DOCSLIB.ORG

The Dow Theory: Curbing Emotional Investing

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Dow Theory: Curbing Emotional Investing ENDICOTT 607-754-7550 FULL SERVICE TOLL FREE 1-800-999-7550 INVESTMENT BROKERS FAX 607-754-7500 Members FINRA and SIPC Cheevers, Hand and Angeline, LLC Endicott Office: Square Deal Place, 111 Grant Ave, Suite 107, Endicott, NY 13760 www.chainvestment.com Securities products offered through Excel Securities & Associates, Inc. • Member FINRA and SIPC JANUARY 2020 $ UCCESS The Dow Theory: Curbing Emotional Investing n addition to starting the compa- months to years), and minor trends, will last. And since market prices ny that publishes The Wall Street which don’t last long and run in the fluctuate from day to day, it’s dan- IJournal, Charles Dow (1851–1902) opposite direction of the primary gerous to make too much out of a also lent his name to one of the trend. Primary up trends are bull single day’s movement. most popular U.S. stock market markets and primary down trends Primary trends can’t be indexes (the Dow Jones Industrial are bear markets — these are 4manipulated. The Dow theory Average) and created a theory marked by peaks and troughs in holds that the primary trend in the regarding major shifts in stock mar- price charts. Within these broader stock market is driven by forces ket trends. While neither Dow nor trends, there are secondary (minor) much bigger than any single event. those who refined the Dow theory countertrends called corrections, The stock indexes reflect all after him believed they were creat- which can retrace anywhere from 4available information. The ing a sure-fire way to beat the mar- 33% to 67% of the primary trend’s Dow theory believes that everything ket, they did believe that following movement. Of course, no one ever its principles could at least avoid knows in advance how long trends Continued on page 2 the mistakes associated with greed and fear. Fun Ways for the Entire Family to Save Three Assumptions ost people don’t think saving money is fun, but there are ways to Behind the Dow theory is a set Mmake it fun for the entire family. Check out these ideas: of assumptions about how the stock Make It a Competition — You and your spouse or two of your market works: teenagers can challenge each other to a “save-off.” Set a time frame and a The stock market moves in savings metric to determine the winner. Make sure the prize doesn’t 4broad cyclical trends. Accord- claim everything you’ve saved. ing to Dow, there are primary Create a Savings Thermometer — This is a great way to save when trends, which are long-lasting (from you have younger children. Let the kids create a large thermometer out of poster board, then write a saving goal at the top and hang it somewhere in the house where everyone can see it. Have a Family Garage Sale — A great way to clean out your house is for everyone to find clothes, toys, and other household items they no longer use or need. Let your children help run the sale. Find Inexpensive Family Fun — Not every outing with your kids has to include spending money, especially with younger children. Go to a local park, plant a garden together, or play a family game of baseball or volleyball. mmm Copyright © 2020. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. This newsletter intends to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete analysis of these subjects. Professional advisers should be consulted before implementing any options presented. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material. FR2019-0715-0081 The Dow Theory 5 Reasons to Start Saving Continued from page 1 f you’re interested in getting perhaps you’re dreaming of a sec- there is to know about a stock and started with savings or want to ond home by the lake, sending the economy at a given moment is Isave more, here are five reasons your kids to college, or starting factored into the prices of stocks. to help keep you motivated. your own business. Whatever your Unexpected events can occur, but 1. You’ll Be Prepared for dreams, they likely have one thing usually they affect the short-term Emergencies — Here’s an alarming in common — they probably re- trend, creating what are called reac- fact: most Americans don’t have quire some money to become a re- tion rallies. enough money saved to cover even ality. Few of those dreams are Three Primary Trend Phases relatively small unexpected ex- achievable if you don’t save for According to the Dow theory, penses. Without cash on hand to them. major trends consist of three phases cover these irregular but inevitable 4. You’ll Be Able to Earn More of varying length: costs, you’re more likely to turn to Money — Saving isn’t just about Stage 1: Accumulation or distri- credit cards or loans when the need setting aside what you’ve already bution. In this phase, the smart arises. Plus, the more debt you earned. It’s also about putting your money — typically large institution- have, the more difficult it is to save. money to work for you. Depending The result? A downward financial on where you save and invest your al investors like investment banks, spiral that can be difficult to pull money, you can earn more just by pension funds, mutual funds — yourself out of. being diligent about saving. Be- start major buying or selling pro- cause of the power of