speculative on forex
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The optimal time to trade the forex foreign exchange market is when it's at its most active levels. That's when trading spreads the differences between bid prices and ask prices tend to narrow. In those situations, less money goes to the market makers facilitating currency trades, which leaves more money for the traders to pocket personally. Forex traders need to commit their hours to memory, with particular attention paid to the hours when two exchanges overlap. When more than one exchange is open at the same time, this increases trading volume and adds volatility—the extent and rate at which forex market schedule or currency prices change. The volatility can benefit forex traders. This may seem paradoxical.

Speculative on forex forex indicators for android

Speculative on forex

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Download references. You can also search for this author in PubMed Google Scholar. Brian G. Reprints and Permissions. Springer, Berlin, Heidelberg. Publisher Name : Springer, Berlin, Heidelberg. Print ISBN : Online ISBN : Anyone you share the following link with will be able to read this content:. Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative. Skip to main content. Search SpringerLink Search. Abstract There is evidence that simple trading rules can make measured profits in the foreign exchange markets. Keywords speculation foreign exchange profits beating the market risk premia performance measurement technical trading filter rules X-statistics. Buying options Chapter EUR Softcover Book EUR Tax calculation will be finalised during checkout Buy Softcover Book.

Learn about institutional subscriptions. Preview Unable to display preview. References Alexander, S. Google Scholar Alexander, S. Google Scholar Cornell, W. Google Scholar Dooley, M. Google Scholar Fama, E. Google Scholar Logue, D. Google Scholar Sweeney, R. Google Scholar Download references. If foreign or domestic investors believe that the central bank does not hold enough foreign reserves to defend the fixed exchange rate, they will target this nation's currency for a speculative attack.

The investors do this by selling that country's currency to the central bank at the fixed price in exchange for the central bank's reserve currency, in an attempt to deplete the central bank's foreign reserves. Once the central bank runs out of foreign reserves, it no longer is able to purchase its currency at the fixed exchange rate and is forced to allow the currency to float.

This often leads to the sudden depreciation of the currency. As many large nations have massive amounts of foreign reserves, often referred to as war chests , speculative attacks often target smaller nations with smaller war chests as they are easier to deplete. There are two main ways that domestic and foreign investors can profit from speculative attacks.

Investors can either take out a loan in the nation and exchange the loan for a foreign currency at the fixed exchange rate or short the stocks of the nation prior to the sudden depreciation of the currency. Taking out a loan allows the investor to borrow a large sum of money from the nation's central bank and convert the money at the fixed exchange rate into a foreign currency.

As the massive outflow depletes the war chest or forces the nation to abandon the fixed exchange rate, investors are able to convert their foreign currency back at a significantly higher rate. For example, an investor borrows X and converts it to Y at the fixed exchange rate of 1X to 1Y.

If the nation X runs out of foreign reserve Y in this period or if they are forced to allow their currency to float, the value of X may drop to an exchange rate of 2X to 1Y. Investors can then exchange their Y for X, allowing them to pay off the loan of X and maintaining a profit of X. An example of this can be seen in the United Kingdom prior to the implementation of the Euro when European countries used a fixed exchange rate amongst the nations.

The Bank of England had an interest rate that was too low while Germany had a relatively higher interest rate. Speculators increasingly borrowed money from the Bank of England and converted the money into the German mark at the fixed exchange rate. The demand for the British pound dropped so much that the exchange rate was no longer able to be maintained and the pound depreciated suddenly.

Investors were then able to convert their German marks back into pounds at a significantly higher rate, allowing them to pay off their loans and keep large profits. Shorting stocks also takes advantage of the depreciation of the currency following a speculative attack. Investors sell their stock with the agreement that they will purchase it back after a certain number of days, whether it increases or decreases in value.

If an investor shorts their stock prior to the speculative attack and subsequent depreciation, the investor will then purchase the stock at a significantly lower price. The difference between the value of the stock when it was sold and when it was repurchased is the profit that the investor makes.

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Example I, Here we can see the numbers of traders who are long or short on a pair, and in this example, we can see that this broker offers the change in open interest, which is currently — 2. So for every one trader that is holding a long trade in this pair, there are 2. Any position that shows a minus in front of the number represents the number of short positions, while readings that are above zero represent the number of traders who are net long in the pair.

Although the SSI is a leading indicator, it is considered to be contrarian, that is to say, that the information that is supplied by the broker should be used to trade against the retail traders with currently open positions. Example I, The rationale behind the contrarian aspect of this indicator using the 2.

And the opposite would apply if there were more buyers than sellers. To maximize the reversal potential of this indicator, it is advised to use it when there is a high ratio of change between the buyers and sellers. It is important that if you decide to use this information to trade that it is as up-to-date as possible. Only then will it help you to determine whether a particular currency pair is bullish or bearish.

Save my name, email, and website in this browser for the next time I comment. Forex Academy. Speculative Sentiment Index Index SSI In this presentation, we will be looking at the speculative sentiment index and its significance in the forex market. Example E, The open interest Example F, And the change between long and short positions The more information, the better your decision-making processes will be.

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