Foreign Exchange Market
In today’s world, financial markets play significant role in the global economy. Certainly, in recent years, you have also heard through newspapers and media a lot about rising or falling financial markets and the reasons for these changes. The fact is that at the current situation, the bold role of financial markets and Heard’s about its benefit, attract all people toward that, such as stocks, commodities, currencies, bonds, etc.that doesn’t look strange.
Therefore, introduction to concept and methods of investment, introduction to the principles of forecasting and analyzing markets and the method of trading in these markets are unique to experts in this field such as economists, traders, economic and financial experts, businessmen and economic enterprises that take benefit or Losses from changes.
We have seen a good example of these activities in Iran coin market. The volatilizes of the Iran coin market caused to each segment of other’s Conversation, focus on increasing or decreasing of coin price. Some people who have added value to their property by purchasing coins, happily they show their succeeding to others and encouraging others to buy coins. Their justification is that the coin will never experience decreasing its value. Of course, you have heard that between years 84-88, when housing prices in Iran were always on the ascending path.
An increasing number of online connections have smoothed the way for financial markets to enter, and usually different people, besides their main jobs, are examining the trend of financial markets to take benefit from the fluctuations in these markets.
Such analyzes are also seen among the global currency market traders. During many years of activity in these markets. I have seen the astronomical numbers in different markets, many people who have raised their investments in a short time to several times of the original assets, and many people who have lost their assets in this market during few days.
Many people, at the beginning of their entry into the financial markets, check this market, but eventually goes out without any result, while they have lost all their assets, has forgotten their activities in financial market and came back to their previous job. You should also have heard that 90% of the people in the currency market are losing. So the question is; what is the reason for this?
In this lesson, I do not intend to explain the reasons for the loss that people get. Because we have read like these Topics in psychology books. But I am here to say this from my own point of view.
In the author’s opinion, the main reason for the loss in financial markets is the lack of sufficient knowledge and experience, and particularly the lack of knowledge in the investment process, because if there was a correct understanding of this process and the investor was well understand about the concept of risk and returns, on investing market, He would never expect to gain wealth in a short period of time.
If you’ve ever looked at warfare maps, you’ll see that always an army was victorious that used specific program and strategy to fight. They consider about all aspects of the war in their planning and have a specific program for each moment of the war,and use the professional trained forces for the front line or the logistics section, and apply expert forces to analyze the situation, Have strategies and tactics and tested warfare techniques to enter the battlefield, so that they can win the warfare.
Maybe, the activity in financial markets is not unlike the war market, but a war in which both the supply and demand forces are involved in reaching the price.
Suppliers and marketers have come with various goals to this road. While some people seek to create new financial resources and attract funds, others are active in a speculative look, seeking profit from fluctuations in the price of the assets.
- Do you use specific program for your trades?
- What kind of techniques and tactics are you using for your trades?
- Which program have you developed to manage the potential risks of currency market?
- How do you deal with profitable and harmful deals?
- Does the main question be which place we are in?
- What is your goal for getting into financial markets?
- Why did you choose the currency market for investment?
- Do you know the process of price determining in the currency market?
- What is your goal that you came into financial markets?
- Do you understand the impact of other financial markets on the foreign exchange market?
- Do you know the reasons for fluctuating prices in the currency market?
Perhaps some people believe that in order to enter the world of currencies, there is no need to know everything. Many people believe that just using technical analytical techniques for trading is enough or that can be combined with several indicators to make an Automatic system for systematic trading.
But really has there formed a correct understanding for the process of technical analysis among traders?
Some people write in Criticism for fundamental analysis, and others, the inefficiency of technical analysis. Some describe both methods as inefficient, and others get to benefit from both methods in their trades. Newcomers with a huge amount of obscure information are wandered and every moment they taste new method in hope of success in this market.
The problem is not in technical analysis, nor in fundamental analysis. Do not assume that your losses are by methods, systems, or analytical methods.
Because there are many people who are successful with very simple methods, and many others are unsuccessful with highly complex trading methods.
The success factor for successful traders is summarized in one point ;
Understanding and mastering the investment process.
1.introducing Investment Principles
2.knowing financial markets (stocks, commodities, currencies, bonds, etc.)
- Methods of analysis (basic, graphing, Inter-Market,…
- introducing Trading Principles (Commercial Program)
; investment process involves many concepts
- Introduction to Investment Fundamentals
- Understanding the concept of investment
- Introduction to Investment Principles
- Understanding the concept of risk and return, and the rules of risk and money management
- Introduction to investment courses
- Introduction to various methods of analysis and financial markets and the optimal using for these methods
- And …
Introduction to financial markets ;
- Familiarity with Financial Markets
- Understanding the types of markets and their characteristics
- Understand the risks and returns of each market
- Understanding the goals in the investment of each market
- Familiarity with actors in each of these markets
- Understand the relationship between markets And …
Introduction to the Methods in Financial Market Analysis
- Fundamental analysis
- Technical analysis
- Analysis of inter-Markets
- Efficiency analysis
- Systematic analysis
To have Experienced to know trading principles
Using a regular and codified program (commercial application)
- Goals and investment period
- trading principles and fixed rules
- risk Management Fundamentals
- Money Management Fundamentals
- trends and process of analysis
- Strategies, tactics and trading techniques
The fact is that if you were familiar with the concept of investment before entering the foreign exchange market and knew about the types of markets and their risks and returns, or with a knowing point of view to enter the financial markets, You could never choose the currency market to get profit.