compound- grams. Initially, this looks like a sec- 2. You’ll Be More Independent ing earnings, even relatively small ondary countertrend, but trading — With a healthy amount of sav- amounts can grow significantly, volume on the major exchanges ings, you can feel more free to take provided you don’t touch your noticeably increases on up days, risks, like starting your own busi- principal. while volume tends to be lighter on ness, heading back to school to down days. train for a new career, purchasing a 5. You’ll Be Happier — Money home of your own, or moving to a isn’t the only thing that can make Stage 2: The big move. In this new city. Plus, without savings, us happy. But there’s evidence that phase, there are many more days in you’re living on the financial edge. saving money, even in small which the indexes move in the amounts, can make us happier. In direction of the primary trend than 3. You’ll Be Able to Reach contrast, having debt (often a con- in the opposite direction. In bull Your Goals — We all have goals. sequence of a lack of savings) tends markets, there are strings of up Maybe you simply want to enjoy a to lead to unhappiness. mmm days, followed by shorter strings of comfortable retirement one day. Or down days, reflecting the spread of enthusiasm for stocks. In bear mar- principal, while those who bought firms would show up in business kets, the opposite occurs, as anxiety stocks at high prices have finally for the companies they hire to move and pessimism mounts. The result is given up and sold at a loss. the goods they make. a significant, long-term increase The Indexes Confirm the For the second index to confirm (bull markets) or decrease (bear New Trend the first, the Dow theory looks for markets) in the market averages. For Charles Dow, the primary both averages to be moving in the Stage 3: Excess. The final phase trend was reflected in the Dow same direction. New highs or lows of a primary trend is marked by Jones Industrial Average, which in one index are accompanied by extremely high levels of emotion — today comprises 30 stocks. But Dow highs or lows at the same time or enthusiasm in bull markets and pes- also looked to another index to con- shortly thereafter in the other. simism in bear markets — which are firm the emergence of a new trend. The Dow theory is designed to signs that the primary trend is about In his day, that was the Dow Rail- tip off long-term investors to to change. These extremes can be road Index. Today, it’s the Dow changes in the trend, so they can seen in the behavior of individual Transportation Index of 20 compa- shift their money from stocks to investors: in bull markets, even the nies engaged in the shipping and another asset class. most conservative investors are buy- transportation of manufactured Please call if you’d like to dis- ing stocks. On the other hand, in the goods. The idea was that a true cuss this in more detail. mmm excess stage of a bear market, every- change in the trend of business one is concerned about safety of activity in the big manufacturing FR2019-0715-0081 The Psychology of Saving aving money sounds simple. selves as different or separate from time period. Overall, the evidence You set aside a portion of their current selves. That disconnect seems to suggest that if we can Swhat you earn on a regular can make it hard to prioritize saving change the way we think about the basis and watch your money grow. for the future. future — and our future selves — As a result, you’re more prepared Researchers studying this issue we may be able to boost our savings for emergencies, feel more financial- looked at whether encouraging peo- rates.
Load more

Recommended publications
  • Stairstops Using Magee’S Basing Points to Ratchet Stops in Trends
    StairStops Using Magee’s Basing Points to Ratchet Stops in Trends This may be the most important book on stops of this decade for the general investor. Professor Henry Pruden, PhD. Golden Gate University W.H.C. Bassetti Coauthor/Editor Edwards & Magee’s Technical Analysis of Stock Trends, 9th Edition This book contains information obtained from authentic and highly regarded sources. Reprinted material is quoted with permission, and sources are indicated. A wide variety of references are listed. Reasonable efforts have been made to publish reliable date and information, but the author and the publisher cannot assume responsibility for the validity of all materials or for the consequences of their use. Neither this book nor any part may be reproduced or transmitted in any form by any means, electronic or mechanical, including photocopying, microfilming, and recording, or by any information storage or retrieval system, without prior permission in writing from the publisher. The consent of MaoMao Press LLC does not extend to copying for general distribution, for promotion, for creating new works, or for resale. Specific permission must be obtained in writing from MaoMao Press LLC for such copying. Direct all inquiries to MaoMao Press LLC, POB 88, San Geronimo, CA 94963-0088 Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation, without intent to infringe. Dow–JonesSM, The DowSM, Dow–Jones Industrial AverageSM, and DJIASM are service marks of Dow– Jones & Company, Inc., and have been licensed for use for certain purposes by the Board of Trade of the City of Chicago (CBOT®).
