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FOREX MARKET

The Fastest growing investment arena and YOU 1


• Eric

Gao

• GM

of Baomoney P/L

• Financial

market analyst

• Investment

• Master

analyst

of Applied Finance

• Diploma

of technical analysis

•8

years FX investment experience 2


Analysing FX, Stock, commodity market on daily basis Investment advice Provide clients with market analysis and investment education Investment and projects valuation

3


CONTENT • 1.

FX market facts

• 2.

Why FX market?

• 3.

FX market and your opportunities

Upcoming FX technical analysis workshop

4


PART 1 FX MARKET FACT

5


Daily FX market turnover:

4.7 Trillion USD 3,615 30 6


Daily FX market turnover

4.7 Trillion USD 13

5.5

7


FX Market daily turnover 5,000

2008 - 2012 Daily turnover increases

3,750 2,500

+47%

1,250 0

1988

1998

2008

2012

8


Global stock market capitalisation

-13%

9


90 - 94% daily transaction are for investment and speculation Institutional transactions counts for 90% of daily trading

10


George Soros The man broke Bank of England ... 11


Ranking

Name

Market share

Deutsch Bank

15.64%

Barclays

10.75%

UBS AG

10.69%

Citi

8.88%

JPMorgan

6.43%

HSBC

6.26%

RBS

6.2%

Credit Suisse

4.8%

Goldman Sachs

4.13%

Morgan Stanley

3.64% 12


PART 2 WHY FX MARKET? 13


WHY DO WE NEED FX MARKET?

1

2

3

14


Singapore exporter with 100,000SGD receivables Date

exchange rate Receivable value

3 Jan 2012

1.2920

129,200.00

2 Feb 2012

1.2480

124,800.00

-4,400.00 15


AU investor in 500 Google share Date 28 Nov 2008 3 June 2009

Price

Value

Exchange rate

262 USD

131,000 USD

0.63

207,936

445 USD

222,500 USD

0.8235

270,188

Value AUD

Expected profit in USD: Actual profit in AUD: 62,252 91,500 loss in profit: 36,560 AUD 16


trader buys and sells

Investor buys and holds March 2009 - July 2011 AUD appreciates 65% 17


WHY DO WE PREFER FX MARKET OVER THE OTHER MARKET?

18


ADVANTAGES OF FX MARKET • Highly

liquid market

• Highly

flexible market

• Highly

transparent market

• Highly

profitable market

19


Gap on illiquid market

20


Monday gap

FX market barely has gaps. Gaps do happen on Monday morning, and with market surprises. 21


ADVANTAGES OF FX MARKET • Highly

flexible market:

• Range

of products: FX forward, FX options, FX swaps, Margin FX

• flexible

investment timeframe

• trading

opportunities 24/7

22


Currencies to watch: EUR, GBP, CHF, XAU

American session: 21:00 - 5:00

European session: 14:00 - 0:00

Currencies to watch: CAD, OIL, GAS

Asian session: 4:00 - 17:00

Currencies to watch: NZD, AUD, JPY, SGD, HKD, CNY 23


FX centres globally: UK - 40% US - 25% Switzerland - 9% Japan - 7.8% Singapore - 6.7%

Best FX trading session: Europe + US

Singapore time: 14:00pm - 0:00am 24


ADVANTAGES OF FX MARKET • Highly

transparent market

• The

FX market is theoretically perfect Efficient Market according to economists

25


ADVANTAGES OF FX MARKET • Highly

profitable market

2009 - 2011:

30 23

10 Years bond Dow Jones Index AUD/USD

15 8 0

2009

2010

2011 26


Part 3 FX market and your opportunities 27


ARE YOU READY FOR IT?

28


Investment and trading requires: Higher probability Knowledgeable actions

29


FX CHECKLIST 1. Capital to start with Capital for risk taking Length of using

30


2. choose the currencies to trade Currency characteristics Active timeframe Economic features Daily movement One or all?

31


3. choose your broker wisely

Platforms to offer Spread type Products offer Services provided

32


4. analyse the market

Fundamental analysis Technical analysis

Behavioural analysis

33


Fundamental analysis: analysing the economics conditions to find the undervalued currency. What to buy and sell 2010 FX market fact:

34


Fundamental analysis: analysing the economics conditions to find the undervalued currency. What to buy and sell 2010 FX market fact:

6 Interest rate hikes to 4.5% and more to rise Economic growth Improving labour market

0.25% interest rate QEII and QE3 Unstable economy Worsen labour market 35


April 2011 AUD/USD 1.08 Oct 2010 AUD/USD 0.99 Up 10%

36


2011 FX market fact:

37


2011 FX market fact:

Since May 2011, RBA kept i/r onhold Economic slowdown after natural disasters Worsening labour market

QE3 unlikely Economy stabilising Improving labour market

38


Oct 2011 AUD/USD 1.07

Down 4%

April 2012 AUD/USD 1.03

39


April 2012 FX market

QE3 unlikely

Debt crisis spreading

Economy stabilising

Worsening economies

Improving labour market

Accommodating monetary policies

Worsening economies Accommodating monetary policies

40


April 2012 FX market

Worsening economies Inflation target at 1%

Cutting interest rate and more to cut Worsening economies Unstable labour market

41


Technical analysis: analysing the currency movement by using charting and statistical indicators. When to buy and sell

42


Down theory example

LH LL

LH LH LL

EUR/USD 1H chart

LL 43


Technical analysis example Downtrend, but correction may happens soon

Bullish divergence ADX loses momentum

RSI oversold

44


Behavioural analysis: learn the repeating human behaviour in financial markets. How the others buy and sell

Herd effect 45


AUD/USD weekly chart

July 2008

5 years from 0.6 to 0.98

4 months to give all back April 2003

46


Your FX checklist 1. Prepare risk-taking capital 2. Decide the currency (currencies) to trade 3. Find a broker suits your needs 4. Analyse the market fundamentally, technically and behaviourally 47


Trading tips Know the direction, turn when you are wrong Know when to trade more and when to break Place stop loss for protection Taking time to master Know the direction, turn when you are wrong Know when to accelerate and stop Buy Insurance for protection Taking time to master 48


49


Upcoming Singapore FX technical analysis workshop

50


Advantages of technical analysis where the trend starts and ends The healthiness of the trend The best possible take profit rates

51


What will be cover? Dow theory and trend analysis Trend following indicators and trend analysis Trend momentum indicators and trend analysis Range trading and how to trade breakout Common mistakes with technical analysis 52


Who should be attending? New entrants to the FX market FX Investors and traders willing to improve technical analysis skills Investors and traders willing to learn technical analysis

53


20 clients required

One lucky client......

54


55


Risk Disclaimer General advice only, doesn't take account of your financial situation.

56


Wish you all trading successfully

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2012 April Baomoney Singapore Seminar