Lesson 1: Foreign exchange trading skills

Learn to open positions, liquidate positions and make profits

"Establishing a position" means opening a market. The opening is also called exposure, which is buying one currency while selling another currency. After the market opens, if the time to enter the market is good, the chance of making a profit is greater; on the contrary, if the time to enter the market is not appropriate, losses are prone to occur.

"Liquidation" is a stop-loss measure taken to prevent excessive losses when the currency's exchange rate is held after the position is established. For example, sell British pounds at an exchange rate of 1.60 and buy U.S. dollars. Later, the pound exchange rate rose to 1.62, and the nominal loss has reached 200 points. To prevent the pound from growing and causing more significant losses, the pound was repurchased at the exchange rate of 1.62, and the dollar was sold, ending the exposure with a loss of 200 points. Sometimes traders refuse to admit compensation but insist on waiting, hoping that the exchange rate will return so that when the exchange rate drops blindly, they will suffer huge losses.

The timing of "profit" is more difficult to grasp. After establishing a position, when the exchange rate has developed in a beneficial direction, the flat plate can be profitable. For example, when the US dollar is bought at 120 yen, the yen is sold; when the dollar rises to 122 yen, there is already a profit of 2 yen, so the dollar is sold, and the yen is repurchased to flatten the dollar position and earn a daily profit. Yuan profit, or flattening according to the original amount of Japanese yen sold to make a profit in US dollars, is an act of flattening profit. It is essential to grasp the timing of profit. If you close the market too early, you will not make much profit; if you close the market too late, you may delay the timing, and the exchange rate trend will reverse, and you will lose profits instead of profits.

Buy up, not buy down.

Foreign exchange trading is the same as stock trading. It is better to buy up and not to buy down. Because there is only one point in the process of price increase that is wrong, that is, when the price rises to the peak, the exchange rate rises from the floor to the ceiling and cannot grow anymore. In addition to this point, any other point of buying is correct.

To buy when the exchange rate is falling, only one thing is correct, that is, the exchange rate has fallen to the lowest point, just like it has fallen to the floor, and it cannot be lowered. In addition, other issues of buying are all wrong.

Since buying when the price rises, only one point is wrong, but only one point is suitable when the price falls. Therefore, the chance of purchasing a profit when the price rises are much more significant than when the price drops.

"Pyramid" overweight

"Pyramid" overweight means: After buying a particular currency for the first time, the currency exchange rate rises. Seeing that the investment is correct, if you want to increase the investment, you should follow the principle of "the amount of each increase is less than the last time." In this way, the number of additional buy-ins will become less and less, just like: "Pyramid." Because the higher the price, the greater the possibility of approaching the peak of the rise, and the greater the danger.

Buy when rumored (sell), sell when facts (buy)

Like the stock market, the foreign exchange market often circulates some news and even rumors, some information proves to be true afterward, and some information proves to be nothing but words afterward. Traders’ practice is to buy immediately when they hear good news and sell as soon as the information is confirmed. The reverse is also true. When bad news comes out, directly sell, and once the data is verified immediately buy back. If the transaction is not fast enough, it is likely to incur losses due to market changes.

Don't be overweight when you lose money.

After buying or selling foreign exchange, some people will want to increase when the market suddenly moves in the opposite direction. This is very dangerous. For example, when a particular foreign exchange has risen continuously, traders chase high and buy the currency. Suddenly the market reversed and plunged downwards. Seeing that the trader was losing money, he wanted to buy an extra order at a low price in an attempt to lower the exchange rate of the first order, and when the exchange rate rebounded, the two charges were closed together to avoid losses. This kind of overweighting method should be cautious. If the exchange rate has risen for some time, you may be buying a "top." If you buy more and more and continue to increase, but the exchange rate does not turn back, the result is undoubtedly a vicious loss.

Do not participate in uncertain market activities.

When you feel that the currency market is not clear enough and lack confidence, it is better not to enter the market. Otherwise, it is easy to make wrong judgments.

Don't go after integer points.

In foreign exchange transactions, sometimes mistakes are made to fight for a few points. After establishing a position, some people set a profit goal, such as earning 200 US dollars or 500 yuan, etc. They are always waiting for this moment to come. Sometimes the price is close to the target, and the opportunity is good, but it is still a few points before it is in place. It could have been flattened to collect the money, but I missed the best price while waiting and missed the opportunity due to the original target.

Establish a position when the game breaks out

The market refers to the market in cowhide, and the exchange rate volatility is narrow. In the game, buyers and sellers are evenly matched, temporarily in a balanced performance. Regardless of whether it is an upward or downward transaction, once the transaction is over, the market price will break the barrier and move up or down, showing a breakthrough. This is an excellent time to enter the market to establish a position. If the game is a long-term cowhide, the work found when breaking the game has a greater chance of making big profits.

The meaning of the price gap

The price gap refers to the area where no transaction occurs on the chart. In an upward trend, the lowest price of a particular day is higher than the highest price of the previous day. The highest price of a specific day in a downward trend is lower than the lowest price of the last day, leaving a gap or blank on the chart that cannot be covered by the cost of the day. An upward gap indicates a strong market, while a downward gap is usually a market weakness. The appearance of cracks in long-term images will have a more significant impact on future trends, so do not ignore the effects of price gaps.