    [Show full text]
  • Dow Theory for the 21St Century Schannep Timing Indicator COMPOSITE Indicator
    st April 1 , 2015 Dow Theory for the 21st Century Schannep Timing Indicator COMPOSITE Indicator Charting a Course of Caution Dow Jones: 17,776.12 S&P 500: 2,067.88 OVERVIEW: There are many stock market and economic indicators ‘out NYSE: 11,062.79 there’, and we can’t follow them all. But every so often we see something that causes us to take a look. Recently a couple of lesser known, or followed, indicators have given us pause in our bullishness. A MarketWatch column by Mark Hulbert about an indicator described by Norman Fosback in his 1976 ‘classic’ Stock Market Logic is intriguing. In years prior to those shown in the chart below, Fosback states that from 1942 to 1975, the "tops of 1946, '56, '59, '61, '66, '68, and '73 were all accompanied or preceded by turns in margin debt". All but 1959 were major bull market tops, as you can see at the Historic Record on our website. The concept illustrated is that ‘sophisticated’ investors aggressively use margin in bull markets, but pull in their horns when stocks start going down. Fosback further stated that when the trend is down, there is a 59% chance a bear market is in progress (41% a bull market is in progress) - not good odds. That implies the bull market topped out earlier this last month on March 2nd at 18,288.63! How’s that for a cloudy outlook? On the other hand, when margin debt is rising there is an 85% probability that a bull market is in progress – as has been the case since 2011, until now.
    [Show full text]
  • Investing with Volume Analysis
    Praise for Investing with Volume Analysis “Investing with Volume Analysis is a compelling read on the critical role that changing volume patterns play on predicting stock price movement. As buyers and sellers vie for dominance over price, volume analysis is a divining rod of profitable insight, helping to focus the serious investor on where profit can be realized and risk avoided.” —Walter A. Row, III, CFA, Vice President, Portfolio Manager, Eaton Vance Management “In Investing with Volume Analysis, Buff builds a strong case for giving more attention to volume. This book gives a broad overview of volume diagnostic measures and includes several references to academic studies underpinning the importance of volume analysis. Maybe most importantly, it gives insight into the Volume Price Confirmation Indicator (VPCI), an indicator Buff developed to more accurately gauge investor participation when moving averages reveal price trends. The reader will find out how to calculate the VPCI and how to use it to evaluate the health of existing trends.” —Dr. John Zietlow, D.B.A., CTP, Professor of Finance, Malone University (Canton, OH) “In Investing with Volume Analysis, the reader … should be prepared to discover a trove of new ground-breaking innovations and ideas for revolutionizing volume analysis. Whether it is his new Capital Weighted Volume, Trend Trust Indicator, or Anti-Volume Stop Loss method, Buff offers the reader new ideas and tools unavailable anywhere else.” —From the Foreword by Jerry E. Blythe, Market Analyst, President of Winthrop Associates, and Founder of Blythe Investment Counsel “Over the years, with all the advancements in computing power and analysis tools, one of the most important tools of analysis, volume, has been sadly neglected.
    [Show full text]
  • Chapter 8 Stock Price Behavior and Market Efficiency Questions and Problems
    CHAPTER 8 Stock Price Behavior and Market Efficiency “One of the funny things about the stock market is that every time one man buys, another sells, and both think they are astute.” William Feather “There are two times in a man’s life when he shouldn’t speculate: When he can’t afford it, and when he can.” Mark Twain Our discussion of investments in this chapter ranges from the most controversial issues, to the most intriguing, to the most baffling. We begin with bull markets, bear markets, and market psychology. We then move into the question of whether you, or indeed anyone, can consistently “beat the market.” Finally, we close the chapter by describing market phenomena that sound more like carnival side shows, such as “the amazing January effect.” (marg. def. technical analysis Techniques for predicting market direction based on (1) historical price and volume behavior, and (2) investor sentiment.) 8.1 Technical Analysis In our previous two chapters, we discussed fundamental analysis. We saw that fundamental analysis focuses mostly on company financial information. There is a completely different, and controversial, approach to stock market analysis called technical analysis. Technical analysis boils down to an attempt to predict the direction of future stock price movements based on two major types of information: (1) historical price and volume behavior and (2) investor sentiment. 2 Chapter 8 Technical analysis techniques are centuries old, and their number is enormous. Many, many books on the subject have been written. For this reason, we will only touch on the subject and introduce some of its key ideas in the next few sections.
