado de câmbio FOREX trabalhou inicialmente sob os bancos centrais e as instituições governamentais, mas posteriormente acomodou as diversas instituições. No presente, também inclui o ponto com booms e a World Wide Web. O tamanho do mercado FOREX anula qualquer outro mercado de investimento. A troca estrangeira é o maior mercado financeiro do mundo. Aproximadamente 1.9 trilhões de dólares são negociados diariamente no mercado de câmbio estrangeiro. Estima-se que mais de US $ 1.200 bilhões sejam negociados todos os dias. Pode-se dizer facilmente que o mercado FOREX é uma oportunidade lucrativa para o investidor experiente em dias de hoje BREVE INFORMAÇÃO DE FOREX. A história da negociação FOREX foi traçada há séculos. Diferentes países precisam de moedas diferentes e a necessidade de trocas existiram desde os babilônios. Dizem que os babilônios foram os primeiros a usar notas e recibos em papel. Durante esses dias, os bens foram trocados por outros bens com base no valor de ambos os bens, que era conhecido como sistema de troca. Mas este sistema teve algumas limitações e isso levou a incentivar o estabelecimento de um meio de troca mais geralmente aceito. Também era importante que uma base comum de valor pudesse ser estabelecida. Em algumas economias, itens como dentes, penas até pedras serviram esse objetivo, mas logo vários metais, em particular ouro e prata, estabeleceram-se como meios de pagamento aceitos, além de um armazenamento confiável de valor. O comércio foi realizado entre pessoas da África, Ásia etc. através deste sistema. Coins foram inicialmente cunhadas do metal preferido e em regimes políticos estáveis, a introdução de uma forma de papel de governo I. O.U. Durante o meio da idade também ganhou aceitação. Este tipo de I. O.U. Foi introduzido com mais sucesso através da força do que através da persuasão e agora é a base das moedas modernas de hoje. Antes da Primeira Guerra Mundial, a maioria dos bancos centrais apoiava suas moedas com a convertibilidade ao ouro. No entanto, o padrão de troca de ouro teve suas fraquezas de padrões de crescimento-crescimento. À medida que uma economia se fortaleceu, importaria muito do país até que escorregasse as reservas de ouro necessárias para suportar seu dinheiro. Como resultado, a oferta monetária diminuiria, as taxas de juros aumentavam e a atividade econômica desacelerou até a recessão. Em última análise, os preços das commodities atingiram o fundo e parece atraente para outras nações que explorariam a fúria de compra que injetou a economia com ouro até aumentar sua oferta monetária, diminuir as taxas de juros e restaurar a riqueza na economia. No entanto, para este tipo de troca de ouro, não havia necessariamente uma necessidade do banco Centrals para cobertura total das reservas cambiais dos governos. Isso não ocorreu com muita freqüência, no entanto, quando uma mentalidade de grupo promoveu essa noção desastrosa de converter de volta ao ouro em massa, o pânico resultou no chamado quotRun em banksquot. A combinação de uma maior oferta de papel-moeda sem o ouro para cobrir levou a inflação devastadora e a instabilidade política resultante. A Grande Depressão e a remoção do padrão-ouro em 1931 criaram uma grave paralisação na atividade de mercado FOREX. De 1931 a 1973, o mercado FOREX passou por uma série de mudanças. Essas mudanças afetaram consideravelmente as economias globais na época e a especulação nos mercados FOREX durante esses tempos foi pouco. A fim de proteger os interesses nacionais locais, o aumento dos controles cambiais foi introduzido para evitar que as forças do mercado punissem a irresponsabilidade monetária. Perto do final da Segunda Guerra Mundial, o acordo de Bretton Woods foi alcançado por iniciativa dos EUA em julho de 1944. A conferência realizada em Bretton Woods, New Hampshire, rejeitou a sugestão de John Maynard Keynes para uma nova moeda de reserva mundial a favor de um sistema construído sobre O dólar dos EUA. Instituições internacionais como o FMI, o Banco Mundial e o GATT foram criadas no mesmo período em que os vencedores emergentes da Segunda Guerra Mundial buscaram uma maneira de evitar as crises monetárias desestabilizadoras que levaram à guerra. O acordo de Bretton Woods resultou em um sistema de taxas de câmbio fixas que reintegrou o Padrão de Ouro em parte, corrigindo o USD a 35,00 por onça de Ouro e corrigindo as demais moedas principais ao dólar, inicialmente destinado a ser permanente. O sistema de Bretton Woods sofreu uma crescente pressão à medida que as economias nacionais se moviam em direções diferentes durante a década de 1960. Uma série de realinhamentos mantiveram o sistema vivo durante um longo período de tempo, mas, eventualmente, Bretton Woods entrou em colapso no início dos anos 1970, após a suspensão do presidente Nixons da convertibilidade do ouro em agosto de 1971. O dólar não era mais adequado como a única moeda internacional em um momento em que Estava sob forte pressão do aumento do orçamento dos EUA e déficits comerciais. As últimas décadas viram que o comércio cambial se tornou o maior mercado global do mundo. As restrições nos fluxos de capital foram removidas na maioria dos países, deixando as forças do mercado livres para ajustar as taxas de câmbio estrangeiras de acordo com seus valores percebidos. A Comunidade Econômica Européia introduziu um novo sistema de taxas de câmbio fixas em 1979, o Sistema Monetário Europeu. A busca continuou na Europa para a estabilidade da moeda com a assinatura de 1991 do tratado de Maastricht. Isto foi não só para corrigir as taxas de câmbio, mas também substituir muitas delas pelo euro em 2002. Londres era e continua sendo o principal mercado offshore. Na década de 1980, tornou-se o centro-chave no mercado Eurodólar quando os bancos britânicos começaram a emprestar dólares como alternativa aos libras para manter sua posição de liderança nas finanças globais. InAsia, a falta de sustentabilidade das taxas de câmbio fixas já ganhou nova relevância com os eventos no Sudeste Asiático na última parte de 1997, onde a moeda após a moeda foi desvalorizada em relação ao dólar dos EUA, deixando outras taxas de câmbio fixas, em particular na América do Sul, também olhando Muito vulnerável. As empresas japonesas tiveram que enfrentar um ambiente cambial muito mais volátil nos últimos anos, investidores e instituições financeiras descobriram um novo campo de jogos. O mercado de câmbio FOREX trabalhou inicialmente sob os bancos centrais e as instituições governamentais, mas posteriormente acomodou as diversas instituições. No presente, também inclui o ponto com booms e a World Wide Web. O tamanho do mercado FOREX anula qualquer outro mercado de investimento. A troca estrangeira é o maior mercado financeiro do mundo. Aproximadamente 1.9 trilhões de dólares são negociados diariamente no mercado de câmbio estrangeiro. Estima-se que mais de US $ 1.200 bilhões sejam negociados todos os dias. Pode-se dizer facilmente que o mercado FOREX é uma oportunidade lucrativa para o investidor hábil moderno. CAPÍTULO 3: MÉTODOS DE QUALQUER TAXAS DE CÂMBIO Existem dois métodos de cotação das taxas de câmbio. Método direto: para alteração na taxa de câmbio se a moeda estrangeira for mantida constante e a moeda doméstica for mantida variável, então as taxas são indicadas expressas em lsquoDirect Method E. g. US 1 Rs. 45,50. Método indireto: para alteração na taxa de câmbio se a moeda doméstica for mantida constante e a moeda estrangeira for mantida variável, as taxas são indicadas expressas no método lsquoIndirect. Por exemplo. Rs. 100 US 2.5116 Com o efeito a partir de 2 de agosto de 1993, todas as taxas de câmbio são citadas em método direto, isto é US 1 Rs. 45,50 GBP1 Rs. 79.82 Método de cotação No mercado Forex há duas taxas como uma é para comprar e uma é para taxas de venda. Isso ajuda na eliminação do risco de receber taxas ruins, ou seja, se uma pessoa vier a saber o que a outra parte pretende fazer, ou seja, comprar ou vender, o primeiro pode levar o último para um passeio. Há duas partes em um acordo de troca de moedas. Para começar o negócio, uma das partes pede uma citação de outra parte e a outra parte cita uma taxa. A parte que pede uma citação é conhecida como o partido lsquoAsking e a festa que dá uma citação é conhecida como o partido lsquoQuoting. As vantagens da citação de duas vias. Oslash Garante automaticamente o alinhamento das taxas com as taxas de mercado. Oslash O mercado disponibiliza constantemente preços para compradores e vendedores. Oslash O preço de duas vias limita a margem de lucro do banco de cotações e a comparação de uma cotação com outra cotação pode ser feita imediatamente. Oslash Não é necessário que qualquer jogador no mercado mostre se ele pretende comprar ou vender moeda estrangeira, mas isso garante que o banco de cotações não possa aproveitar manipulando os preços. As cotações bidirecionais Oslash dão profundidade e liquidez ao mercado e que é muito essencial para uma eficiência. Oslash Em citações de duas vias para a primeira taxa é a taxa de compra e outra taxa é para venda. Devemos entender aqui que, na Índia, os bancos que são revendedores autorizados, sempre citam taxas. Assim, as taxas citam - comprar e vender é para os bancos comprarem os dólares dele, então, enquanto o cálculo da primeira taxa será usado, que é uma taxa de compra, já que o banco está comprando