What are the characteristics of our stock market?

We look at the stock market and foreign exchange market from a comparative point of view

One, the closed stock market and open foreign exchange market

Every morning at 9:30, millions of pairs of eyes watching the screen, waiting for the opening price of the stock, millions of brains began to run at a fast pace, calculating their own floating profit and loss, 3:30 p.m., a day of battle is over, millions of hanging heart finally landed and began to Inventory or rest, this is the picture of the stock market.

The stock market is a closed market, there is a fixed opening time and closing time, there is a fixed trading place, there is a fixed clearing center, at the same time the same stock transaction is the same price.

The foreign exchange market is very different, it is an open market. Although we have seen on TV the busy trading scene in the foreign exchange, it is easy to equate the foreign exchange market with the stock market, but in fact, it is not the case at all.

Trading on the physical forex exchanges is only a very small part of the overall forex market. Most of the trading is done off-exchange, where traders trade with each other using modern means of communication. Such transactions are entirely between two counterparties, we simply follow a practice, and are not subject to any regulations, systems. The foreign exchange market does not have the same rules, there is no specialized clearing agency, there is no fixed opening and closing times. The so-called opening and closing prices are only agreed to prevail in the New York market, and no one stipulates that we can not trade after the close. As long as you can find a counterparty, you can trade, but this transaction price will not be reflected in the information system.

The foreign exchange market runs continuously from 4:00 a.m. Beijing time on Monday to 4:00 a.m. Saturday, and I'm often asked, "Which market is the price now?" I am also often difficult by this question. Because, the price of the foreign exchange market only active degree of distinction, there is no market. When we listen to professionals to analyze the market, often referred to as "the Asian trading session ......, the European trading session ......", which refers to the price of a certain period of time in the situation. It does not in any way mean that the price is the price from a particular exchange. During the Asian session, it is likely that many traders from Europe and the Americas are also trading, and their prices will be reflected in the quotation system. In other words, the price that you usually see is not the price quoted by any exchange, but there is a quote from a certain trader. This quoting dealer changes frequently. Now it is Citibank, the next may be the Bank of China, or a foreign exchange dealer. This offer only represents the willingness of the offerer, reflecting the current market level of exchange rates, rather than a standard. The actual price at which we all transact depends on what price your chosen counterparty is willing to offer you. If you are not satisfied, you can choose another counterparty, just as you can choose between the four big state-owned banks and other commercial banks.

In the stock market, exchanges have strict status limits for participating traders, requiring that an entering trader must have a seat on the exchange. The average investor can only trade through an agent and pay a commission to these organizations. In the foreign exchange market, there are no restrictions on traders. You can trade as long as you want. You don't have to pay commissions to any person or organization, you are a direct participant in the market. It is only due to the amount of capital that the price of your trade is not reflected in the information system. Since you are not a major market participant, you have no room to bargain with your counterparties. In the foreign exchange market, the main traders are central banks, commercial banks, foreign exchange brokers, large funds, large multinational companies. Their transaction prices have an influence on the market. General investors are and banks or foreign exchange brokers to trade, the price of the international market does not have much influence. This is quite different from the stock market.

In the stock market, everyone trades in the form of pooled bidding through a unified aggregation system. So, your price can have absolutely no impact on the instantaneous market price. If you want, you can make a stock appear down in the middle. This is not the case in the foreign exchange market, which does not have a system for summarizing transactions. The average investor is not qualified to make an active offer, but can only passively accept or reject the deal.

In the stock market, insider information becomes the object of pursuit. Mastery of insider information, you get a good opportunity to prioritize the money than others. In the foreign exchange market, insider trading is basically non-existent. Because, this is a completely open market, central bank dynamics, monetary policy, economic data is completely transparent. You have equal access to this information regardless of the size of your capital. It's just that due to equipment and distance from core trading issues, there will be a sequence of when everyone gets this news, but the gap is not enough to have a critical impact on investment decisions.