    [Show full text]
  • The Dow Theory and the Management of Investments
    THE DOW THEORY AND THE MANAGEMENT OF INVESTMENTS By BURTON M. WOODWARD A DISSERTATION PRESENTED TO THE GRADUATE COUNCIL OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY UNIVERSITY OF FLORIDA 1968 COPYRIGHT 1968 BY BURTON M . WOODWARD 11 ACKNOWLEDGMENTS The writer wishes to express his appreciation for the assistance given him by Dr. William V. Wilmot, chairman of the supervisory committee. Appreciation is also expressed to Dr. Harvey Deinzer, Dr. John James, Dr. Alan Sievers, and Dr. Ralph Blodgett, who served on the committee. Special thanks go to Dr. A. E. Brandt for equal measures of advice and enthusiasm that made the research seem exciting. Special appreciation is expressed to my wife, Joanne, whose devotion and encouragement contributed immeasurably. iii . TABLE OF CONTENTS Page Acknowledgments iii Chapter I Introduction 1 Chapter II History of the Dow Theory 13 Chapter III Technical and Logical Problems 26 Chapter IV Analysis of the Dow Theory 35 Chapter V Other Methods of Trend Following 71 Chapter VI A New Technical Strategy 83 1 Chapter VII Summary and Conclusions 92 Appendix A Major Bull Movements and Dow Trades 1932-1967 99 Appendix B Lines 100 Appendix C Volume Action Between Turning Points 102 Appendix D Volume Correlation 103 Appendix E Trades on the Dow Theory 1932-1939 104 Appendix F Trades on the Dow Theory 1940-1947 105 Appendix G Trades on the Dow Theory 1948-1955 106 Appendix H Trades on the Dow Theory 1956-1963 107 Appendix I Trades on the Dow Theory 1964-1967
    [Show full text]
  • Dow Theory for the 21St Century Schannep Timing Indicator COMPOSITE Indicator a Tale of Two…Possible Outcomes
    st June 1 , 2013 Dow Theory for the 21st Century Schannep Timing Indicator COMPOSITE Indicator A Tale of Two…Possible Outcomes Overview: Even as the Bull market rages, there are always things to worry Dow Jones: 15,115.57 about. The declining trend in Retail Sales Growth is one of them. Two of the S&P 500: 1,630.74 last three previous ‘obvious’ declines have fallen to below a 2% growth rate NYSE: 9,302.27 and when they did the economy entered into recession. In 1995 the declining growth rate did not continue and was able to stabilize above 2% and avoid recession. Today’s report, however, showed consumer spending dropped to a negative -0.2% for April, not a good sign. The year- over-year change was about 2.8%. We’ll keep our eyes on this important economic indicator: The reasons for this recent decline in sales are numerous. For the bottom 60% of wage earners, which accounts for 40% of all consumer spending, some of those issues could be the increase in Payroll and Social Security taxes and/or late federal tax refunds due to the sequester, or inefficiency, or whatever. For the high-end consumers, accounting for 60% of all consumer spending, they may have their own issues: a reinstated top marginal tax rate of 39.6%, rising Medicare tax, the allowable itemized Flexible For more information, contact [email protected]. All logos, trademarks, and content used in this newsletter are registered trademarks and/or copyright of their respective companies and owners. 1 st June 1 , 2013 spending health-care accounts reduced by half, and the top rate on long-term capital gains and dividends rose from 15% to 20%.