os dólares do exportador. Oslash O mesmo caso acontecerá inversamente com o importador, pois ele vai comprar os dólares dos bancos e o banco vai vender dólares para o importador. MOEDA DE BASE Mesmo que uma moeda estrangeira possa ser comprada e vendida da mesma forma que uma mercadoria, mas eles são usados ​​como uma pequena diferença na compra de produtos de ajuda monetária. Ao contrário, no caso de commodities, no caso de moedas estrangeiras, duas moedas estão envolvidas, então é necessário saber qual a moeda a ser comprada e vendida e a mesma é conhecida como Moeda lsquoBase. TAXAS DE AMPLIAÇÃO DE BID As taxas de compra e venda também são referidas como as taxas de oferta e oferecidas. Nas taxas de câmbio do dólar referidas acima, ou seja, 1.628896, o banco de cotação oferece (vendendo) dólares em 1.6288 por libra enquanto oferecendo (comprando) em 1.6296. Então, nesta cotação, a taxa de lances para dólares é de 1.6296 enquanto a taxa oferecida é 1.6288. A taxa de proposta para uma moeda é automaticamente a taxa oferecida para a outra. No exemplo acima, a taxa de lances para dólares 1.6296, também é a taxa oferecida de libras. Cálculo da taxa de câmbio O dólar dos EUA é a moeda mais negociada no mercado cambial. Em outras palavras, um suporte da maioria das negociações cambiais é a moeda dos EUA, de modo que as margens entre a oferta e as taxas oferecidas são as cotações mais baixas se o dólar norte-americano. As margens tendem a alargar-se para taxas cruzadas, como o seguinte cálculo mostraria. Considere a seguinte estrutura: GBP 1.00 USD 1.628896 EUR 1.00 USD 1.127680 Nesta estrutura tarifária, temos que calcular a oferta e as taxas oferecidas para o euro em termos de libras. Deixe-nos ver como a taxa oferecida (venda) para o euro pode ser calculada. Começando com a libra, você terá que comprar dólares americanos à taxa oferecida em USD 1.6288 e comprar Euros em relação ao dólar à taxa oferecida pelo euro em USD 1.1280. A taxa oferecida para o euro em termos de GBP, portanto, torna-se EUR (1.62881.1280), ou seja, EUR 1.4441 por GBP, ou mais convencionalmente, GBP 0.6925 por euro. Da mesma forma, a taxa de oferta do euro pode ser vista em 1.4454 euros por GBP (ou GBP 0.6918 por euro). Assim, a cotação torna-se GBP 1.00 EUR 1.444154. Será notado ansiosamente que, em termos percentuais, a diferença entre a oferta e a taxa oferecida é maior para a taxa de EUR: libra em relação ao dólar: EUR ou libra: taxas de dólar. CAPÍTULO 4: VANTAGENS DO MERCADO FOREX O mercado Forex é, de longe, o maior e mais líquido do mundo, mas também os comerciantes do dia se concentraram no momento em busca de lucros em mercados principalmente de ações e futuros. Isso se deve principalmente à natureza restritiva dos serviços de negociação forex oferecidos pelo banco. Existem Advanced Currency Markets (ACM) oferecem serviços de negociação de forex on-line e tradicionais para o pequeno investidor com valores mínimos de abertura de conta a partir de 5000 USD. Existem muitas vantagens na negociação em câmbio em lugar de negociação de ações e futuros. Estas são algumas das vantagens abaixo. Comissões: a ACM oferece uma comissão de troca de divisas gratuita. Isso contrasta fortemente com (mais uma vez) o que os corretores de ações e futuros oferecem. O comércio de ações pode custar entre US $ 5 e 30 por troca com corretores on-line e normalmente até US $ 150 com corretores de serviços completos. Os corretores de futuros podem cobrar comissões entre US $ 10 e 30 em turno redondo. Requisitos de margem: a ACM oferece uma negociação cambial com uma margem de 1. Nos termos de laymans, isso significa que um comerciante pode controlar uma posição de um valor de USD 1000000 com apenas USD 10000 em sua conta. Em comparação, as margens de futuros não são apenas mudanças constantes, mas também são bastante consideráveis. As ações geralmente são negociadas de forma não marginalizada e, quando elas estão, podem ser tão restritivas quanto 50. Mercado de 24 horas: o mercado de câmbio ocorre durante um período de 24 horas na Ásia, às 24: 00h CET, à noite e chegando ao fim nos Estados Unidos na sexta-feira às 23:00 CET. Embora as ECNs (redes de comunicações eletrônicas) existam para mercados de ações e mercados de futuros (como a Globex) que fornecem após o intercâmbio de horas, a liquidez geralmente é baixa e os preços oferecidos geralmente podem ser pouco competitivos. Limite de Limite de limite: os mercados de futuros contêm certas restrições que limitam o número eo tipo de transações que um comerciante pode fazer em determinadas condições de preço. When the price of a certain currency rises or falls beyond a certain pre-determined daily level traders are restricted from initiating new positions and are limited only to liquidating existing positions if they so desire. The controlling of daily price volatility is the main mechanism but in effect since the futures currency market follows the spot market anyway the following day the futures market may undergo what is called a gap or we can say also in other words the futures price will re-adjust to the spot price the next day. In the OTC market no such trading constraints exist permitting the trader to truly implement his trading strategy to the fullest extent. Since a trader can protect his position from large unexpected price movements with stop-loss orders the high volatility in the spot market can be fully controlled. Sell before you buy: Equity brokers offer very restrictive short-selling margin requirements to customers. This means that a customer does not possess the liquidity to be able to sell stock before he buys it. When initiating a selling or buying position in the spot market a trader has exactly the same capacity in margin wise. In spot trading when you are selling one currency you are necessarily buying another. CHAPTER 5: FOREX EXCHANGE RISK The Risk Management Guidelines are primarily an accent of some good and prudent practices in exposure management. They have to be understood and slowly internalized and customized so that they yield positive reimbursement to the company over time. Any business is open to risks from movements in competitors prices, raw material prices, competitors cost of capital, foreign exchange rates and interest rates, all of which need to be (ideally) managed. Forex Risk Everywhere in the world risk is attached. Without risk there is no gain. Also the FOREX is not risk-free. Like if you are trading with substantial sums of money and there is always a possibility that trades will go against you. Also there are several trading tools so that can minimize your risk and with caution and above all education the FOREX trader can learn how to trade profitably and while minimizing losses. Assuming you are dealing with a reputable broker and there are still risks to FOREX trading. Transactions are subject to unexpected rate changes, volatile markets and political events. Exchange Rate Risk: Exchange rate risk which refers to the fluctuations in the currency prices over a long trading period. The Prices can fall rapidly which are resulting in substantial losses unless and until stop loss orders are used when trading FOREX. And so stop loss orders specify that the open position should be closed if currency prices pass a predetermined level. Stop loss orders can be used in conjunction with limit orders to automate FOREX trading - limit orders specify an open position should be closed at a specified profit target. Interest Rate Risk: It can result from discrepancies between the interest rates in the two countries which represented by the currency pair in a FOREX quote. This discrepancy can result in variations from the expected profit or loss of a particular FOREX transaction. Credit Risk: It is the possibility that when the deal is closed one party in a FOREX transaction may not honor their debt and this may happen when a bank or financial institution declares insolvency. The Credit risk is minimized by dealing on regulated exchanges which require members to be monitored for credit worthiness. Country Risk: Country risk is connected with governments that may become involved in foreign exchange markets by limiting the flow of currency. There is more country risk associated with exotic currencies than with major currencies that allow the free trading of their currency. Limiting Risk in your FOREX currency trading system FOREX trading can be very risky but there are ways to limit your risk and financial exposure. Every FOREX trader should have a trading strategy for knowing when to enter and when to exit the market and what kind of movements to expect. Developing strategies requires education for the key to limiting FOREX risk. At all times follow the basic rule that do not place money in the FOREX that you cannot afford to lose. Every FOREX trader needs to know at least the basics about technical analysis and how to read financial charts. He should study chart movements and indicators and understand how charts are interpreted. Even the most knowledgeable traders however cant predict with absolute certainty how the market will behave. For this reason, every FOREX transaction should take advantage of available tools designed to minimize loss. Stop-loss orders are the most common ways of minimizing risk when placing an entry order. A stop-loss order contains instructions to exit your position if