In the stock market, funds and institutions or whatever "black marketers" can create news, can use the money in hand to make perfect technical charts, price manipulation, but the foreign exchange marketers is almost impossible. In the face of the global daily trading volume of 4 trillion dollars, any one organization, including the power of a country is small. Their trading behavior is unlikely to have a directional impact on the exchange rate. Many people admire the financial predator "Soros" and think that he can influence the trend of a currency. In fact, he is not the amount of money to control the exchange rate, but he is good at finding the many factors that support the exchange rate of the flaws that exist, and amplify, from the weakest link to support the exchange rate to start, give a painful blow, in the market to form a domino effect, so that the exchange rate towards their own favorable direction. Even so, what Soros did can not be called exchange rate manipulation. This is because what they did was discovered by the market in a very short period of time and widely disseminated. Any investor can make their own investment decisions based on this information. This is fundamentally different from the case of stock shady practices that come to light a long time after the event. Therefore, compared with the stock market, the currency market is a more open market, a more transparent market and a fairer market. Investors are making money by virtue of their own wisdom, not by chance.

Two, currency for securities and currency for currency

In the stock market, we are buying and selling the stock of this right contract, is the currency for securities transactions, this kind of securities may be a piece of paper, may be a pile of waste paper. This is the key to the stock market to attract everyone. It is full of opportunities and traps. If you are less lucky, the stock in your hand may become ST, PT, or even delisted.

In the foreign exchange market, we buy and sell currencies, is a kind of "goods for goods" process. At present, the international foreign exchange market can be free to buy and sell the currency, the vast majority of the economic and political stability of the country's currency. Absolutely will not appear "ST yen", "PT pound" and other phenomena. That is, for the average investor, as long as the timing of the sale is not very bad, buy a currency even if the long-term depth of the trap, generally have the opportunity to unlock the profit. At least have the opportunity to reduce losses. Many friends in the euro after the launch of the euro, in the position of 1:1 to buy the euro, condom 3 years later today, is not also able to obtain quite lucrative earnings? In the foreign exchange market, "three years waiting for a leap month" is more common. In the stock market, it is more difficult, 100 dollars or so to buy the billion Ann technology shares do not know within 100 years there is no opportunity to unwind. Because the stock market is a currency for securities, so there is no question of markup, must be a share of X stock value Y yuan markup method. However, in the foreign exchange market is different, everyone is a currency, there is a who to whom the problem of markup. Traditionally, economically powerful countries have preferred to denominate the currencies of other countries in their own currencies.

The markup method often confuses beginners. After all, the specialized academic terminology is a bit of a mouthful. In layman's terms, the direct markup method is directly expressed in U.S. dollars to other currencies to markup method. This markup method, the larger the value, that corresponds to the dollar currency is less valuable, and the stock market price is reversed. The indirect method is to use other currencies to express the U.S. dollar valuation method. Under this method, the larger the value, the more valuable the currency, and the stock market price is consistent.

Three, the stock market analysis of the treasure in the currency market is useless

"Volume and price with" is the securities and futures market technical analysis of the treasure. In these markets, any directional change in price is impossible to establish without the cooperation of volume. Therefore, in technical analysis, volume becomes an important factor. If a person analyzing the movement of the yen gives you a lecture on how perfect the volume-price match is and how seamlessly the indicators work together, and then encourages you to go ahead with the trade, please be sure to greatly discount his advice. No matter how proficient he is in technical analysis, he is only a half a foot just stepped into the foreign exchange market novice, the foreign exchange market is not familiar with. Why do you say so? Because, "the foreign exchange market does not look at the volume" is the most basic common sense of foreign exchange analysis.

So, why "the foreign exchange market does not look at the volume"?

The answer is: the volume of the foreign exchange market can not be seen.

From the above characteristics of the foreign exchange market can be seen, the foreign exchange market is invisible market, open market. It is not like other markets have a centralized aggregation system, operating in a closed market. Its transactions are free and loose, there is no one global transaction summarization system. As a result, the volume of transactions at a given price cannot be accurately tallied in a timely manner. Furthermore, relying on modern technological means, even if there is a way to accurately count the trading volume, the trading volume at a certain price is insignificant in relation to the daily trading volume of $4 trillion, and it is meaningless to study and analyze this data. However, I have seen volume data in certain analytics software, which many of you have also noticed, so where does this volume come from?

Different software providers have different data sources, so the data meaning of the volume is different, some represent the sum of the original data provider's turnover (turnover amount), and some represent the frequency of transactions at a certain price (number of transactions), no matter what it represents, is not a summary of all the transaction data, and therefore, can not represent the entire market's real turnover, and ultimately are no The reference value.

It should be emphasized that, in addition to the "volume and price with" this point, the stock market other technical analysis methods can be used to analyze the foreign exchange market. The stock market technical analysis of the master is destined to become a master of technical analysis of the currency market. Because, the foreign exchange market relative to the stock market objective regularity is stronger, is the technical analysts to show their talent paradise.