Let the trend be your friend.
Under the floating exchange rate system, there are only three kinds of foreign exchange quotations, namely, rising quotation, falling quotation and sorting quotation. In the foreign exchange market, consolidation accounts for about 70%-80% of the annual trading day, and the remaining 20%-30% are long or short. In a consolidation market, investors should first distinguish the consolidation range and then sell it at the upper and lower positions of the range.
Buying at a stall, that is, buying low and selling high, can make a profit and the risk is not too great. If investors can rationally implement the stop-loss strategy, they can even increase the amount of investment to obtain greater returns.
However, most people in the market still hope to grasp the 20%-30% long or short market in time and operate with the trend. The main reason is that the profit of homeopathic operation is very considerable, the number of stops is small, and the extra cost is greatly reduced. What's more, homeopathic operators are only practitioners, not inventors, who only need to buy and sell according to the existing market trends, which belongs to the type of "easier said than done", so market participants think that "trends Trendisyourfriend". But there are two problems in actual trading: first, how to distinguish whether the market is long, short or consolidation; First, "contrarian operation" is a weakness that human beings are extremely difficult to overcome. Overcoming the weakness of human nature can usually be achieved by accumulating experience, bearing losses and increasing cognition. As for how to distinguish whether the market is bullish, short or consolidation, it must be judged from the fundamentals and technical aspects. When investors operate in the foreign exchange market, whether they are buyers or sellers, the basic premise should be to predict the future price of the investment target first, and then decide the investment strategy and operation direction according to their own predictions. For example, when investors are optimistic about the dollar against the yen, it means that investors think that the dollar will take a long market pattern and the yen will take a short pattern, so they should buy dollars and sell yen, that is, stand on the empty side of the dollar and the yen. If this prediction is correct, investors will make a profit.
Master the basic knowledge of data analysis
Fundamental analysts believe that the strength of the currency reflects the quality of the country's economic situation. Although its strength may fluctuate temporarily due to the interference of other non-economic factors, it may also have the opposite trend to the economic constitution, but in the long run, its price will eventually return to a level commensurate with the economic situation. As for how to measure a country's economic situation, we have to adopt a relatively comparative method. For example, the economic growth rate of the United States in 1996 is estimated to reach 3%. In the view of fundamental analysts, this data can't judge whether the dollar should strengthen or weaken. It must be compared with the economic growth rate of the previous year and with that of major countries such as Germany and Japan. If the economic growth rate of the United States in the previous year was 2%, while that of Germany and Japan in 1996 was about 1.5%, then the idea provided by the 3% data to fundamental analysts is that the economy of the United States is improving day by day, and its economic growth is better than that of Germany and Japan, and the dollar should be relatively strong against the mark or yen to reflect its economic strength. Fundamental analysts use this as an indicator of foreign exchange trading decisions, buying dollars and selling yen and marks.
The data reflecting an economic situation, that is, the so-called economic indicators, include many things besides the economic growth rate, such as trade deficit, budget deficit, money supply, consumer price index (retail price index), producer price index (wholesale price index), unemployment rate, housing operating rate, leading indicators and so on. As the focus of fundamental analysts' bets, the data will be published by relevant government departments on a regular basis. Such investors will collect and analyze the data and further analyze and compare them as the basis for judging the future trend of each trend.
Is this analysis and prediction correct? What's the effect? You can look at international investors, who have set up economic research departments to analyze the economic situation of major countries. Before the United States and other government agencies publish important economic indicators, investors in the market will settle or reduce their foreign exchange positions first, and the foreign exchange market will present an imminent enemy atmosphere, while bank traders will wait all night. We can know from all the people after the publication of economic indicators that fundamental analysis does have a decisive impact on the foreign exchange market.
After the publication of economic indicators, the currency trend is affected by it, and the strong may be stronger or weaker; The weak may be weaker or stronger, which shows the true portrayal of "economic indicators are market promoters". How can foreign exchange investors ignore such an influential factor? Therefore, no matter how correct the fundamental analysis is in predicting the future trend of the money market, for a long time, fundamental analysis has indeed become the criterion for market participants to make investment decisions.
Basic analysis is suitable for forecasting medium and long-term trends.
It is appropriate to predict the medium and long-term trend of currency through fundamental analysis, such as the next six months, 1 year or two years. However, since the abolition of the gold standard and the international floating exchange rate system, factors other than fundamentals will affect the price of money more or less. For example, the scale of the foreign exchange market is expanding and the number of people participating in foreign exchange investment is increasing. The daily turnover of the international foreign exchange market has changed from
From $800 billion in 1994 to 80% in 1995 and 1996, all transactions are speculative. Speculators buy and sell in the international market every minute, and a lot of buying and selling will also affect the foreign exchange market.
The whole international community is becoming more and more open, just like a global village, and the freedom of international funds entering and leaving countries is increasing. International payment systems, such as CHIPS in the United States and CHAPS in the United Kingdom, have accelerated the transfer of funds, even in an instant. International funds are like wings, and hot money comes into being, which not only affects the monetary policies of various countries, but also often distorts the reasonable monetary price that fundamentals should reflect, leading to the short-term failure of fundamental analysis. Therefore, foreign exchange investors have gradually revised the application of fundamentals, not only as a tool for medium and long-term trend prediction, but also in combination with technical analysis data to make investment decisions.
The fundamental analysis of foreign exchange trend has a long history, and the "purchasing power parity theory" mentioned in textbooks is an obvious example. The basic theory of purchasing power parity theory holds that the price relationship of currencies in various countries is directly related to the quantity of goods purchased by countries with the same amount of currencies. For example, if you buy an egg in the United States, Japan and Germany, the value is 1 yuan, Japanese yen 100 and German mark 1.5 yuan. It can be inferred that it is USD 1, Japanese yen 100 and German mark/kloc-. However, if we compare this theory with the current foreign exchange price, we will find that a currency is overvalued or undervalued. In addition, the calculated purchasing power of money varies with different commodity samples, whether the value of money is overestimated or underestimated, and the ratio of overestimation and underestimation will also be different. For example, according to the data provided by the Economic Research Department of Merrill Lynch in the United States, compared with the purchasing power of $0/996 in April, the overvalued currencies are Japanese yen, German mark, Swiss franc and New Zealand dollar, with overvalued ranges of 35%, 20%, 10% and 9% respectively; The undervalued currencies are British pound, Canadian dollar, French franc and Australian dollar, with the undervaluation ranges of 20%, 16%, 8% and 4% respectively.
Today's foreign exchange market has long gone out of the era of fixed exchange rate, so all kinds of political and economic news, as small as gossip, are enough to shock the market. It is obviously too simple to infer the appropriate price of money only by purchasing power parity, and investors can only take this theory as a reference.