the currency price reaches a certain point. If you take a long position (expecting the price to rise) you would place a stop loss order below current market price. If you take a short position (expecting the price to fall) you would place a stop loss order above current market price. As an example, if you take a short position on USDCDN it means you expect the US dollar to fall against the Canadian dollar. The quote is USDCDN 1.213643 - you can sell US1 for 1.2136 CDN dollars or sell 1.2143 CDN dollars for US1. You place an order like this: Sell USD:1 standard lot USDCDN 1.2136 121,360 CDNPip Value:1 pip 10 Stop-Loss:1.2146 Margin:1,000 (1) You are selling US100,000 and buying CDN121,360. Your stop loss order will be executed if the dollar goes above 1.2146, in which case you will lose 100. However, USDCDN falls to 1.211623. You can now sell 1 US for 1.2116 CDN or sell 1.2123 CDN for 1 US. Because you entered the transaction by selling US dollars (buying short), you must now buy back US dollars and sell CDN dollars to realize your profit. You buy back US100,000 at the current USDCDN rate of 1.2123 for a cost of 121,223 CDN. Since you originally sold them for CDN121,360 you made a profit of 155 Canadian dollars or US127.85 (155 divided by the current exchange rate of 1.2123). CHAPTER 6: FOREIGN EXCHANGE EXPOSURE Adler and Dumas defines the foreign exchange exposure as lsquothe sensitivity of changes in the real domestic currency value of assets and liabilities or operating income to unanticipated changes in exchange rate. Foreign exchange risk is mainly related to the variability of the domestic currency values of assets, liabilities and operating income due to unanticipated changes in exchange rates. When there is a condition prevalent where the exchange rates become extremely volatile the exchange rate movements are destabilize the cash flows of a business significantly then such destabilization of cash flows that affects the profitability of the business. And this profitability of the business risk is from the foreign currency exposures. Foreign currency exposure and the attendant risk occur whenever a business has an income and expenditure or an asset and liability in a currency other than that of the balance-sheet currency. Indeed exposures can arise even for companies with no income, expenditure, asset or liability in a currency different from the balance-sheet currency. We can define exposure as the degree to which a company is affected by exchange rate changes but there are different types of exposure, which we must consider. In simple terms that exposure is the amount of assets and liabilities and operating income that is at risk from unexpected changes in exchange rates. There are two sorts of forign exchange risks or exposures. The term exposure refers to the degree to which a company is affected by exchange rate changes. Following are the types of foreign exposurerisks. TRANSACTION EXPOSURE Transaction exposure is the exposure which occurs from foreign currency denominated transactions which an entity is committed to complete. It arises from the contractual, foreign currency and future cash flows. For example, if a firm has entered into a contract to sell televisions at a fixed price denominated in a foreign currency and the firm would be exposed to exchange rate movements till it receives the payment and converts the receipts into domestic currency. The exposure of a company in a particular currency is measured in net terms, i. e. after netting off potential cash inflows with outflows. Transaction exposure is intrinsic in all foreign currency denominated contractual obligationstransactions. This involves gain or loss arising out of the various types of transactions and that require settlement in a foreign currency. The transactions may relate to cross-border trade in terms of import or export of goods, domestic purchases and sales of goods and services of the foreign subsidiaries, the borrowing or lending in foreign currencies and the purchase of asset or takeover of the liability involving foreign currency. The actual profit the firm earns or loss it suffers is known only at the time of settlement of these transactions. While it is true that transaction exposure is applicable to all these foreign transactions, it is usually employed in connection with foreign trade which is specific imports or exports on open account credit. It is worth mentioning that the firms balance sheet already contains items reflecting transaction exposure the notable items in this regard are debtors receivable in foreign currency, creditors payable in foreign currency, foreign loans and foreign investments. Suppose that a company is exporting deutsche mark and while costing the transaction had reckoned on getting say Rs 22 per mark. By the time the exchange transaction materializes i. e. the export is affected and the mark sold for rupees the exchange rate moved to say Rs 18 per mark. The profitability of the export transaction can be completely wiped out by the movement in the exchange rate. Such transaction exposures arise whenever a business has foreign currency denominated receipt and payment. The risk is an adverse movement of the exchange rate from the time the transaction is budgeted till the time the exposure is extinguished by sale or purchase of the foreign currency against the domestic currency. TRANSLATION EXPOSURE Translation exposure is the exposure which arises from the need to convert values of assets and liabilities denominated in a foreign currency into the domestic currency. Translation exposure means any exposure arising out of exchange rate movement and ensuing change in the domestic-currency value of the deposit would classify as translation exposure. It is potential for change in reported earnings and in the book value of the consolidated corporate equity accounts as a result of change in the foreign exchange rates. For any given period of time Translation exposure arises from the need to quottranslatequot foreign currency assets or liabilities into the home currency. Translation exposure is for the purpose of finalizing the accounts. The treatment of foreign currency borrowings is a typical example of translation exposure and which consider that a company has borrowed dollars to finance the import of capital goods worth Rs 20000. When the import materialized the exchange rate was say Rs 30 per dollar. The imported fixed asset was therefore capitalized in the books of the company for Rs 600000. In the ordinary course and assuming no change in the exchange rate the company would have provided depreciation on the asset valued at Rs 600000 for finalizing its accounts for the year in which the asset was purchased. If at the time of finalization of the accounts the exchange rate has moved to say Rs 35 per dollar, the dollar loan has to be translated involving translation loss of Rs50000. The book value of the asset thus becomes 650000 and consequently higher depreciation has to be provided thus reducing the net profit. Translation exposure relates to the change in accounting income and balance sheet statements caused by the changes in exchange rates and these changes may have taken place byat the time of finalization of accounts vis-agrave-vis the time when the asset was purchased or liability was assumed. We can say that in other words, translation exposure results from the need to translate foreign currency assets or liabilities into the local currency at the time of finalizing accounts. Alternatively, translation losses (or gains) may not be reflected in the income statement but they may be shown separately under the head of translation adjustment in the balance sheet without affecting accounting income. This translation loss adjustment is to be carried out in the owners equity account and the reason is that the accounting income has not been diluted on account of translation losses or gains so it may be shown in the owners equity account. On account of unstable ways of dealing with translation losses or gains, accounting practices vary in different countries and among business firms within a country. Whichever method is adopted to deal with translation lossesgains it is clear that they have a marked impact of both the income statement and the balance sheet. ECONOMIC EXPOSURE An economic exposure is more a managerial concept than an accounting concept. A company can have an economic exposure to say Yen: Rupee rates even if company does not have any transaction or translation exposure in the Japanese currency. This would be the case for example, when the companys competitors are using Japanese imports. If the Yen weekends the company loses its competitiveness (vice-versa is also possible). Then the companys competitor uses the cheap imports and can have competitive edge over the company in terms of his cost cutting. Therefore an indirect way company exposed their Japanese yen. In simple words we can say that the economic exposure to an exchange rate is the risk that a change in the rate affects the companys competitive position in the market and so it indirectly affects the bottom-line. Economic exposure affects the profitability over a longer time than the transaction and even translation exposure. While translation and transaction exposures can be hedged the economic exposure cannot be hedged under the Indian exchange