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MPE707 Assignment Cover Sheet



Last Name

First Name


Student ID




Current Password



Final account balance (after all
positions have been closed)


Number of spot transactions



Number of forward transactions

Number of other transactions (such
as options) undertaken


Names of currencies traded (such as




WORD COUNT (excluding executive summary, footnotes and appendices to the report):


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The following report is based on the trading activities carried out in major currencies,
Indices and commodities like gold and silver on the website easy forex and the tools and
strategies applied while trading. The main aim of the assignment was to gain experience
and knowledge of how things work in the real trading market. The demo account was
already set-up by the unit team and the accounts details were provided to us along with
deposited amount of $50,000 virtual money. The trading was started from 24 th August 2016
and went on for almost a month and have completed 40 transactions all this time of trading.
In a months time all the tradings were done in major currencies like USD, EUR, JPY,
AUD, GBP, XAG and XAU wherein all the tradings were based on day order and limit
order transactions. All the decisions that were taken before trading into any currency were
totally depended on how the market situation is and by analyzing economic and political
situations of the country of which currency was to be traded in, this was all done by going
through the news articles and technical analysis provided by Bloomberg, DailyFx, Wall
street journal, BBC, etc. news websites.
The transactions explained in the report have only given profits but all this while doing
trading I have also incurred loss with certain currency pairs which is not explained in the
report but a copy of the transactions is posted in the appendix. My point in explaining this
was just to express that these transactions were carried out without analyzing the market. So
I have learnt my lesson, that in the trading world you have to do your homework thoroughly
and then invest.
Easy forex website is very helpful for a beginner since it has so many options for the
beginner from where he can learn how to trade.

The Foreign Exchange market (forex, Fx, or currency market) is the worldwide,
fragmented, over-the counter market for trading currencies. It the worlds biggest financial
market with over volume of $5.3 trillion a day worldwide. (Pepperstone.com, 2016). There
is no as such common platform for trading or exchanging the currencies, it is done over the
counter. The trading takes place 24 hours a day and five days a week. The major financial
centers for currency trading worldwide are New York, London, Paris, Frankfurt, Singapore,
Zrich, Hong Kong, Tokyo and Sydney. In the Forex market there is little or no inside
information provided. The fluctuations in the exchange rate are caused due to the monetary
flows or because of global economic conditions. (Pepperstone.com, 2016).
There are two type of trader in the forex market namely, commercial traders and speculative
traders. Commercial trading is basically done by the big corporations, government, central
banks, international bank, etc. in order to control the revenues and expenses that are
aroused in various currency trading through hedging or multiple trades are carried out in
order to reduce the loss incurred I other trades. (Learningcenter.fxstreet.com, 2016).
Speculative traders are individuals who trade in currencies on the Forex platform with the
aim of achieving profits. The speculative trading is done by analyzing the market
performance, going through political news and or by studying the technical analysis of
currencies. (Pepperstone.com, 2016).
Easy Forex website helps the individual who is new to trading by helping him learn the real
time market through forex trading videos, trading stimulator and through forex events
(wherein an individual will meet another trader and will learn trading), forex news, etc.
Easy Forex even have an option for the new trader wherein he can open a demo account
and can trade in real time market by using virtual money. There are various tools on easy
forex website which the trader can use to analyze before trading in currencies and the tools
are as follows: technical analysis, charts, insider view, dealing room, etc.
Advantages of using Forex Market:

Forex market is the largest and most liquid financial market in the world.
Spot currency trading on forex market eliminated the middleman and lets you trade
directly in the market liable to the value of a particular currency pair.
Free demo accounts, spread charts and technical analysis.
Traders and earn steady income or profits.
Low transaction costs.
The market is opened 24 hours for the trader.


In order to carry out trade in different currencies in the real time market and to understand
the market efficiently an individual has to follow few strategies. Strategies used for trading
in the assignment are as follows:
Fundamental analysis
Technical analysis
Risk management
1. Fundamental analysis:
Fundamental analysis in the forex market is the analysis of economic situations of
countries so that the trading in the currencies is done more adequately. Fundamental
analysis provides us with the information regarding the political and economic
impact on a particular countrys currency. While doing the analysis the forex trader
tries to find answers to the following questions;
Which economies are growing the world?
Is the growth sustainable?
What is the government and centrals banks are doing to hold their
What is the political situation of the country? etc. (Brooks, 2013).
Finding answers to this questions using the fundamental analysis helps the forex
trader to make decisions for investing in any currencies.
2. Technical analysis:
Technical analysis involves understanding the pattern on the price chart. Technical
analysis is basically a trading tool used to evaluate securities and an attempt to
forecast their future movements by analyzing the data gathered from daily trading
activities like price movement and volumes. (Investopedia, 2003). There are various
tools in technical analysis like Bollinger Bands, Relative Strength Index, Stochastic
Oscillators, trend technical analysis, Elliot waves, etc. which helps the trader to
determine the entry and exit points for trading in a particular currency or stock.
(Dailyfx.com, 2016).

