Despite the fact that the subject of an information portal forexanewway is a forex training, in this chapter we will look at the stock exchanges and stock indices. At first glance it may seem that the material head is not related to Forex, but in fact it is not. Exchange rates on the world market are correlated (correlation) with stock indices, so the study of the past can be a good tool in your arsenal of tools for analyzing and forecasting Forex.
Before you meet with the main stock exchanges, we consider the stock market participants to better understand its organization. In the previous chapter we have seen that happening in the stock market trading in securities. Securities released issuers - companies and organizations, raise funds for the organization of their business processes. Those with surplus funds, investors invest in securities with a view to profit in the future. The brokers are professional financial intermediaries that have a license for this type of activity - they help buyers and sellers of securities to find each other for mutually beneficial transactions. Brokers operate at the expense of their clients and on their behalf, be rewarded with a commission at closing. The venue of the securities trading is stock exchanges. These include stock exchanges and off-exchange trading systems, allowing to carry out trading through electronic POS terminals. Accounting of the issuer's securities and their current owners is a special organization - the registrar. Accounting of the securities portfolio of a single investor is carried out in the depository, which he served. As in any other business, the stock market there are bodies of state regulation and control, consulting and information firm.
Thus, securities trading conducted on stock exchanges (exchanges and off-exchange trading systems). The main volume of shares traded on a global scale focused on two trading platforms:
NYSE (New York Stock Exchange) - New -Yorkskaya Stock Exchange;
AMEX-NASDAQ - combining OTC NASDAQ (National Association of Securities Dealers Automated Quotations) and the Stock Exchange AMEX(American Stock Exchange).
Apart from the above trading platforms also deserve special attention:
LSE (London Stock Exchange) - The London Stock Exchange;
TSE (Tokyo Stock Exchange) - The Tokyo Stock Exchange;
DB (Deutsche Boerse) - Frankfurt Stock Exchange;
SEHK (Stock Exchange Hong Kong) - Hong Kong Stock Exchange.
We will not dwell on the fact that the impact on stock prices in the long term, as the consideration of this issue can take a long time. We also will not discuss the classification of shares in companies by industry of their activities. Let's just say that there are several branches, each of which in its appeal to investors. When investing money in shares of a particular industry remains unchanged fact that a large yield means a greater risk of loss for the investor. Subject analysis of financial activity of the company in order to make investment decisions also beyond the scope of the site. But you must know that there is a quantitative analysis of the financial statements (quarterly and annual) and qualitative analysis of the policy pursued by the company.
Now we focus on what kind of correlation (relationship) exists between the Forex market and the stock market. We already know that the rate depends on the economic situation of her country. The very same state of the economy depends on many factors. General indicators of these factors is the Gross Domestic Product - GDP. There are several methods of calculating GNP. As part of the material before us is only necessary to understand that the better financial situation of companies representing key sectors of the state (the higher the stock prices of such companies on the stock market), the higher the GNP and the more stable currencies. This means that if the stocks of companies representing key sectors of the state are growing in value, increasing in price and the currency of the State in the Forex market.
Thus, the question remains - how to quantify the state of the stock market of a single country. Just for this purpose and were introduced special indicators - stocks. Each stock markets used his stocks, which characterize the state of the stock market of the country. The value of stock index is calculated based on the value of the shares of companies (in certain proportions), included in the calculation base index. Despite the fact that there is a variety of stock indices on each trading floor decided to allocate only the most important, are the most approximate reflect the state of the stock market and the economy of their country. Here are the major stock indexes:
DJIA (Dow Jones Industrial Average - the Dow) in the US;
Composite NASDAQ (National Association of Securities Dealers Automated Quotations) in the US;
S & P 500 (Standard and Poor's 500 Index) in the US;
FTSE-100 (Financial Times Stock Exchange 100 Index) in the UK;
DAX (Deutscher Aktienindex) in Germany;
The CAC 40 (Compagnie des Agent de Change 40 Index) in France;
The Nikkei 225 in Japan;
SMI (Swiss Market Index) in Switzerland;
RTSI (RTS Index) in Russia.
The value of the stock index is directly dependent on the price of the shares included in the index calculation base. Therefore, for example, changing the value of the DJIA upward indicates a strengthening of the US economy. Converse is also true, when the fall of the DJIA shows the decline of the US economy.
Changes in stock market indices are reflected in the Forex market. Since Forex trading one currency is bought and sold for other currencies, to study the effect of stock indexes on a separate quotation must be taken to study the dynamics of the two stock indices. For example, in the case of quotations of USD / CHF, we need to study the dynamics of the stock indices DJIA and SMI. If the stock market is growing steadily DJIA and SMI steadily decreases, with a certain degree of error, we can argue that this trend will inevitably affect the Forex market, and the US dollar will rise against the Swiss franc. If both stock indices have dynamic growth, it is necessary to consider how the dynamics of growth of the index outperformed the growth of the other, and definitely talk about the impact on the Forex market is no longer necessary.
Summarizing the chapter say that forecasting - a creative process. You can use the benchmarks in its arsenal of forecasting changes in exchange rates on the forex, and you can ignore them. Obviously, your decision will depend on how you conduct trading on Forex. The use stock indicators for predicting exchange rates is only meaningful in the medium and long term. Moreover, the impact of the stock market on the foreign exchange market has a certain inertia and not immediately affected. In some cases, the effect of the reverse happens when the rate changes in the foreign exchange market led to the rise or fall of shares. Therefore, it is important to learn to understand what impact the primary, and it is not always a trivial task. Finally, apply the knowledge in this chapter or not - your choice. But to realize that all the economic processes in the world must be interconnected!