Graphic meaning of ascending triangle

The ascending triangle is the evolution of a symmetrical triangle. The ascending triangle reflects that buyers are more potent than sellers in the market. Still, they encounter selling resistance at the same level every time, forming a horizontal resistance line reflecting the selling resistance. On the other hand, a support line reflecting the demand situation will also be included. Since the buyer's power is greater than the seller's power, the bottom continues to rise, showing an upward sloping trend. An ascending triangle indicates an upward trend after a breakout. Usually, the ascending triangle is a continuous pattern. Investors wait for the triangle to break through and follow up after a clear trend appears.

Lesson 2: The basic strategy of foreign exchange investment

The primary investment strategy is the same, especially in the more complex foreign exchange market, whether investing in the domestic market or foreign markets, whether investing in general commodities or financial products. Although the investment strategies of each person are different, some of them are basic, such as the summary of the methods below, which are of considerable reference value for various investors.

(1) Invest with spare funds

If investors invest with the necessary expenses of family life, in case of loss, it will directly affect the family's livelihood, and the chance of failure in the investment market will increase because it is psychologically disadvantaged when a sum of money that should not be used for investment is used to make money. It isn't easy to maintain an objective and calm attitude when making decisions.

(2) Know yourself and the enemy

You need to understand your personality. Those who are prone to impulsivity or have severe emotional tendencies are not suitable for this market. Most successful investors can control their emotions and have strict discipline, and can effectively restrain themselves.

(3) Do not over-trading

To become a successful investor, one of the principles is to maintain more than three times the capital at any time to cope with price fluctuations. If you do not have sufficient funds, you should reduce the purchase and sale contracts you hold. Otherwise, you may be forced to "liquid your position" due to insufficient funds to free up funds. Even if you prove that your vision is accurate, it will not help.

(4) Facing the market squarely and abandoning illusions

Don't use emotions; look forward to the future and remember the past too much. An American futures trader said: A person full of hope is a beautiful and happy person, but he is not suitable to be an investor. A successful investor can separate his feelings and transactions.

(5) Don't change your mind lightly

Set the price and plan for entering the market in advance. Don't easily change the decision because of the rapid price fluctuations. It is hazardous to make a quick decision based on the changes in the price of the day and market news.

(6) Make appropriate suspension of trading

Day after day, trading will slow down your judgment. A successful investor said: Whenever I feel that my mental state and judgment efficiency are as low as 90%, I start to make no money, and when my state is lower than 90%, I start to lose money. Therefore, I will let go of everything. And go on vacation for a few weeks. A short break can make you re-understand the market, re-understand yourself, and help you see the direction of future investment. Investor motto: When you get too close to the forest, you can't even see the tree in front of you.

(7) Don't blindly

Successful investors will not blindly follow the meaning of others. When everyone thinks they should buy, they will wait for an opportunity to sell. When everyone is in the same investment position, especially those small investors who have followed up, successful investors will feel dangerous and change their course. This is the same as the contrarian theory. When most people say they want to buy, you should wait for the opportunity to sell.

(8) Reject the opinions of others

When you have grasped the direction of the market and made a fundamental decision, do not easily change the decision due to the influence of others. Sometimes other people’s opinions appear to be very reasonable, prompting you to change your mind, but only afterward find out that your decision is the most correct. In short, the opinions of others are only for reference, and your own opinions are the decision to buy and sell.

(9) When in doubt, wait and see

It is not necessary to enter the market every day. New entrants are often keen to enter the market, but successful investors will wait for opportunities and leave the market first when they are confused after entering the market.

(10) Make a decisive decision

When investing in the foreign exchange market, many psychological factors lead to failure. A fairly common situation is that when investors face losses and know that they can no longer survive, they often hesitate and fail to act decisively, thus getting deeper and deeper. , The loss increased.

(11) Forget the price of the past

"Past price" is also a psychological obstacle that is quite difficult to overcome. Many investors have made mistakes in investment judgments because of the influence of past prices. Generally speaking, after seeing high prices, they will feel quite unaccustomed to the new low prices when the market goes down. At that time, even though various analyses show that the market outlook would fall again, the market investment climate was nasty. Still, investors are in these. Before the new low price level, not only would he not sell the goods he held, but he would also feel very "low" and have the urge to buy. As a result, he was firmly trapped after buying. Therefore, investors should "forget past prices."

(12) Patience is also an investment

There is a saying in the investment market that "Patience is an investment." I believe that few investors can do this. Those engaged in investment work must cultivate good endurance, which is often a key to success or failure. Many investors do not have low analytical skills or lack investment experience. Instead, they lack stamina and buy or sell prematurely, thus incurring unnecessary losses.

(13) Set a stop loss position

This is a crucial investment technique. Because the investment market risk is relatively high, to avoid losses in case of investment mistakes, we should place a stop-loss order every time we enter the market; that is, when the exchange rate drops to a predetermined price, it may also fall, The transaction is settled immediately, so this kind of calculation is a loss-limiting order so that we can limit the further expansion of the loss.