control. Among all the exposures economic exposure is considered the most important because it has an impact on the valuation of a firm and it is defined as the change in the value of a company that accompanies an unanticipated change in exchange rates. It is important to note that anticipated changes in exchange rates are already reflected in the market value of the company. For example when an Indian firm transacts business with an American firm it has the expectation that the Indian rupee is likely to weaken vis-agrave-vis the US dollar and this weakening of the Indian rupee will not affect the market value (as it was anticipated, and hence already considered in valuation). So, in case the extentmargin of weakening is different from expected it will have a bearing on the market value. The market value may enhance if the Indian rupee depreciates less than expected. And also in case the Indian rupee value weakens more than expected, it may entail erosion in the firms market value. In brief, the unanticipated changes in exchange rates (favorable or unfavorable) are not accounted for in valuation and, hence, cause economic exposure. Economic exposure is not as precise and accurate as those of transaction and translation exposures but it involves subjectivity. Shapiros definition of economic exposure provides the basis of its measurement. According to him, it is based on the extent to which the value of the firmmdashas measured by the present value of the expected future cash flowsmdashwill change when exchange rates change. OPERATING EXPOSURE Operating exposure is a result of economic consequences (Cost). It is defined by Alan Shapiro as ldquothe extent to which the value of a firm stands exposed to exchange rate movements, the firms value being measured by the present value of its expected cash flowsrdquo. Economic exposure is known as of exchange rate movements on the value of a firm. Transaction and translation exposure cover the risk of the profits of the firm which being affected by a movement in exchange rates and on the other hand, operating exposure describes the risk of future cash flows of a firm changing due to a change in the exchange rate. Operating exposure has a longer-term perspective because Operating exposure has an impact on the firms future operating revenues, future operating costs and future operating cash flows. Given the fact that the firm is valued as a going concern entity and its future revenues and costs are likely to be affected by the exchange rate changes. In particular, it is true for all those business firms that deal in selling goods and services that are subject to foreign competition andor uses inputs from abroad. In case, the firm succeeds in passing on the impact of higher input costs (caused due to appreciation of foreign currency) fully by increasing the selling price, it does not have any operating risk exposure as its operating future cash flows are likely to remain unaffected. The fewer prices elastic the demand of the goods services the firm deals in and the greater is the price flexibility it has to respond to exchange rate changes. Price elasticity in turn depends on the degree of competition and location of the key competitors. The more differentiated a firms products are the less competition it encounters and the greater is its ability to maintain its domestic currency prices both at home and abroad. Apart from supply and demand elasticities the firms ability to shift production and sourcing of inputs is another major factor affecting operating risk exposure. In operational terms, a firm having higher elasticity of substitution between home-country and foreign-country inputs or production is less susceptible to foreign exchange risk and so encounters low operating risk exposure. In short, the firms ability to adjust its cost structure and raise the prices of its products and services is the major determinant of its operating risk exposure. MANGING YOUR FOREIGN EXCHANGE RISK Once you know about the foreign exchange exposure will be and currencies involved then you can manage the risk and you will be in a position to consider. The options available to you fall into three categories: 1. DO NOTHING: This is a very high-risk and speculative strategy as you will never know the rate at which you will deal until the day and time the transaction takes place. You might choose not to actively manage your risk and which means dealing in the spot market whenever the cash flow requirement arises. Foreign exchange rates are disreputably volatile and movements make the difference between making a profit or a loss. If you are relying on buying or selling your currency in the spot market it is impossible to properly budget and plan your business. 2. TAKE OUT A FORWARD FOREIGN EXCHANGE CONTRACT: This will enable you to fix the exchange rate immediately to give you the certainty of knowing exactly how much that foreign currency will cost or how much you will receive at the time of settlement whenever this is due to occur. As soon as you know that a foreign exchange risk will occur and you could decide to book a forward foreign exchange contract with your bank. As a result you can budget with complete confidence. However, you will not be able to benefit if the exchange rate then moves in your favor as you will have entered into a binding contract which you are obliged to fulfill. You will also need to agree a credit facility with your bank for you to enter into this kind of transaction 3. USE CURRENCY OPTIONS: The method you decide to use to protect your business from foreign exchange risk will depend on what is right for you but you will probably decide to use a combination of all three methods to give you maximum protection and flexibility. A currency option will protect you against adverse exchange rate movements in the same way as a forward contract does but it will also allow the potential for gains should the market move in your favor. For this reason, a currency option is often described as a forward contract that you can rip up and walk away from if you dont need it. Many banks offer currency options which will give you protection and flexibility but this type of product will always involve a premium of some sort. The premium involved might be a cash amount or it could be factored into the pricing of the transaction. Finally, you may consider opening a Foreign Currency Account if you regularly trade in a particular currency and have both revenues and expenses in that currency as this will negate to need to exchange the currency in the first place. FOREX TOOLS There are many tools available to the FOREX trader for analyzing the market as well as for buying and selling currencies. Software tools are a necessary part of FOREX because of its volume and volatility. In order to make lucid successful trades the FOREX trader needs information. Forex traders need more and more information. The trader needs historical data as well as current information about political and economic conditions that could affect currency prices. And all this information is provided by many FOREX brokers on their web sites. Political and economical condition is make accurate assessment from Forex traders. Being able to predict whether a currency will fall or rise against another currency allows the FOREX trader to profit from currency movements. For buying and selling currencies these are the two basic trading methods. Reactive trading means the trader responds to changes in the political or economic climate. Speculative trading means the trader makes buying decisions and on based of these decisions predictions on how the market will respond to current events. While most FOREX trading is speculative both types of trade require up-to-time it means up-to-the-minute information and an analysis of current and historical conditions. Traders are relying on both fundamental and technical analyses. Fundamental analysis is based on news information about political conditions, economic policies, trade patterns, interest rates and unemployment rates and where Technical analysis relies on historical charting to identify trends and patterns over time. Information needed for both types of analyses is available in real time on the Internet. Most online brokers offer live news feeds and streaming rates for observing minute by minute changes in the market. All this information can help you decide which currencies to buy or sell. More tools are available in the market which to help you minimize your risk and maximize your profits. TheRisk Probability Calculator (RPC): The RPC can be used to identify trades that who have more potential gain than potential loss. The RPC can also help you target exit points to end the trade. Pivot Points: Pivot Point Calculators tell you whether prices fall in the normal trading range or extreme trading ranges. Pivot Points can be used for predict the movements of currency prices and they are calculated as an average of the currencies high, low and closing prices. Pip Value Calculators: Pip calculators can tell you the actual profit or loss that will result from movements in the FOREX and also it is used to tell you the value of each pip (smallest currency unit) according to various sized lots. Once a trader has decided which currency pair to trade then he logs on his online account provided by his broker. After log on account the desired currency pair is entered and the current exchange rate appears on the screen. The amount of the trade is entered (how much currency you wish to buy). Some brokers may give you the option of specifying the amount you wish to risk. This automatically enters a stop loss rate into your order. After the details of the trade are entered you will be taken to a confirmation screen where you can accept the current price on screen. You may be given the option of freezing the quoted price. Freezing means the price of your transaction is exactly what you see on screen without any slippage. Then accept the rate and your deal is running. If exchange rate falls below a certain rate just as you can enter a stop loss rate to automatically sell the currency and then you can enter a take profit rate to automatically sell the currency when it reaches a certain level. If you dont enter a take profit rate you need to monitor the movement of the currency to decide when to close the deal and take either your profits or your losses. FOREX ANALYSIS There are two types of analysis applied for analyzing and forecasting the movement of currency exchange rates. 