Before you meet with the main stock exchanges, we consider the stock market participants to better understand its organization. In the previous chapter we have seen that happening in the stock market trading in securities. Securities released issuers - companies and organizations, raise funds for the organization of their business processes. Those with surplus funds, investors invest in securities with a view to profit in the future. The brokers are professional financial intermediaries that have a license for this type of activity - they help buyers and sellers of securities to find each other for mutually beneficial transactions. Brokers operate at the expense of their clients and on their behalf, be rewarded with a commission at closing. The venue of the securities trading is stock exchanges. These include stock exchanges and off-exchange trading systems, allowing to carry out trading through electronic POS terminals. Accounting of the issuer's securities and their current owners is a special organization - the registrar. Accounting of the securities portfolio of a single investor is carried out in the depository, which he served. As in any other business, the stock market there are bodies of state regulation and control, consulting and information firm.
Thus, securities trading conducted on stock exchanges (exchanges and off-exchange trading systems). The main volume of shares traded on a global scale focused on two trading platforms:
NYSE (New York Stock Exchange) - New -Yorkskaya Stock Exchange;
AMEX-NASDAQ - combining OTC NASDAQ (National Association of Securities Dealers Automated Quotations) and the Stock Exchange AMEX(American Stock Exchange).
Apart from the above trading platforms also deserve special attention:
LSE (London Stock Exchange) - The London Stock Exchange;
TSE (Tokyo Stock Exchange) - The Tokyo Stock Exchange;
DB (Deutsche Boerse) - Frankfurt Stock Exchange;
SEHK (Stock Exchange Hong Kong) - Hong Kong Stock Exchange.
We will not dwell on the fact that the impact on stock prices in the long term, as the consideration of this issue can take a long time. We also will not discuss the classification of shares in companies by industry of their activities. Let's just say that there are several branches, each of which in its appeal to investors. When investing money in shares of a particular industry remains unchanged fact that a large yield means a greater risk of loss for the investor. Subject analysis of financial activity of the company in order to make investment decisions also beyond the scope of the site. But you must know that there is a quantitative analysis of the financial statements (quarterly and annual) and qualitative analysis of the policy pursued by the company.
Now we focus on what kind of correlation (relationship) exists between the Forex market and the stock market. We already know that the rate depends on the economic situation of her country. The very same state of the economy depends on many factors. General indicators of these factors is the Gross Domestic Product - GDP. There are several methods of calculating GNP. As part of the material before us is only necessary to understand that the better financial situation of companies representing key sectors of the state (the higher the stock prices of such companies on the stock market), the higher the GNP and the more stable currencies. This means that if the stocks of companies representing key sectors of the state are growing in value, increasing in price and the currency of the State in the Forex market.
Thus, the question remains - how to quantify the state of the stock market of a single country. Just for this purpose and were introduced special indicators - stocks. Each stock markets used his stocks, which characterize the state of the stock market of the country. The value of stock index is calculated based on the value of the shares of companies (in certain proportions), included in the calculation base index. Despite the fact that there is a variety of stock indices on each trading floor decided to allocate only the most important, are the most approximate reflect the state of the stock market and the economy of their country. Here are the major stock indexes:
DJIA (Dow Jones Industrial Average - the Dow) in the US;
Composite NASDAQ (National Association of Securities Dealers Automated Quotations) in the US;
S & P 500 (Standard and Poor's 500 Index) in the US;
FTSE-100 (Financial Times Stock Exchange 100 Index) in the UK;
DAX (Deutscher Aktienindex) in Germany;
The CAC 40 (Compagnie des Agent de Change 40 Index) in France;
The Nikkei 225 in Japan;
SMI (Swiss Market Index) in Switzerland;
RTSI (RTS Index) in Russia.
The value of the stock index is directly dependent on the price of the shares included in the index calculation base. Therefore, for example, changing the value of the DJIA upward indicates a strengthening of the US economy. Converse is also true, when the fall of the DJIA shows the decline of the US economy.
Changes in stock market indices are reflected in the Forex market. Since Forex trading one currency is bought and sold for other currencies, to study the effect of stock indexes on a separate quotation must be taken to study the dynamics of the two stock indices. For example, in the case of quotations of USD / CHF, we need to study the dynamics of the stock indices DJIA and SMI. If the stock market is growing steadily DJIA and SMI steadily decreases, with a certain degree of error, we can argue that this trend will inevitably affect the Forex market, and the US dollar will rise against the Swiss franc. If both stock indices have dynamic growth, it is necessary to consider how the dynamics of growth of the index outperformed the growth of the other, and definitely talk about the impact on the Forex market is no longer necessary.
Summarizing the chapter say that forecasting - a creative process. You can use the benchmarks in its arsenal of forecasting changes in exchange rates on the forex, and you can ignore them. Obviously, your decision will depend on how you conduct trading on Forex. The use stock indicators for predicting exchange rates is only meaningful in the medium and long term. Moreover, the impact of the stock market on the foreign exchange market has a certain inertia and not immediately affected. In some cases, the effect of the reverse happens when the rate changes in the foreign exchange market led to the rise or fall of shares. Therefore, it is important to learn to understand what impact the primary, and it is not always a trivial task. Finally, apply the knowledge in this chapter or not - your choice. But to realize that all the economic processes in the world must be interconnected!
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