Lesson 3: How to earn foreign exchange spreads?

The People's Bank of China decided to lower the interest rates for small deposits of US dollars, Hong Kong dollars, and Swiss francs of domestic Chinese-funded commercial banks on May 23, 2001. This is the sixth consecutive reduction in US and Hong Kong deposit interest rates since December 23 last year. Since different foreign exchange currencies have different deposit interest rates, depositors can reduce interest losses through interest rates as long as they convert currencies with low interest rates into currencies with high interest rates.

Assuming that the one-year pound deposit interest rate is 5.5%, the dollar deposit interest rate in the same period is 5%, and the interest rate difference between them is 0.5%. Assuming that the current exchange rate between them is 1 pound = 1.5 US dollars, then if exchange rate fluctuations are not taken into account, the sum of the principal and interest of a one-year deposit of 1500 US dollars is 1575 US dollars [1500×(1+5%)], which is converted into The British pound is 1050 pounds (1575÷1.5). However, if the US$1,500 is first converted into £1,000, the sum of the principal and interest of the previous year will be £1,055 [1000×(1+5.5%)]. In short, for the same amount of deposit, depositing GBP is 0.5% more interest spread than depositing USD.

However, this can only be achieved if the exchange rate remains unchanged. In other words, if by the end of the one-year deposit period, the exchange rate fluctuation between them is 1 pound = 1.48 U.S. dollars, then the sum of the principal and interest of 1,055 pound deposits in pound sterling is converted into U.S. dollars, which is 1561.4 U.S. dollars (1055×1.48). Savings in US dollars are 13.6 US dollars (1575-1561.4), which is because the exchange rate difference between the British pound and the US dollar reached 1.33% in one year [(1.50-1.48)/1.50]. Therefore, arbitrage trading is not worth the gain when the exchange rate difference is more significant than the interest rate difference. In fact, due to the relationship between supply and demand, the forward exchange rate of currencies with high interest rates in the foreign exchange market will indeed fall. The situation that the exchange rate difference is more significant than the interest rate difference does exist. Therefore, in arbitrage trading, exchange rate difference and interest rate factors must be considered comprehensively. Of course, if there is a forward foreign exchange market, people can use swaps to avoid the risk of exchange rate fluctuations and earn interest margins. This approach is called offset arbitrage.

Foreign exchange financial management concerns: speculation in foreign exchange must reach three realms

Mr. Xi's involvement in the foreign exchange market started in 1995 and is now more experienced. Mr. Xi's participation in the foreign exchange market was mainly because of his only daughter. At that time, his daughter needed foreign exchange to study abroad, so Mr. Xi retreated from the stock market and specialized in foreign exchange research. Mr. Xi is a hard-working Huimin. According to him, he works more than 16 hours a day and only eats one dinner.

One of the most frequently said words of Mr. Xi is "The simplest foreign exchange speculation" because there is no trading volume in the foreign exchange market; Huimin does not need to study the distribution of chips but only needs to pay attention to the changes in prices. But Mr. West's involvement in the foreign exchange market was not all smooth sailing.

At the beginning of the transfer from stockholders to remittances, I always couldn't grasp the beat of the foreign exchange market because, in the stock market, everyone would not stop getting 1% of profits, but in the foreign exchange market, reaching 1% of profits had to be considered temporarily. At that time, Mr. Xi was most annoyed that he always stepped on the wrong beat when entering the foreign exchange market from the stock market, so he lost a lot of money at the beginning. In the end, he decided to withdraw from the foreign exchange market and wait and see for a while and then enter, "If the beat is right, the money will come." Mr. Xi said with a smile.

When asked what Mr. Xi’s most significant experience has been since he speculated in foreign exchange, he said: “You must abide by the operating rules you set. The most taboo is to violate your own rules because of greed.” But he also admitted that he also violated the rules twice. By the trading rules set by myself, I cannot sell when it is time to sell, so I lose a lot of money.

When asked what factors Mr. Xi's primary analysis of foreign exchange speculation, he said: "It is mainly to grasp the political trends." For example, when the euro was just launched in 2000, many friends persuaded Mr. Xi to buy the euro, and the market was also vigorously touting the euro, but Mr. Xi Not moved by it. At that time, Mr. Xi mainly analyzed the politics of European countries and believed that the cooperation of various countries still needed a running-in period.

Mr. West believes that foreign exchange trends have peaks and troughs like life. He especially admired Gann's theory, and he often made some charts in advance to predict prices and took out a table carried with him. He said that this table could reflect the foreign exchange market trend for a long time.

Mr. Xi believes that there are three realms in foreign exchange speculation. The first realm is "you follow the price"; the second realm is "the price follows you"; the third realm is "freedom and thorough thinking." Mr. Xi said that he has only reached the upper level of the second realm.

Driven by Mr. Xi, his wife also began to speculate in foreign exchange. Mr. Xi said: "Men wandering, women staying, and the husband and wife engaged in foreign exchange speculation can complement each other in their personalities." Since Mr. Xi’s wife joined the ranks of foreign exchange speculation, Mr. Xi has only made decisions as a decision-maker, and his wife has undertaken all operations.