1. Fundamental analysis 2. Technical analysis Various indicators determine market moves in the FOREX trading. FOREX traders are always relying on analysis to make plan their trading strategies. There are two basic types of FOREX analysis - technical and fundamental. We can understand firstly fundamental analysis. A análise fundamental refere-se a condições políticas e econômicas que podem afetar os preços cambiais. FOREX traders using fundamental analysis rely on news reports to gather information about unemployment rates, economic policies, inflation, and growth rates. The aim of the fundamental analysis is to make middle-term and long-term predictions on the Forex market and it become necessary to conduct research on internal deep reasons for changes in currency exchange rates. Only this type of analysis will make it possible to estimate the prospects of dynamics of the currency demand and supply Most traders rely on technical analysis for plotting entry and exit points into the market and supplement their findings with fundamental analysis but Fundamental analysis is often used to get an overview of currency movements and to provide a broad picture of economic conditions affecting a specific currency. Currency prices on the FOREX are affected by the forces of supply and demand, which in turn are affected by economic conditions. Os dois fatores econômicos mais importantes que afetam a oferta e a demanda são as taxas de juros e a força da economia. A força da economia é afetada pelo Produto Interno Bruto (PIB), pelo investimento estrangeiro e pela balança comercial. Indicators There are various indicators are released by government and academic sources. São medidas confiáveis ​​de saúde econômica e são seguidas por todos os setores do mercado de investimento. Os indicadores geralmente são divulgados mensalmente, mas alguns são divulgados semanalmente. Dois dos principais indicadores fundamentais são as taxas de juros e o comércio internacional. Other indicators include the Consumer Price Index (CPI), Durable Goods Orders, Producer Price Index (PPI), Purchasing Managers Index (PMI), and retail sales. Interest Rates: Interest rate can have either a strengthening or weakening effect on a particular currency. The high interest rates attract foreign investment which will strengthen the local currency. Por outro lado, os investidores no mercado de ações geralmente reagem aos aumentos das taxas de juros, vendendo suas participações na crença de que custos de empréstimos mais altos afetarão adversamente muitas empresas. Os investidores em ações podem vender suas participações causando uma desaceleração no mercado de ações e na economia nacional. Determinar quais desses dois efeitos predominarão depende de muitos fatores complexos, mas geralmente há um consenso entre os observadores econômicos de como as mudanças específicas das taxas de juros afetarão a economia e o preço de uma moeda. International Trade: Trade balance which shows a deficit (more imports than exports) is usually an unfavorable indicator. Deficit trade balances means that money is flowing out of the country to purchase foreign-made goods and this may have a devaluing effect on the currency. If a county habitually operates with a deficit trade balance this has already been factored into the price of its currency. Os déficits comerciais só afetarão os preços cambiais quando forem mais do que as expectativas do mercado. Other indicators include the CPI: Other indicators as CPI are a measurement of the cost of living and the PPI is a measurement of the cost of producing goods. The GDP measures the value of all goods and services within a country while the M2 Money Supply measures the total amount of all currency. There are 28 major indicators used in the United States. When preparing any strategies FOREX traders should be aware of them because Indicators have strong effects on financial markets. Up-to-date information is available on many websites and many FOREX brokers supply this information as part of their trading service. Technical Analysis FOREX technical analysis are using historical economic data to predict movements and is critical for forex trading strategies FOREX analysis is divided into two types: Fundamental and Technical. Fundamental analysis attempts to predict movements in currencies by examining current political and economic events. Technical analysis uses historical economic data to predict movements in the FOREX. These two articles will examine the principles of technical analysis and the tools involved. Basic Principles Technical analysis is based on three assumptions: 1. Market movement takes into account everything: Price movements are a result of all market forces combined. Things that can affect currency prices include political events, economic conditions, supply and demand, seasonal variations and weather conditions. The technical analyst is not concerned with the reasons for market movement but more the movements themselves. 2. Prices have tends of movement: The main consequence of assumption that ldquoprices move according to patternsrdquo is that the current trend is most likely to continue its further development but not go into reverse. The trends are divided into the three types: Bullish trend - the price moves up Bearish trend - the price moves down Sideways trend - the price almost doesnt move. Currency prices follow trends. Many market patterns have been recognized as having predictable consequences. 3. The history repeats itself: These patterns are based on human psychology and the way people react to certain sets of circumstances. Price movements follow historical trends. FOREX data has been collected for over 100 years and patterns have emerged over time. CHAPTER 9: FOREX CHARTS In FOREX technical analysis we will look at the various kinds of charts and provide basic guidelines for reading charts. Price Charts: Price Chartsshow information about FOREX prices at specified intervals of time. Intervals can be from one minute up to several years and everything in between. Prices can be plotted with simple line graphs or the price variation for each interval can be shown by a bar or candlestick pattern. Price chartsare usually supplemented with technical indicators. There are many Technical Indicators broadly divided into different categories which are Trend indicators, strength indicators, volatility indicators, and cycle indicators are just some of the analytical tools used to anticipate movement and market volume. Line Charts: Line charts are very clean to read and make it easy to spot patterns, but they lack the detail of bar and candlestick charts. Line chartsare suitable for getting a broad overview of price movements. They show the close price at the chosen intervals. Bar Charts: Bar chartsgive much more information than line charts. The length of each bar indicates the price spread for the given period. A long bar indicates a large difference between high and low prices. The left tab on the bar shows the opening price and the right tab show the closing price. Bar charts printed on paper (especially for short periods) can be difficult to read but software charts usually have a zoom function that makes it easier to read closely spaced bars. Candlestick charts: Candlestick chartswere invented by the Japanese for analyzing rice contracts. They are similar to bar charts in that they indicate open, close, high and low prices for a given period. They are easier to read than bar charts. It is easier to read because of their color coding. Green candlesticks show rising prices and red candlesticks show falling prices. Candlestick shapes - when viewed in relationship to neighboring candlesticks which provide indicators of market movement that can aid in chart analysis. Various shapes of candlesticks are formed according to price spread and the nearness of opening to closing prices. Candlestick patterns have been given fantastic names like morning star and dark cloud cover and once the shapes have been learned they are easy to pick out on a chart for identifying trends in the market. Some of the most common technical indicators used in FOREX are: Average Directional Movement Index (ADX)- is used to determine if a market is entering a trend (either downward or upward) and how strong the trend is. Readings over 25 indicate a trend with higher values indicating stronger trends. Moving Average ConvergenceDivergence (MACD)- shows the momentum of the market and the relationship between two moving averages. When the MACD line crosses the signal line it indicates a strong market. Stochastic Oscillator - indicates the strength or weakness of a market by comparing a closing price to a price range over a period of time. When the stochastic is above 80 it indicates the currency is overbought while a stochastic below 20 indicates the currency is oversold. Relative Strength Indicator (RSI)- is a scale of 100 indicating the highest and lowest prices over a given period. When the price rises above 70 it is considered overbought and when the price falls below 30 it is considered oversold. Moving Average - is the average price for a given time interval when compared with other prices during similar time periods. For example, the closing prices over a 3 day period would have a moving average of the total of the 3 closing prices divided by 3. Bollinger Bands - are bands which contain the majority of a currencys price. The bands are three lines - the upper and lower lines following the price movement and the middle line showing the average price. During times of high volatility the distance between the upper and lower bands widen. If a bar or candlestick touches one of the bands it indicates overbought or oversold conditions. CHAPTER 10: Factors which moves the forex market Interest Rates: Interest income and capital appreciation are the two methods we can use to make profit from countries interest rates. Interest Income. Every currency in the world somehow attached with an interest rate which is set by its countrys central bank. All things are same you should always Buy currencies from countries with high-interest rates and Finance these purchases with currency from countries with low-interest rates. Economic Growth. Economic Growth is next factor when predicting a countrys currency movements. The stronger the economy means the greater will be the possibility of that the central bank will raise its interest rates in order to the growth of inflation. Andthe higher a countrys interest rates means the bigger the likelihood those foreign investors will invest in a countrys financial markets. More foreign investors mean a greater demand for the countrys currency. A greater demand results in an increase in a currencys value. Hence economic growth inspires higher interest rates and it inspires more foreign investment. More foreign investment inspires greater currency demand and last which inspires an increase in the currencys value. Geo-Politics. Geo-political is the important factor which moves Forex market and the currency market is the only market which successfully traded on political news as well as economic releases in the world. Because currencies representcountries rather than companies and any disturbance to the political landscape will oftentimes affect the direction in which the exchange rate moves. The key understanding of speculative behavior with respect to any geopolitical factor that speculators run first and ask questions later. In other words whenever investors fear any threat to their capital they will quickly retreat to the sidelines until they are certain that the political risk has disappeared. Therefore the general rule of thumb in the currency market is thatpolitics almost always trumps economics. Trade and Capital Flows You should always determine whether or not the currency is dependent on its countrys capital or trade flow before ever making a final prediction regarding the movement (or trend) of a particular currency. Capital flow refers to the amount of investment a country receives from international sources and Trade flow is the income resulting from trade. Some countries can be very dependent their capital flow and while other countries are extremely sensitive to trade flows. Mergers and Acquisitions Merger and acquisition activity is the least important factor in determining the long-term direction of currencies. It can be the most powerful force in stagingnear-term currency moves. Merger and acquisition activity occurs when a company from one economic region wants to make a transnational transaction and buy a corporation from another country. For example, a European company wants to buy a Canadian asset for 30 billion it would have to go into the currency market and acquire the currency to affect this transaction. Typically, these deals are not price sensitive buttime sensitivebecause the acquirer may have a date by which the transaction is to be completed. Because of this underlying dynamic, merger and acquisition flow can exert a very strong temporary force on FX trading, sometimes skewing the natural course of currency flow for days or weeks. DIFFRENTIAL IN INFLATION: As its purchasing power increases relative to other currencies a country with a consistently lower inflation rate exhibits a rising currency value. Different countries have different inflation rate which reflect the most. The countries with low inflation included Japan, Germany and Switzerland, while the U. S. and Canada achieved low inflation only later. Those countries with higher inflation typically see depreciation in their currency in relation to the currencies of theirtrading partners. This is also usually accompanied by higher interest rates. CURRENT ACCOUNT DEFICITS: Thecurrent accountis the balance of trade between a country and its trading partners which reflecting all payments between countries for goods, services, interest and dividends. Adeficitin the current account shows the country is spending more on foreign trade than it is earning and that it is borrowing capital from foreign sources to make up the deficit. In other words we can say that the country requires more foreign currency than it receives through sales of exports and supplies more of its own currency than foreigners demand for its products. The more demand for foreign currency so lowers the countrys exchange rate until domestic goods and services are cheap enough for foreigners and foreign assets are too expensive to generate sales for domestic interests. PUBLIC DEBT: Countries will engage in large-scale deficit financing. Deficit financing is paying for public sector projects and governmental funding. While such activity stimulates the domestic economy, nations with large public deficits and debts are less attractive to foreign investors. Reason for these is a large debt encourages inflation and if inflation is high the debt will be serviced and ultimately paid off with cheaper real dollars in the future. In the worst case scenario a government may print money to pay part of a large debt but increasing the money supply unavoidably causes inflation. Moreover, if a government is not able to service its deficit through domestic means (selling domesticbonds, increasing the money supply) then it must increase the supply of securities for sale to foreigners in that way lowering their prices. Finally, a large debt may prove worrisome to foreigners if they believe the country risksfailure to payon its obligations. Foreigners will be less willing to own securities denominated in that currency if the risk of default is great. For this reason, the countrys debt rating a crucial determinant of its exchange rate. TERMS OF TRADE: A ratio comparing export prices to import prices is the terms of trade which related to current accounts and thebalance of payments. If the price of a countrys exports rises by a greater rate than that of its imports its terms of trade have positively superior and increasing terms of trade shows bigger demand for the countrys exports. This will shows result in rising revenues from exports and which provides increased demand for the countrys currency. If the price of exports rises by a smaller rate than that of its imports and the currencys value will decrease in relation to its trading partners. POLITICAL STABILITY AND ECONOMIC PERFORMANCE: Foreign investors unavoidably look for out stable countries with strong economic performance in which to invest their capital. A country with such positive attributes will draw investment funds away from other countries perceived to have more political and economic risk. Political turmoil is example which can cause a loss of confidence in a currency and a movement of capital to the currencies of more stable countries. CHAPTER 11: Important five key Factors which moves the forex market FACTOR 1: Interest Rates we can use two methods to profit from the difference in countries interest rates: Generating Interest Income. Every currency in the world comes close with an interest rate that is set by its countrys central bank. All things being equal you should always buy currency with high interest rates from country and salefinance these purchases currency from low-interest rates. For example, as of the fall of 2006, interest rates in the United States stood at 4.25, while rates in Japan were set at .25. You could have taken advantage of this rate difference by borrowing a large sum of Japanese yen, exchanging it for US dollars, and using the US dollars to purchase bonds or CDs at the US 4.25 rate. In other words, you