3. Risk management:
Risk management is one of the integral part of trading. This strategy defines you
being a trader and without implementing it you are nothing more than just a
gambler. It is obvious that every transaction we do is not profitable and we often
face losses and have a good risk management strategy help the trader to gain some

profits even if he is facing loss. By setting a stop-loss and take-profit limit the trader
can make at-least some profits from the loss hes facing. (Brooks, 2013).

4. Speculation:
In simple words day trading is known as speculation. In other words, Currency
speculation involves buying, selling and holding back the currency to make profits
from the fluctuated exchange rates. Thus it is an act of trading in any currency that
has a significant risk of losing all of initial with the expectation of gaining profits.
(Staff, 2016).


On 26th August 1 EUR was equal to 114.0345 Yen. Japanese Yen got weaker because of
0.5% drop in consumer prices for the fifth month in a row. Governor of Bank of Japan
did not agree on easing the monetary policy and the speech given by the Fed chair Janet
Yellen on likely to increase the interest rates were the reasons for the fall of Japanese
Yen over the weeks. The yen fluctuated after reaching a one-week low as Morgan
Stanley says the Bank of Japan is likely to dive further into negative-interest-rate policy
at a meeting next week. (Financial Review, 2016). Japan's currency fell against about
half of its major counterparts after some central-bank officials were reported to have
said they still favors stepping up purchases of government bonds. (Financial Review,
2016). On the other hand, the Pan-European Stoxx Europe 600 rose by 0.04 percent,
Bayer rises by 0.4% after announcing the deal to acquire U.S. seeds company and
mining stocks stood solid. After analyzing the market drift on the forex website named
dailyFx and easy forex and after critically analyzing the technical charts of the given
pair which was proving that EUR was dominating the Japanese Yen and showed a26
and the reason for me buying EUR and selling in JPY.

'Brexit will actually help the economy thrive' claims former Bank of England governor
Lord King as he criticizes 'speculative' scare stories as 'insulting to the intelligence of
the voter'. (Mail Online, 2016). The British economy was on rise straight for three
months through June due to strong consumer spendings, rise in industrial production
and great investments made by business owners. Manufacturing and servicing industries
holding up pretty well, strong rise in retail sector and a swift political entente and
radical action taken by the bank of England kept the pound Sterling on its toes and did
not let it fall. Whereas in case of Japanese Yen, Governor of Bank of Japan did not
agree on easing the monetary policy and the speech given by the Fed chair Janet Yellen
on likely to increase the interest rates were the reasons for the fall of Japanese Yen over
the weeks. After analyzing the new regarding the Brexit and the solid market it is
holding after leaving the EU union and after critically studying the exchange rate on the
dailyfx resulted in Pound Sterling totally dominating the Yen market which was the
reason I trade the above currency pair.

The release of the US ISM Non-Manufacturing PMI fell sharply to 51.4 in
August from 55.5 in the previous month. This was also well below the 55.4
survey reading anticipated. The decline in this services component of the ISM
report follows on from last weeks disappointing Manufacturing PMI. NonFarm Payroll number came in well below the consensus expectation while the
first revision to second quarter GDP weakened to just 1.1% annualized with
inflation as measured by Core PCE still well below the Feds 2% target, and
with Janet Yellen reiterating the point that the US central bank is data
dependent when it comes to deciding monetary policy, the likelihood of a
September rate hike appears to be declining every day. (investing.com UK,
2016). This were the reasons for the fall of U.S. dollar against one of the major
commodities like silver. On the day when the above currency pair was traded I
examined the technical analysis chart provided by the easy forex website and
dailyfx it showed a magic rise in silver prices by 85% and the next time when
the trading was done in the same pair it declined to 65% but still silver was
taking over the falling U.S. dollar and this was the reason to trade in the above
given pair.

USD slumped across the board as market participants pared back the chances of a
September Fed rate hike, following a much weaker-than-expected US August ISM nonmanufacturing (services) index, and a decline in the Feds 19 component Labour Market
Conditions Index in August. (Scutt, 2016). The ISM services index fell from 55.5 to 51.4 in
August Alongside broad based US dollar weakness, the other factor helping to drive the
Aussie higher is speculation that another strong GDP report will arrive on Wednesday. The
Australian dollar has edged higher as the greenback lost some ground after a Federal
Reserve official cast doubt on the chances of a US rate rise in September.
(Theaustralian.com.au, 2016). This boosted the value of Australian dollar over the U.S.
dollar. The fall of the U.S. market ahead of increasing the interest rate gave a steady rise of
7% to Aussie dollar on the day it was traded as per the information provided by Bloomberg
and dailyfx and this was the reason of interest in investing in the given currency pair.

The U.S. dollar has considerably fallen comparing to other currency components because of
Fed rate hike, following a much weaker-than-expected US August ISM non-manufacturing
(services) index, and a decline in the Feds 19 component Labour Market Conditions Index
in August. (Scutt, 2016). Gold prices have risen, breaking a five-day decline as the US
dollar slipped against a basket of currencies, with the market waiting for clues on the timing
of an increase in US interest rates. US gold futures settled up 0.18 per cent at $US1,326.10.
Expectations that the US Federal Reserve will raise rates next week have receded, putting
pressure on the dollar, which when it falls makes gold cheaper for holders of other
currencies. Easing of us dollar led to gold getting hold over the us dollar. Buying gold
against any currency is like opening a saving account and due to the fall of U.S, dollar it
gave rise to the commodities market like gold and silver. A thorough analysis was done
before investing the above currency with the help of dailyfx, going through news and
studying the technical charts of gold over the U.S. dollar which showed a 61% rise in the
gold commodity, which led me to do the transaction in the above given pair.

