How Forex Works?
Private investors (further — traders) have got access on world currency market in 1986 when on it margin trade for the first time has been involved. In this case for realization of the transaction is enough to bring into the account of the broker company small percent from the full sum of the contract, a so-called margin or the insurance deposit. The broker, in turn, gives to the trader a credit shoulder thanks to which the initial sum of the deposit, increasing in tens, and even hundreds times becomes sufficient for carrying out of transactions on Forex. For example, at the size of the credit level 1:100 and the size of a margin $10 thousand it is possible to carry out transactions with a turn to $1 million.
Differently, at margin to trade own capital of the investor makes only 1-3 % from the sums of operations spent by it. The effect of a credit shoulder does trade is very risky. On the one hand, it allows to derive huge profit but with another — can lead not smaller losses. At fulfillment of transactions losses of the client can’t exceed the initial size of his deposit (or its in advance established part). When the margin decreases to insufficient for carrying out of transactions of level, trade stops automatically, and the broker exposes to the trader the requirement to recharge (English margin call). As well as at any stock exchange, trade on Forex makes profit thanks to constant change of rates of exchange. At first sight, “success” strategy here is extremely simple: to buy more cheaply — to sell more expensively (speculation for the rise), or to sell more expensively — to buy more cheaply (speculation for the fall). However to foresee the further movement of the price of money is extremely difficult. Rates of exchange are very thin matter subject to influence of numerous factors: economic, political, ecological etc. Besides, appreciably the trend of this or that currency is defined by expectations of participants of the market. And it already is a question of “psychology of weights”. Nevertheless to learn to predict the further movement of a course all the same is possible.
For this purpose there is the whole science consisting of two basic parts: the fundamental analysis studying influence on a course macroeconomic, political, etc. factors or, simply speaking, news; and the analysis technical — studying price schedules for the previous periods of time. In last often include the likelihood analysis meaning forecasting of courses by means of the theory of probability and the mathematical statistics. Unlike “fundamentalists”, “technicians” recognize that any factor influencing the price, is in advance considered and reflected in its schedule. Therefore from their point of view influence of news on the further movement of a course remains minor. At first sight, the technical analysis can seem a guessing on a coffee thick.
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