Successful people, especially in the foreign exchange market, have been some people who have often used simple methods in their transactions, but their domination on the market, experience, discipline, and their commitment to the last part of the business plan has led to use different analytical methods, trading systems and strategies that are different from each other, all have positive outcomes.
In fact, the code of their success is not summarized in their analytical systems or methods but is in their knowledge about the game basics, experience, and business plans.
Obtaining knowledge in following cases is a little hard, but it must be acknowledged that for success in financial markets, itis not necessary to pass years to gain expertise in the above fields.
As real traders, we do not need to be an economist or financial manager or to be familiar with all of business small works, but we should be able to use this science to optimize our trading system.
In fact, to succeed in this market;
You do not need to think like investment managers, but firstly, should acquaint with the correct concept of investment, to not expecting astronomical numbers and digits, and care to the potential risks of the currency markets, thereby avoiding many unnecessary losses (management Risk and money)
there is no need to study the global outlook for the next ten years, as an economist, but at first level you should know the variety of many factors affecting global markets, such as the concept of economic growth, inflation, and interest rates, to understand the causes of price changes, and to be able to Use them to draw an appropriate prospect of future fluctuations analysis the reasons for price changes in markets).)
You do not need to invest on Formation of investment baskets for trading as s investment fund managers in different markets, but you need to get knowledge, that help you choose the best asset (asset selection).)
There is no need to use highly complicated trading platforms like inter-bank traders, but you need to use and be adhere to your regular transactions as a true trader. (Commercial application).
You may continue to your daily life and announce clearly that you do not need to study more about many sciences, but you can not express this belief about economics.
You need to study economics in every job and the office degree you have, with every response. The higher is your position and responsibility, the more important for you is knowledge about the economic fundamentals.
According to the sentence of Alfred Marshall, one of the economists in the nineteenth century, “for mankind, the study is in the course of daily economic life”.
When you get a newspaper or watch TV, you certainly see a variety of news and information that being aware of these can change your decision makings. When you think about your life, you may make a lot of decisions. When you are a student, you decide, how many years stay in school. When you find a job, how much of your income do you spend? How much do you save? How do you invest your savings? Maybe the day will come that you manage a small enterprise or a large business company. Then there, you will decide about pricing your products.
All of the above reminds you the need for learning economics.
You may feel that it’s too late for learning, or it can not have a significant impact on life at this stage, but get familiar with the knowledge and tools fundamentally and purposefully every time, and try to learn it rightly. you will take many steps along your life with valuable experiences, you will get a higher position in terms of economics and Understanding
The purpose of this training course is to train the analysis of financial markets based on the fundamental analysis process. But in fact, you will learn about the basic principles of economics in this lesson, which will guide you in the financial markets, and, in addition, you will get the knowledge that will use throughout your life.
But at first, since the perception of fundamental analysis requires a person’s awareness of the structure of financial markets, we will look at the structure of financial markets in the next few lessons. Especially that the foreign exchange market is a market that influences many other financial markets. Hence, in order to understand the relations between markets, the fundamental analyst needs to have the necessary knowledge about the mechanisms of other markets and their relationship with the foreign exchange market. Hence, at the beginning of this training course we will focus on the structural nature of the financial markets, and then we will begin training the fundamental analysis method. In this course, we will learn two or three investment process.
The goal of us is rooted in learning. Root learning means knowing the mechanism of price change in the markets. To know that why the rates in the foreign exchange market behave this way, may not be important at first look, but it is important for us, because of developing logical methods of trading and help to raise the level.
The review for the past of many prominent and renowned traders shows that they have finally reviewed their behavior with the market and have begun a new move to succeed rightly.
At first, It is necessary to say that you should not expect a miracle from fundamental analysis. No analytical method is 100 percent, and if we are the best analyst, we can not expect to see that trends are 100 percent correct. But using fundamental analysis can greatly increase the success rate for a trader. We will discuss the various types of analytical methods and the goals for each of these methods in future lessons.
Fundamental analysis is only a component of the investment process, but it is not enough to succeed. Basic analysis training is just one of your tools and, in addition, you need other tools too.
So, once again, I advise you not to expect miracles but know that you will have deep insight, that will change the mechanism of your trades.