    [Show full text]
  • Bear Market Investing Strategies WILEY TRADING SERIES
    Y L F M A E T Team-Fly® Bear Market Investing Strategies WILEY TRADING SERIES The Psychology of Finance, revised edition Lars Tvede The Elliott Wave Principle: Key to Market Behavior Robert R. Prechter International Commodity Trading Ephraim Clark, Jean-Baptiste Lesourd and Rene´Thie´blemont Dynamic Technical Analysis Philippe Cahen Encyclopedia of Chart Patterns Thomas N. Bulkowski Integrated Technical Analysis Ian Copsey Financial Markets Tick by Tick: Insights in Financial Markets Microstructure Pierre Lequeux Technical Market Indicators: Analysis and Performance Richard J. Bauer and Julie R. Dahlquist Trading to Win: The Psychology of Mastering the Markets Ari Kiev Pricing Convertible Bonds Kevin Connolly At the Crest of the Tidal Wave: A Forecast for the Great Bear Market Robert R. Prechter BEAR MARKET INVESTING STRATEGIES Harry D. Schultz Copyright # 2002 by John Wiley & Sons Ltd Baffins Lane, Chichester, West Sussex PO19 1UD, England National 01243 779777 International (þ44) 1243 779777 e-mail (for orders and customer service enquiries): [email protected] Visit our Home Page on http://www.wiley.co.uk or http://www.wiley.com All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE, UK without
    [Show full text]
  • September 2015 the Dow Jones Industrial Average (DJIA), S&P 500
    On Our Radar – September 2015 The Dow Jones Industrial Average (DJIA), S&P 500 and NASDAQ Composite fell 6.56 percent, 6.25 percent, and 6.85 percent, respectively, in August, which was highlighted by a dramatic 1089.42 point decline in the DJIA in the first ten minutes of trading on Monday August 24, 2015. That extreme selloff was shortly followed by a two-day rally of 988.33 points, the largest in history. Although last month we stated that trading in August “can subject the markets to large swings,” and that “it is not unusual for periods of low volatility to be followed by periods of high volatility,” we did not anticipate a decline of 1692.28 DJIA points in four days. The catalyst for the decline seems to have been a combination of factors including the devaluation of the Chinese renminbi (yuan), which surprised the markets. On or about August 11, 2015, the International Monetary Fund (IMF) decided that the yuan would not be part of a reserve currency basket, at least for another year. Soon thereafter, China officially devalued their currency. As the U.S. plays a dominant role in the IMF, China’s response may have been a way to retaliate against the U.S. In addition, a deceleration in China’s economic growth along with a strong U.S. dollar have caused a massive bear market in commodities, led by the near 60 percent decline in the price of oil. This is putting further economic pressure on oil producing countries including Russia and Saudi Arabia.
    [Show full text]
  • A Technical Analysis-Based Method for Share Price Forecasting
    A TECHNICAL ANALYSIS-BASED METHOD FOR SHARE PRICE FORECASTING C.A. Mahesh Kumar1, S.Naseeruddin2, B.Narendra3, A.Venugopal Reddy4 1Assistant Professor, 2,3,4P.G Student, Department of Management Studies, Gates Institute of Technology, Gooty, A.P (India) ABSTRACT Technical analysis attempts to explain and forecast changes in security prices by studying only the market data. In other words a study of past share prices behavior to predict the future trend is termed as technical analysis. The main objective of this paper is to identify or predict the share price in stock market by using Dow theory, moving average method(MAM), relative strength index(RSI). Dow Theory, moving average method and relative strength index these are all tools of technical analysis. Dow theory is a market indicator and MAM,RSI are market and individual stock indicators. Here we find out primary movements , secondary reactions and minor movements and also to know the bullish trend and bearish trend. Keywords: Technical analysis, Dow theory, Moving average method(MAM),Bullish & Bearish trend and also Relative strength index(RSI). I. INTRODUCTION The methods used to analyze securities and make investment decisions fall into two very broad categories: fundamental analysis and technical analysis. Fundamental analysis involves analyzing the characteristics of a company in order to estimate its value. Technical analysis takes a completely different approach; it doesn't care one bit about the "value" of a company or a commodity. Technicians (sometimes called chartists) are only interested in the price movements inthemarket. Despite all the fancy and exotic tools it employs, technical analysis really just studies supply and demand in a market in an attempt to determine what direction, or trend, will continue in the future.