Trading in one of the worlds largest market platform was of really a great experience and it
left a tremendous effect on me since going through all the news articles of the different
countries and studying about their economic and political situation left me stranded
knowing that how the worlds economy is changing and is taking a drastic turn. Though we
were provided with the virtual money but dealing in the real time market was what I could
ever experience in my life and for about a month and I was full of enthusiasm since I was
getting to trade in the real market.
While trading in the market I came across many trading tools and strategies that I have
applied while doing trading during the two months time which are explained in the report
above. Earlier before doing this assignment my head was full of like trading is easy just
deposit money and trade in currency but after doing this assignment I came to know it is not
that easy, for any trader it is important to implement appropriate strategies before trading in
a currency looking after the managing the risk and doing fundamental and technical
analysis of the currency that is traded.
To be a successful trader you should be constantly connected with the market and should
have a knowledge of forex tools and how to use them. All the currencies in which I have
traded are explained in the above report and had a closing balance of $A41,367.22 and have
completed 40 transactions.



Brooks, K. (2013). Kathleen Brooks On Forex. Petersfield: Harriman House.

Staff, I. (2016). Understanding the Risks of Currency Speculation. [online]

InvestorGuide. Available at:
http://www.investorguide.com/article/11846/understanding-the-risks-of-currencyspeculation-igu/ [Accessed 13 Sep. 2016].

Investopedia. (2003). Technical Analysis. [online] Available at:

http://www.investopedia.com/terms/t/technicalanalysis.asp [Accessed 13 Sep.

Dailyfx.com. (2016). Technical Versus Fundamental Analysis in Forex. [online]

Available at:
/20/Technical_Versus_Fundamental_Analysis_in_Forex.html [Accessed 13 Sep.

Investopedia. (2003). Speculation. [online] Available at:

http://www.investopedia.com/terms/s/speculation.asp [Accessed 13 Sep. 2016].

Financial Review. (2016). Yen dips on bets Bank of Japan to further lower rates.
[online] Available at: http://www.afr.com/markets/currencies/yen-dips-on-bets-bankof-japan-to-further-lower-rates-20160914-grgmry [Accessed 13 Sep. 2016].

Mail Online. (2016). 'Brexit will actually help the economy thrive' claims Lord
King. [online] Available at: http://www.dailymail.co.uk/news/article3763938/Brexit-actually-help-economy-thrive-claims-former-Bank-Englandgovernor-Lord-King-criticises-speculative-scare-stories-insulting-intelligencevoter.html [Accessed 13 Sep. 2016].

Financial Review. (2016). Yen dips on bets Bank of Japan to further lower rates.
[online] Available at: http://www.afr.com/markets/currencies/yen-dips-on-bets-bankof-japan-to-further-lower-rates-20160914-grgmry [Accessed 13 Sep. 2016].

Guerrera, F. and Cooper, C. (2016). Why Brexit hasnt destroyed the British
economy (yet). [online] POLITICO. Available at:


[Accessed 13 Sep. 2016].

investing.com UK. (2016). Gold And Silver Shoot Higher As USD Pulls Back
Sharply. [online] Available at: http://uk.investing.com/analysis/weak-us-datareduces-likelihood-of-september-hike-200152088 [Accessed 13 Sep. 2016].

NewsComAu. (2016). Gold prices break falling streak. [online] Available at:
http://www.news.com.au/finance/business/breaking-news/gold-prices-break-fallingstreak/news-story/f78db76a5e40a095512b1b0fd68a7dfd [Accessed 13 Sep. 2016].

Teo, V. (2016). Gold supported by weaker US dollar. [online] The Bullion Desk.
Available at: https://www.bulliondesk.com/gold-news/asia-gold-gold-supportedweaker-us-dollar-120581/ [Accessed 13 Sep. 2016].

Theaustralian.com.au. (2016). Dollar gains amid US rates talk. [online] Available at:
http://www.theaustralian.com.au/business/markets/australian-dollar-gains-amid-usrates-talk/news-story/c814e6ef70e6a04cb83ef2c7d65e821d [Accessed 13 Sep.

Meyer, J. (2016). Australian dollar tumbles after hitting three-week high. [online]
The Sydney Morning Herald. Available at:
http://www.smh.com.au/business/markets/currencies/wild-night-australian-dollarcrashes-back-to-earth-after-hitting-threeweek-high-20160908-grcfjh.html [Accessed
13 Sep. 2016].

Scutt, D. (2016). The Aussie dollar just logged its largest gain in over 2 months.
[online] Business Insider Australia. Available at:
http://www.businessinsider.com.au/the-aussie-dollar-just-logged-its-largest-gain-inover-2-months-2016-9 [Accessed 13 Sep. 2016].