The forex analysis
It
should be noted that compared to the stock market, the foreign exchange
market transactions in foreign currencies with international normative,
so integration will issue a lot faster. Therefore,
would not surprise when we suddenly realized that the investors lose
joining "playground" global forex if we do not prepare and encourage
popular application of Technical analysis now.
Currency trading has long certainly not only a specialized business of
commercial banks , but also become a channel of investment and
trading profit of a large part of the economy.
With the pace of international economic integration as now, surely this
field will increasingly flourish into an official investment channels
and important in the economy, such as investing in the stock market and
real estate Is.
We can somewhat identify common level of investment channels through
the most prestigious banks in the world are maintaining websites forex
trading transactions through the network to serve multiple purposes
Investors formats, private investors with a minimum account
(mini-account) from US $ 200-300 to investors' medium and large
"accounts with deposits over $ 500,000 level.
If we believe in the prospect that the foreign exchange market will now be a wide open market for many subjects and would become more and more professional, individual connections in the foreign exchange market with market international, then surely we can agree that learning about the forecasting methods effective exchange rate and facilitate investors step by step approach with this method is extremely necessary. In this article, I'll review some forecasting methods rates are currently used in the world, and focused presentations on technical analysis - a method is considered effective and are commonly applied today in the foreign exchange market development.
An overview of the methods of forecasting exchange rates
Methods forecast exchange rates using time series method. This method predicted values of variables should predict at the present time on the basis of its value in the past plus the partial error, the error is random fluctuation. This method is based on the prices already include all the relevant information and thus the "pattern" of past exchange rate will not contain any useful information should not necessary anymore interested in the pattern of the past. This characteristic forming the exchange rate volatility is random, changing behavior in the future is completely independent with past behavior. This research was supported by the math of probability theory, econometrics and chaos theory (chaos theory). This method requires analysts to solve problems and can handle informatics tools in data analysis econometrics. Combining theory of random variation and time-series models, based on the stability of variables, noise, autocorrelation properties ..., the researchers often use third respectively ARIMA model , ARCH, and GARCH. Also many models nonlinear autocorrelation like STAR also been proposed in recent years. Features of this model is that there is predictability in the short and medium term.
The second method is often used by economists is used econometric models to factor in determining the exchange rate.
Accordingly, the exchange rate is seen as a dependent variable can be
explained by macroeconomic variables such fundamental growth, inflation,
interest rates, real exchange rate, PPP theory ... Models This aims to
long-term forecasts for the macroeconomic conditions for long-term
equilibrium (thus sometimes called structural model or equilibrium
model).
Many non-linear models have been proposed, but the complexity of the
model is usually higher, and almost did not demonstrate superiority
completely than time series method random fluctuations.
A third method is analyzed in "flow line" command (order flow). This is a new approach and in contrast to the second method, that the exchange rate is influenced mainly by the microscopic structure of the Forex market: trading orders, news and adjust portfolio . However, these models proved more complicated than models under the second approach and the effectiveness of this model is still in the testing.
The fourth approach is fundamental analysis. People who use this method is based on the analysis of "fundamentals" such as GDP, investment, savings, productivity, inflation, balance of payments ... These analyzes not be modeled by econometric only qualitative in order to determine the impact of this factor to long-term trends of the exchange rate. This is a method used very commonly by foreign currency traders on the financial market development, besides methods of technical analysis.
Currency trading has long certainly not only a specialized business of
commercial banks , but also become a channel of investment and
trading profit of a large part of the economy.
With the pace of international economic integration as now, surely this
field will increasingly flourish into an official investment channels
and important in the economy, such as investing in the stock market and
real estate Is.
We can somewhat identify common level of investment channels through
the most prestigious banks in the world are maintaining websites forex
trading transactions through the network to serve multiple purposes
Investors formats, private investors with a minimum account
(mini-account) from US $ 200-300 to investors' medium and large
"accounts with deposits over $ 500,000 level. If we believe in the prospect that the foreign exchange market will now be a wide open market for many subjects and would become more and more professional, individual connections in the foreign exchange market with market international, then surely we can agree that learning about the forecasting methods effective exchange rate and facilitate investors step by step approach with this method is extremely necessary. In this article, I'll review some forecasting methods rates are currently used in the world, and focused presentations on technical analysis - a method is considered effective and are commonly applied today in the foreign exchange market development.
An overview of the methods of forecasting exchange rates
Methods forecast exchange rates using time series method. This method predicted values of variables should predict at the present time on the basis of its value in the past plus the partial error, the error is random fluctuation. This method is based on the prices already include all the relevant information and thus the "pattern" of past exchange rate will not contain any useful information should not necessary anymore interested in the pattern of the past. This characteristic forming the exchange rate volatility is random, changing behavior in the future is completely independent with past behavior. This research was supported by the math of probability theory, econometrics and chaos theory (chaos theory). This method requires analysts to solve problems and can handle informatics tools in data analysis econometrics. Combining theory of random variation and time-series models, based on the stability of variables, noise, autocorrelation properties ..., the researchers often use third respectively ARIMA model , ARCH, and GARCH. Also many models nonlinear autocorrelation like STAR also been proposed in recent years. Features of this model is that there is predictability in the short and medium term.
The second method is often used by economists is used econometric models to factor in determining the exchange rate.
Accordingly, the exchange rate is seen as a dependent variable can be
explained by macroeconomic variables such fundamental growth, inflation,
interest rates, real exchange rate, PPP theory ... Models This aims to
long-term forecasts for the macroeconomic conditions for long-term
equilibrium (thus sometimes called structural model or equilibrium
model).
Many non-linear models have been proposed, but the complexity of the
model is usually higher, and almost did not demonstrate superiority
completely than time series method random fluctuations. A third method is analyzed in "flow line" command (order flow). This is a new approach and in contrast to the second method, that the exchange rate is influenced mainly by the microscopic structure of the Forex market: trading orders, news and adjust portfolio . However, these models proved more complicated than models under the second approach and the effectiveness of this model is still in the testing.
The fourth approach is fundamental analysis. People who use this method is based on the analysis of "fundamentals" such as GDP, investment, savings, productivity, inflation, balance of payments ... These analyzes not be modeled by econometric only qualitative in order to determine the impact of this factor to long-term trends of the exchange rate. This is a method used very commonly by foreign currency traders on the financial market development, besides methods of technical analysis.
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