could have borrowed money at .25, lent it out at 4.25, and made a 4 return. Or you could save yourself all the hassle of becoming a money lender by simply trading the currency pairto affect the same transaction. Generating income from capital appreciation. Asa countrys interest rate increase the value of the countrys currency also tends to increase-- this phenomenon gives you a chance to profit from your currencys increased value or capital appreciation. In the case of the USDJPY spread in 2005 and 2006, as the US interest rates stayed higher than Japans interest rates the dollar will continued to increase in value. Investors who traded yen for dollars gained from interest income as well as the US dollars capital appreciation. A wide spread in currency values provides investors with a ripened opportunity to earn income through both interest income and capital appreciation. Between January 2005 and November 2006, as the spread between US and Japanese interest rates widened, so did the spread between the currency values. A wide spread in currency values provides investors with a ripe opportunity to earn income through both interest income and capital appreciation. Interest rates spark a 700 point rally Another great example of the power of interest rates in the currency market occurred in August of 2006. At that time the Bank of England stunned the market by raising its short-term rates from 4.5 to 4.75. Interest rates for Japan were still at a low .25.The increase in Englands interest rates widened the interest rate differential on the popular GBPJPY cross from 425 basis points to 450 basis points. Investment money flowed into Great Britain as traders bought up pounds to take advantage of the new spread. As the demand for the GBP increased the value of the GBP increased, and the spread between the currencies increased. These domino effects lead to a700-point rally in the GBPJPY over the next three weeks. When the Bank of England raised short-term interest rates in August 2006, it leads to a 700-point rally in the GBPJPY over the next three weeks. 80 Points in Less than 24 Hours The concept of interest rates can be used to trade currencies using both long and short-term perspectives. On a long-term basis we look for major themes. On a short-term basis we look forsurprises in the newsthat shift the markets interest rate expectations. We were able to maketwo winning tradesbased on short-term interest rate flows in the Australian dollarJapanese yen (AUDJPY) currency pair on January 24, 2009. The trigger for our trade was the surprise drop in Australian consumer prices during the fourth quarter. The market was looking for hot inflation numbers but instead they received cold ones. Low inflation numbers meant the central bank of Australia was not likely to raise interest rates as expected. This news sent the Australian dollar tumbling hard against the Japanese yen, as traders speculated that theinterest rate differentialbetween the two currencies would no longer grow. The first trade we made on January 24 banked us 45 points. We took profit before the currency pair retraced and then sold it again when it showed further signs of weakness. The second January 24 trades produced an additional 35 points for a total of80 points. Australian dollar vs. Japanese yen, January 24, 2007.By predicting the affect of unexpectedly low inflation on the Australian dollar, we made two winning trades on January 24. Combined, these trades netted us 80 points in one day FACTOR 2: Economic Growth Economic growth is the other factor while predicting a countrys currency movement. The stronger the economy, the greater the possibility that the central bank will raise its interest rates to tape the growth of inflation andthe higher a countrys interest rates, the bigger the likelihood that foreign investors will invest in a countrys financial markets. More foreign investors mean a greater demand for the countrys currency. A greater demand results in an increase in a currencys value. Hence, a ripple effect: economic growth inspires higher interest rates inspires more foreign investment inspires greater currency demand which inspires an increase in the currencys value. How weak Economic Growth Crashed EURUSD 2,000 Points For a good example of the impact of economic growth on the direction of currency rates is the EURUSD from 2005 to 2006.Economic growth is best measured by a countrys Gross Domestic Product, or GDP. The United States and Euro zone represent two of the most prosperous regions in the world with GDPs running at 13 trillion and 11 trillion respectively. In 2005 and 2006, thedifference in growth ratesbetween the two major economic powers was clearly reflected in currency movements. In 2005 the Euro zone lagged significantly behind the United States in economic growth, averaging an anemic 1.5 rate throughout the year while the US expanded at a healthy 3 rate. Consequently, investment capital flowedfrom Europe to the USand the EURUSD dropped by nearly 2,000 basis points by the end of 2005.In 2006, however, Euro zone growth perked up while US growth began to slow. At the end of 2006, Euro zone GDP actually overtook US growth rates, causing the EURUSD to rally. In 2005, The EURUSD plummeted asEuro zone showed little economic growth compared to the US GDP. In 2006, as the EZ GDP rallied, so did the EURUSD. Weve used GDPs to forecast trends on several more Forex trades in the past. One great example is our November 14, 2006 United States dollar Japanese yen trade (USDJPY). 67 Points in Four Hours In the middle of November 2006, hurt by the reduction in its housing sector the US economic data began to deteriorate. Rumor had it that the US mightlower interest ratesin the first quarter of 2007, which would encourage foreign investors to look elsewhere. Meanwhile, the Japanese economy was buoyed by the feeble yen that made Japanese products affordable internationally and helped encourage double digit growth in exports. On November 14, 2006, the Japanese GDP printed at much better than expected -- 2 versus the 1 forecast. We decided to take advantage of thestrength of the Japanese economic growthvs. the relatively weak economic outlook in the US so we went short USDJPY at 117.82.As we hoped, that morning, in sharp contrast to Japan, US retail sales produced very weak numbers and the USDJPY pair collapsed. We were able to collect67 pointson the trade in less than four hours. United States dollar vs. Japanese yen, November 14, 2006.The strong economic growth in Japan made the USDJPY trade a success for us in November. FACTOR 3: Geo-Politics Geo-political is the important factor which moves Forex market and the currency market is the only market which successfully traded on political news as well as economic releases in the world. Because currencies representcountries rather than companies and any disturbance to the political landscape will oftentimes affect the direction in which the exchange rate moves. The key understanding of speculative behavior with respect to any geopolitical factor that speculators run first and ask questions later. In other words whenever investors fear any threat to their capital they will quickly retreat to the sidelines until they are certain that the political risk has disappeared. Therefore the general rule of thumb in the currency market is thatpolitics almost always trumps economics. The history of FX is besieged with examples of political trades. Lets take a look at some examples over the past few years. No-Confidence Vote Depresses Loonie The end of May 2005 was not a happy moment for the Liberal Party government of Canadas Prime Minister, Paul Martin. Martin was facing the fight of his life as his party prepared for a no-confidence vote stemming from accusations of past Liberal Party corruption after having guided the country to its best economic performance in 30 years Meanwhile, Canadas economy was becoming a star performer spurred by the massive rises in the price of oil. As the number one exporter of crude to the US, Canada was benefiting mightily from this new found wealth. Yet despite the great economic news, the Canadian dollarremained weakagainst the greenback as traders worried about the implications of the fall of the Liberals. On May 26, 2005, Martins government survived the no-confidence vote and the Canadian dollar rallied, causing the USDCAD to push 200 points in less than a week as the market once again focused on Canadas stellar economic fundamentals. The USDCAD pair trades inversely. Despite strong economic performance, the Canadian dollar remained weak until Martin survived the no-confidence vote and the Canadian political climate settled. Bank of Japan Governor Fukui Responsible for Floundering Yen At the beginning of June 2006, Bank of Japan Governor Fukui revealed to the Diet that he had invested 10 million yen in 1999 in a fund founded by financier Yoshiaki Murakami. Murakami was later indicted on charges of insider trading and although Fukui was not involved in any illegal activity and the mere appearance of impropriety in image-conscious Japan greatly damaged his reputation. As the principal of Japans monetary policy during its recovery from a decade-long battle with deflation, Fukui was considered one of the most powerful men in the currency markets. His forced resignation would dogreat damageto the