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Still hope that there will be some responses
There are some important issues, (for me at least) which I want to point out and discuss with other traders. Let's start with the issue of forex itself.
By whom is forex market driven? A common sense for all traders on this subject is that market is driven correctly. (answer doesn't correspond to the question, ain't I correct?) SO BY CORRECT FOREX FORCES? OR FOREX FORCES which are always right? Can we say about trading such sentence: Trading is not about sum of money in your account, it is about your brain which is situated in your head (HEHE). Can we do that? Of course we can't!!! The sad truth in fact is that it is and was and will be about sum of your money in your account. Let's propose that 95% of the operations in the market are speculative by it's goal. It means that, actually market is speculative. Speculative driven by people like me, you and other forum members (How powerful are we) but can't we be sometimes wrong?
By whom is forex market driven?
Main question at the moment. I hope I will hear some clear discussional answers
ff is just quiet during the weekend
ok By whom is forex market driven?
my answer is not by us
but by people like us with stronger leverage and capital
check the DJIA chart below
I 100% can't believe that the movement during the 1980s era was caused by small traders like us here.
If we check carefully, from 1960 - 1980 the index was just idling at around $900 on average. suddenly after 1980 it was shot up amazingly and that move was started almost the same time with the great commodity depression era.
average people like us here would never had the idea that the stock market would ever reach 14000, not during the 1960 - 1980. no indicator of any kind will predict that. average people would probably started to buy 1 - 2 years after the index started to move up.
the market is moved by the same group who made massive selling of gold and oil on 1980
those are the same group responsible for the Asian crisis (check the USD/THB chart on 1990 - 2000), black Wednesday, etc
OK so far I only speak about the big, major movements, however I still believe smaller groups who also responsible for large sum of money still making the same speculative buy/sell in order to have our indicator to confirm the buy/sell every day and every hour
I'm talking about hedge fund managers, bankers, central banks, institutional traders etc.
so don't follow the Feds
don't follow BoJ
follow those big boys
- | Joined Apr 2007 | Status: Member | 2,387 Posts
"what doesn't bankrupt me, makes me stronger" modern nietzche
- | Joined Mar 2008 | Status: Member | 29 Posts
Mhhh... that was a start.... if i had 1 Billion....
The problem next will be based on what should I spend this 1 Billion??
Any idea?
The problem next will be based on what should I spend this 1 Billion??
Any idea?
- Joined Aug 2007 | Status: Senior Member | 1,798 Posts
my understanding,
Currency is driven by undercurrent forces such as fiscal policies , rate interest , economic growth , inflation ...
the structure of currency market starts from central banks , they sell/buy to tier 1 banks , tier 1 in turn sell/buy it again to tier 2 , etc ...
big companies use currencies to hedge their profit/loss against another currency when they deal with import and export they deal with tier 2 banks
and we ... we probably dont mean that much to the currency market , at least not as much as it means to us
Currency is driven by undercurrent forces such as fiscal policies , rate interest , economic growth , inflation ...
the structure of currency market starts from central banks , they sell/buy to tier 1 banks , tier 1 in turn sell/buy it again to tier 2 , etc ...
big companies use currencies to hedge their profit/loss against another currency when they deal with import and export they deal with tier 2 banks
and we ... we probably dont mean that much to the currency market , at least not as much as it means to us
To Live is the rarest thing in the world , Most people exist , that is all
- | Joined Dec 2007 | Status: IF YOU SEE SMOKE, RUN! | 1,206 Posts
By whom is forex market driven?
Main question at the moment. I hope I will hear some clear discussional answers
It's not driven by the OTC market [the one we particpate in.]
In my feeble mind the movements consists primarily of banks moving money around. This might be for companies like Apple making payments to China for all those iphones, imacs etc. China doesn't want another stinking dollar so Apple has to convert dollar to yuan to pay off those poor saps putting all those iphones together.
This is only one part of the equation... buying or paying for goods and services.
Another part is all these rich people hopping on these flying tin cans and going to places like London, Paris etc and nobody (in their right mind) wants a stinkin dollar. So have to convert it...This is probably the smaller part but still part of it.
BUY OUTS on WallStreet / EuroNext / or any other cockameemee exchange you can think of. This is probably a good size part of it but these don't necessarily happen everyday.
But say you have a deal like Google did for Groupon and say Groupon was a Brittish company or whatever. They buy them out for 5-6 Bil or whatever... again nobody wants a dollar these days. So got to convert it. So in thoughts like this you could think of the forex market as one big ole wal-mart for converting your worthless dollars into some other currency.
