Getting Started with Trading Research

Trading ResearchResearching the Foreign Exchange Market based on facts, historical data, and the cyclical patterns of the past.

 

Forex Market Statistics

With a daily turnover of $7.5 trillion per day, the Foreign Exchange Market is the largest and most liquid financial market in the world.

Highlights

  • The size of the entire Foreign Exchange market is estimated more than 2.4 quadrillion USD
  • More than 170 currencies are traded on the global Foreign Exchange market
  • USD is a component of 88.5% of the overall FX trading turnover, while EUR/USD remains the largest currency pair (22.7%)
  • London remains the most important Forex center in the world, followed by New York
  • Five organizations hold a 44% share of the entire global Forex market
  • There are over 14 million active Forex traders worldwide, most of them are located in Asia, and the great majority of them are men (89%)

Intermarket Analysis

Understanding Intermarket Analysis Intermarket Analysis

Intermarket Analysis investigates the relationships between different financial markets. The following intermarket analysis focuses on four major asset classes: bonds, currencies, equities, and commodities.

 

INTERMARKET ANALYSIS GUIDE CONTENTS

Cross-Asset Correlations

A cross-asset correlation measures the degree to which the price of a financial instrument is affected by a change in the price of another instrument of a different asset class...Key Cross-Asset Correlations

A cross-asset correlation measures the degree to which the price of a financial instrument is affected by a change in the price of another instrument of a different asset class.

 

Introduction to Cross-Asset Correlations

The globalization of the economy and the unification of the world financial markets into a common area of investment opportunities are the drivers of the increased cross-asset correlations we have witnessed over the past 20 years.

 

Defining Correlation:

In general, a correlation between two variables expresses an average relationship that is backed by historical data. The correlation coefficient receives values between -1.0 and +1.0, and that means:

  • +1.0 is the perfect correlation reflecting identical movements/directions

  • -1.0 is the perfect negative coefficient reflecting identical opposite directions

Forex Institutional Traders and Order Flows

Forex Institutional Trading, Order Flows, and Stop-HuntsForex Institutional Trading, Order Flows, and Stop-Hunts

If you are a retail trader, understanding the role of Institutional Trading is the same as a little Penguin knows when and where the white sharks go for hunting. This little information can save its life numerous times.

 

Profiling Institutional Traders

Institutional traders are large players managing great sums of trading capital. They include Investment Banks, Hedge Funds, Mutual Funds, Investment Firms, and some large Commercial Corporations. Institutional traders can manage their funds but also their clients’ funds. The Euromoney Survey can provide a good insight into the top institutional players in the Forex market.

The Euromoney Forex Survey

According to the 2017 Euromoney Foreign Exchange survey, Citigroup continues to hold the top ranking amongst currency trading companies. Note that the market share of the top five (5) global banks has diminished to 41.1% compared to 61.5% in 2009.

Following the Smart Money

Following the Smart Money -The Six (6) IndicatorsFollowing the Smart Money -The Six (6) Indicators

Traders who can recognize and follow the movements of smart money can improve significantly their trading performance.

 

What is the Smart Money?

Smart money can be defined as the capital invested by traders with expert knowledge and often with inside information. Smart money can spot trends before others and trades basically against the general market sentiment.

Smart Money and the Foreign Exchange Market

The Foreign Exchange market is a decentralized (OTC) market and that means there is no track record of the aggregate trading activity. That makes things even more difficult to identify the smart money movements. However, there are quite a few indicators providing insight into where the smart money is flowing.

This analysis includes the following indicators:

  1. Following the Long-Term Circles of Unemployment, Inflation, and Growth
  2. COT Analysis (Commitment of traders)
  3. The US-Dollar Index (USDX)
  4. The CBOE Volatility Indexes (VIX & Skew Index)
  5. The Treasury Bills Correlations
  6. Contrarian-News Approach

The Forex Market Statistics

Forex Market StatisticsWith a daily turnover of $7.5 trillion per day, the Foreign Exchange Market is the largest and most liquid financial market in the world.

 

Highlights

  • The size of the entire Foreign Exchange market is estimated more than 2.4 quadrillion USD
  • More than 170 currencies are traded on the global Foreign Exchange market
  • USD is a component of 88.5% of the overall FX trading turnover, while EUR/USD remains the largest currency pair (22.7%)
  • London remains the most important Forex center in the world, followed by New York
  • Five organizations hold a 44% share of the entire global Forex market
  • There are over 14 million active Forex traders worldwide, most of them are located in Asia, and the great majority of them are men (89%)
  • Retail trading accounts account only for 5.5% of the entire market’s turnover
  • The MetaTrader platforms dominate the online Foreign Exchange market (91%)

Subcategories

The Foreign exchange market or else Forex is the largest and most liquid financial market in the world...