Have you ever sat watching a chart and, despite your best analysis, not been able to understand what is driving the market? Have you ever been suddenly stopped out, or been in a winning trade only for price to turn against you?
Gus Farrow, our Chief Editor and analyst, highlights the main features of the Financial Trading Analysis short course that we have developed together with University of Essex Online. He will explain why it is important to learn about the complex relationships between all markets.
Markets are dynamic, evolving and most importantly, interconnected
There is no one market that can be viewed and traded in total isolation. We believe that in order to understand one market, you need to understand the others, how they are constructed, and the different factors affecting them all. It is impossible to watch stocks without watching currencies, for all stocks are priced in currencies and we operate in an international market.
The 1987 US stock market crash caught analysts off guard. US Dollar priced stocks plummeted suddenly, and nobody knew why. Very few considered the cause might have been the 1985 Plaza Accord that saw an international agreement for the US Dollar to be devalued by 40%. As the dollar devalued, so did the underlying value of US Stocks, until the 1987 tipping point turned into a selling frenzy that shook the world.
At the same time, fleeing capital poured aggressively into Japan, leading to the asset price bubble crash of 1990. The twenty years of resulting policy mismanagement and deflation led to the aggressive monetary policy we see today, defining almost all current Yen moves. In a similar vein, it’s impossible to separate currencies from interest rates and government debt. Likewise, we can’t view commodities without considering the futures and options contracts that developed in the 16thcentury Japanese rice markets and ancient Greek olive groves.
Understanding the structure, mechanics and relationships of asset classes and markets is essential
All markets serve a purpose and operate together within a global financial ecosystem that evolves from day to day. Understanding the structure, mechanics and relationships of asset classes and markets is essential, as is the way that participants analyse them and make investment decisions. Approaches can range from technical studies, following statistical and behavioural influences, to fundamental analysis, drilling down into macroeconomic data and examining global relationships. Even the execution approach can make a big difference to how markets behave. Day traders and investors have different timelines and approaches to risk management and performance analysis. Understanding these differences can help you to find the best approach to suit your own personal circumstances.
Finally, an often-neglected aspect of finance is psychology. Understanding our personal motives, influences, and triggers is a key factor in investing or trading. How can we expect to make rational decisions if we are distracted by an external influence? Likewise, we also need to appreciate group psychology. The market is not a tangible object, but rather a collection of individuals with a financial interest in price developments. Every single participant is affected by the personal and group psychological forces at play. After all, it was Keynes who said, ‘Successful investing is anticipating the anticipation of others.’
Determination, focus and experience
There are no secrets, other than this is a job that requires determination, focus and experience. On this course, we don’t promise that we will turn you into a superstar trader or investor after four months. We don’t promise that we will deliver the secret formula to understanding the market. We will not give trade recommendations or share winning strategies. Our aim is that when our students graduate, they are able to demonstrably understand why things happen in the market, what the experts really mean and how best for them to approach the market themselves.
We have put together an experienced team of City professionals and FXStreet analysts to guide you through this course and help you to take the first step towards a successful trading career.
- Assets > FX, Commodities, Equities, Fixed Income, Futures, Options
- Analysis > Technical, Fundamental, Intermarket, Quantitative
- Trading > Trading, Risk Management, Portfolio Management, Performance Analysis
- Psychology > Behaviour Finance, Market Psychology
Our students will benefit from access to simulation trading platforms and performance reviews, regular bite-sized video lectures and exercises. They will be able to access the library databank, which offers MSc level literature. All of this will be hosted in an interactive online classroom, where students can learn in their own time, and at their own pace.
Financial markets require time, effort and dedication to master, and the first investment of all should be in yourself.