prospects of further recovery in Japan. Meanwhile, Japanese economic data continued to showstellar economic performanceas exports and business investment continued to grow, unemployment reached decade-long lows, and consumer sentiment improved. Talk spread through the markets that Japan would soon abandon its zero-interest rate policy and would actually have positive interest rates for the first time this century. Despite all the positive speculation theyen floundered, continuing to decline against the dollar as traders feared that Fukui would have to step down. Fukui stolidly refused, and as the furor passed and the market realized that he would stay on, the yens strength returned, showing once again that when it comes to currencies, politics can often be more important than economics. Despite positive speculation and strong economic reports, the Japanese yen did not regain strength until investors realized that Fukui would not resign. If you enjoy predicting changes to the political landscape, your talents could be well utilized as a Forex trader. Recently, we predicted a strengthening of the Canadian dollar and earned close to 70 points in less than 24 hours. At 10 to 1 leverage you could have profited along with us, making a7 return or 700 on a 10,000 trade. How OPEC Made Us 70 Points Geopolitical risk mean wars, terrorist attacks or missile launches, but it can also relate to milder yet still politically dominant events such as G7 meetings and OPEC announcements. In October 2006, Saudi Arabia announced that they would back OPECs plans tocut oil productionby one million barrels a day after oil prices dropped more than 10 in just seven trading days. The cuts were to take effect on November 1, 2006, with more to come in December. As Canada is a major exporter and producer of oil, we believed that this policy change would bevery positivefor the Canadian dollar. Therefore we went short the US dollar and long the Canadian on October 19, 2006.Over the next 24 hours, based upon the geopolitical theme, we earned close to70 pointson the trade. United States dollar vs. Canadian dollar, October 19, 2006.Knowing that OPECs announcement would affect Canadian currency allowed us to gain 70 points on October 19. FACTOR 4: Trade and Capital Flows Before you make your final prediction about the trend of a countrys currency, you should take a moment tocategorize the countryas dependent on either trade flow or capital flow. Trade flow means how much income a country earns through trade andCapital flow means how much investment a country attracts from abroad. Some countries are sensitive to trade flows, while others are far more dependent on capital flows. Countries whose currency strength depends on theirtrade flowsinclude: These countries achieve a huge part of their growth through the export of various commodities. In the case of Canada oil is the primary (main) source of revenue. For Australia, industrial and precious metals dominate trade and in New Zealand, agricultural goods are a crucial source of income. Trade flows are also important for other export-dependent countries such as Japan and Germany. For countries like US and UK capital flows are of greater importance because of large liquid investment market. In these countries financial services are principal. In fact in the US, financial services represented 40 of the total profits of the SampP 500. The United States also serves as a perfect example of why it is crucial to understand which flows affect which country in order to effectively analyze the direction of currencies. On the surface, the US currency with its record multi-billion dollar trade deficit and near 1 trillion current account deficit should depreciate significantly. As the chart below illustrates, the US has been able to attract more than enough surplus capital from the rest of the world to offset the negative effects of its massive trade deficits. For the time being, trade-flow deficits do not matter to the dollar. However, it should the US become unable to attract enough capital flow to offset its deficits. Uridashi Bond Prediction Returns 40 Pips New Zealand has one of the highest interest rates January 2007 it was 7.25 in the developed world and because of that fact it is a major destination for capital flow. On January 22, 2007, there was talk ofUridashi bondsbeing issued to the benefit of the NZD. Uridashi bonds are issued when companies want to denominate their debt in a higher yielding currency and then offer it to Japanese investors. For these popular because the yield offered is far higher than the yield that Japanese investors can earn at home, which is less than 1. We anticipated that the weeks Uridashi issuances would inspire capital flow into New Zealand as investors purchased the bonds in New Zealand dollars. Once we made this prediction, we had to decide which New Zealand currency pair we would trade to best take advantage of the movement of the New Zealand dollar. We considered both the NZDUSD pair and the NZDJPY. We decided to go long the New Zealand dollar against the US dollar instead of against the Japanese yen. The riskreward ratio to go long NZDJPY versus NZDUSD was not as attractive. Our stop in the NZDUSD was more conservative than the risk we would have assumed in NZDJPY. Therefore, we went long NZDUSD and banked40 points over the next 24 hours. New Zealand dollar vs. United States dollar, January 22, 2007.We traded the New Zealand dollar United States dollar on January 22. The trade returned 40 points in 24 hours. New Zealand dollar vs. Japanese yen, January 22, 2007.The New Zealand Dollar Japanese yen trade would have been a higher risk than the above-charted NZDUSD trade. FACTOR 5: Mergers and Acquisitions Merger and acquisition activity is the least important factor in determining the long-term direction of currencies. It can be the most powerful force in stagingnear-term currency moves. When a company from one economic region wants to make a transnational transaction and buy a corporation from another country the merger and acquisition activity occurs. For example for a European company wants to buy a Canadian asset for 20 billion and it would have to go into the currency market and acquire the currency to affect this transaction. In general, these deals are not price sensitive butit is time sensitivebecause the acquirer may have a date by which the transaction is to be completed. Because of this underlying dynamic merger and acquisition flow can exercise a very strong temporary force on FX trading which sometimes skewing the natural course of currency flow for days or weeks. If you keep side by side of international merger and acquisitions you may be able to predict short-term fluctuations in FX. For example, in late 2006, Canadian economic data showed a great deal of weakness. Yet large demand for Canadian corporate assets from the Asia, Middle East, and Europe overrode the financial reports and kept the USDCAD at all-time lows. USDCAD trades inversely In November of 2006, we made a healthy profit by predicting a backward acquisition effect:After a surprising government announcement, money that had been used to purchase equities in Canada, reversed flow and headed out of the country. CanadaLoses Investors, Inspires Big Forex Gains Merger and acquisition activity can be a powerful but sometimes silent driver of demand in the currency market. When a countrys capital assets such as equities suddenly find help from the rest of the world and they indirectlyaffect pricing in theforeign exchange market as dealmakers first have tobuy the countrys currencybefore they can buy the stock.. In the fall of 2006, Stephen Harpers newly elected conservative government made a shocking announcementthat the very popular Canadian income trusts which enjoyed certain tax advantages would be taxed just like other Canadian securities. The Harper government exacerbated the situation by not grandfathering any of the long-term investors who already held positions in income trusts. We thought the impact of this news would be highly negative to the Canadian dollar as foreign capital would speedilyflow outof the country. Despite lackluster US economic news at the time, we thought a USDCAD trade would be profitable because news that affects immediate investment flows typically overwhelms any day to day economic data. Therefore, on November 1, 2006 we went long USDCAD at 1.1290 and were able to bank45 pointsin just a few hours. From the personal interview I would come across that these five factors are very important in the moving of forex market. I had taken interview of Mr. Darshan Soni from the Darshan Forex. They informed me about the forex market and also give some guidance of that how to moves the forex market and also they told that speculation affect more in the forex market. Currency speculation is measured a highly suspect activity in many countries. While investment in traditional financial instruments like bonds or stocks often is considered to contribute positively to economic growth by providing capital but currency speculation does not according to this view. It is simplygamblingthat often interferes with economic policy. CASE STUDY CASE STUDY 1 Hedging interest rate risk A major aircraft manufacturer has decided to replace his mainframe computer. The cost after trade in is 10 million, payable on delivery.