OIL--- TEXAS TEA
again they don't want a stinkin dollar... have to convert it. So with all this converting going on the market moves. You never know when some big player is going to jump in and convert, so that's why some moves are bigger than others and so on.
CENTRAL BANKS--- Ah the big Cahoney's... it's the parker brothers of the world... need some more $... ok no worries we'll print some. [Well maybe China is worried, but that's another story.]
Carry Traders - Hedge Funds etc. The central banks set the interest rates and the carry traders and Hedge funds buy the high rate currency in the hopes that it will appreciate, plus pay a nice daily swap.
Hedgers... These are typically big companies with exposure to various countries because they sell a sizable amount of goods. If the exchange rate goes to far out of whack they may not be able to compete price wise so they may buy or sell a certain currency to hedge part of their risk because they sell products. Much in the same way a big bakery may hedge against a rise flour or wheat prices... so they lock in their price and don't have to worry about any serious price moves so they remain competitive to gain market share etc.
I think this covers most of it... the rest is just banks farting in the wind.
It's not driven by the OTC market [the one we particpate in.]
In my feeble mind the movements consists primarily of banks moving money around. This might be for companies like Apple making payments to China for all those iphones, imacs etc. China doesn't want another stinking dollar so Apple has to convert dollar to yuan to pay off those poor saps putting all those iphones together.
This is only one part of the equation... buying or paying for goods and services.
Another part is all these rich people hopping on these flying tin cans...
Don't you have to buy dollar in order to invest in government bonds etc. or even like if you are interested in investing in stock company which is traded on nyse? I know american bonds and treasury papers really suck but hey, people are still holding on to them and some of them are even adding up, aren't they?
- | Membership Revoked | Joined Sep 2010 | 2,072 Posts
By whom is forex market driven?
Main question at the moment. I hope I will hear some clear discussional answers
- | Joined Dec 2007 | Status: IF YOU SEE SMOKE, RUN! | 1,206 Posts
Your post is really appreciated and I feel really well from what point of view you are coming out, however doesn't dollar get purchased a lot as well? If it only would be big players trying to get rid of the dollar then I am assuming that price chart would like a straight line up and all of us would be sooooo happy
Don't you have to buy dollar in order to invest in government bonds etc. or even like if you are interested in investing in stock company which is traded on nyse? I know american bonds and treasury papers really suck but hey, people...
I know my example of google buying (er trying to buy) groupon for some 6 bil wasn't really that good an example because both are american companies. So the exchange of money doesn't require forex entry.
You would only have to buy a dollar if you don't already have one, just investing a dollar you already have somewhere won't do nothing to the dollar because you aren't exchanging it for another currency.
Think about supply and demand for a bit... a bunch of people have 100k a piece and they all buy the euro. If all of them are holding USD the dollar is very plentiful on the market and so the value of it falls. [However, we don't really think of forex this way because of central banks and the parker bros. effect, not to mention interest rates. This alone makes the FX market different than anyother market including OIL, GOLD, RICE, SUGAR, CORN, STOCKS, BONDS, etc.]
There are many facets to the forex market, but in my mind the only way to move it is to access the forex market. Taking a dollar and buying something with it dollar for dollar does nothing. BUT if the something you bought was from overseas requiring a currency transaction at some point then it would have implications depending on how big the transaction was.
- | Joined Dec 2007 | Status: IF YOU SEE SMOKE, RUN! | 1,206 Posts
To expand on this further, just realize that even central banks have trouble moving the market, unless it is a coordinated effort by multiple central banks.
An example of this is BOJ and SNB this year. Both intervened and while the effect was felt for awhile it was only temporary. There is no one single player big enough to have a lasting effect on the currency markets.
My view of the forex is me in a little dingy in the middle of the ocean. Occasionally I see those great big Ocean liners and some times I'm lucky enough to grab on and hitch a ride for awhile.
Other times I mistakenly hitched a ride to a pirate ship and am looted an dumped back into the sea.
An example of this is BOJ and SNB this year. Both intervened and while the effect was felt for awhile it was only temporary. There is no one single player big enough to have a lasting effect on the currency markets.
My view of the forex is me in a little dingy in the middle of the ocean. Occasionally I see those great big Ocean liners and some times I'm lucky enough to grab on and hitch a ride for awhile.
Other times I mistakenly hitched a ride to a pirate ship and am looted an dumped back into the sea.