    [Show full text]
  • Technical Analysis in the Foreign Exchange Market
    Research Division Federal Reserve Bank of St. Louis Working Paper Series Technical Analysis in the Foreign Exchange Market Christopher J. Neely and Paul A. Weller Working Paper 2011-001B http://research.stlouisfed.org/wp/2011/2011-001.pdf January 2011 Revised July 2011 FEDERAL RESERVE BANK OF ST. LOUIS Research Division P.O. Box 442 St. Louis, MO 63166 ______________________________________________________________________________________ The views expressed are those of the individual authors and do not necessarily reflect official positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, or the Board of Governors. Federal Reserve Bank of St. Louis Working Papers are preliminary materials circulated to stimulate discussion and critical comment. References in publications to Federal Reserve Bank of St. Louis Working Papers (other than an acknowledgment that the writer has had access to unpublished material) should be cleared with the author or authors. Prepared for Wiley’s Handbook of Exchange Rates Technical Analysis in the Foreign Exchange Market Christopher J. Neely* Paul A. Weller July 24, 2011 Abstract: This article introduces the subject of technical analysis in the foreign exchange market, with emphasis on its importance for questions of market efficiency. “Technicians” view their craft, the study of price patterns, as exploiting traders’ psychological regularities. The literature on technical analysis has established that simple technical trading rules on dollar exchange rates provided 15 years of positive, risk-adjusted returns during the 1970s and 80s before those returns were extinguished. More recently, more complex and less studied rules have produced more modest returns for a similar length of time. Conventional explanations that rely on risk adjustment and/or central bank intervention do not plausibly justify the observed excess returns from following simple technical trading rules.
    [Show full text]
  • The Dow Theory in Technical Analysis
    The Dow Theory in Technical Analysis CharlesDow is the father of the modern technical analysis in theWest. He developed a theory, later called Dow Theory, whichexpresses his ideas on price actions in the stock market. www.ifcmarkets.com CharlesDow is the father of the modern technical analysis in theWest. He developed a theory, later called Dow Theory, whichexpresses his Theideas Dow on Theoryprice in Technicalactions Analysisin the stock market. INTRODUCTION oday Foreign Exchange Market is one of the popular segments of the glob- al financial market. FOREX is the largest and the most liquid financial market in the world. The daily turnover of the market reaches up to $5 Ttrillion. That’s really an enormous number! Day by day more and more people get interested in Forex and try to make money by trading. The reason why Foreign Exchange Market is so attractive is due to the following characteristic features: • high liquidity • variety of trading instruments • availability of the market, that is to say the market is active 24 hours a day, except for weekends Being that much attractive, Foreign Exchange Market is also very unpredictable, and you should be very careful while trading and use some methods of analysis and tools that will help you somehow to forecast the behavior of the market. The two most well-known methods of analysis for predicting the market are tech- nical analysis and fundamental analysis, which are considered to be the insepa- rable part of trading. In this article we are going to speak about technical analysis trying to observe its role in financial markets.
    [Show full text]
  • Study Book for Successful Foreign Exchange Dealing
    ROYALFOREX FFOORREEXX STUDY BOOK FOR SUCCESSFUL FOREIGN EXCHANGE DEALING Los Angeles, California 2001 Contents 1.Common knowledge about the trading on Forex 1.1. Forex as a aart af the global financial market Brief data about the Forex rise and development. The factors caused Foreign Exchange Volume Growth on Forex (Exchange Rate Volatility, Business Internationalization, Increasing of Traders’ Sophistication, Developments in Telecommunications, Computer And Programming Development). The role of the U.S. Federal Reserve System and central banks of other G-7 countries on Forex. 1.2. Risks by the trading on Forex 1.3. Forex sectors Spot Market Forward Market Futures Market Currency Options 2. Major currencies and trade systems 2.1. Major currencies The U.S. Dollar The Euro The Japanese Yen The British Pound The Swiss Franc 2.2. Trade systems on Forex Trading with brokers Direct dealing 3. Fundamental analysis by trading on Forex 3.1 Theories of exchange rate determination Purchasing Power Parity Theory of Elasticities Modern monetary theories on exchange rate volatility 3.2. Indicators for the fundamental analysis Economic indicators The Gross National Product The Gross Domestic Product Consumption Spending Investment Spending Government Spending Net Trading Industrial sector indicators 2001 by Royal Forex. All right reserved. www.royalforex.com 2 Industrial Production Capacity Utilization Factory Orders Durable Goods Orders Business Inventories Construction Data Inflation Indicators Producer Price Index Consumer Price Index Gross National Product Implicit Deflator Gross Domestic Product Implicit Deflator Commodity Research Bureau’s Futures Index The Journal of Commerce Industrial Price Balance of Payments Merchandise Trade Balance The U.S. – Japan Merchandise Trade Balance Employment Indicators Employment Cost Index Consumer Spending Indicators Retail Sales Consumer Sentiment Auto Sales Leading Indicators Personal Income 3.3.
    [Show full text]