Foreign market is a place where the money supply and demand meet denominated in one currency, which is exchanged for money denominated in other currency. Foreign market is not institutionalized. It is a network of all banks, dealers, tradesman, and market makers in the world, who make this market operable almost every day, day and night. The purpose of each participant is the same. Realization of profit.
But, how to become a successful dealer?
Even the best sportsmen miss a penal in their most important matches in their carrier. It is not because these sportsmen do not have the necessary values and abilities, but because their emotional situation has succumbed, because they experience stronger stress and failure fear. Feeling of stress and fear has high impact on the dealers in reaching decisions in foreign trading. Ability to manage the emotional situation, suppressing the fear in him/her, may largely improve the quality of decision making.
Psychology in foreign currency trading is very important. Very often the psychology and not the lack of education or skills is the reason for making errors. Trading psychology provides following the assigned goals, irrespective of the current losses.
Most of the people begin to know the foreign market with technical analysis of the charts, with historic trends of currency pairs. There after there is fundamental analysis, why some currency pairs behaved as they had in the past and how would they behave in the future. The challenge is to find the right combination of tools, which shall provide the dealer with realization of profit.
During the first few months of 2021, just as in the past year, the entire world and the domestic public witnessed the extreme price growth of the largest crypto currencies relative to their market capitalization. The oldest and most popular crypto currency (Bitcoin) reached growth of 600% in year 2020, and only at the beginning of this year its value was increased by another 80%. In addition, the value of the other most traded crypto currencies, as are Ethereum, Litecoin and XRP, has grown by 1.010%, 350% and 230%, respectively.
As a result of this vertiginous price growth, market capitalization of crypto currencies reached amount of 1,6 trillion USD, whereby the Bitcoin contributes with 68%. Such figures have not left unmoved even the strongest critics of Crypto Market.
Having in mind these developments, at the beginning of the text we shall try to explain the features of the crypto currencies and purpose for their creation. In addition, further in the text, we shall analyze the potential and future perspectives of this market segment, aiming to get clearer picture of the direction it might move to.
A crypto currency may be defined as a form of digital ownership used as an asset for exchange of goods and services. The method of providing security of transactions is enabled by use of technology named blockchain. At the same time, a control is carried out over the creation of additional monetary units through this technology, as well as confirmation for the currency transfer. Most famous and most valued currency, measured by the market capitalization, is the “Bitcoin”.
At the beginning of November 2020, presidential elections should take place in the United States of America, where Donald Tramp, as representative of the Republican Party and Joe Biden, as representative of the Democratic Party would confront as presidential candidates. Uncertain is the victory of any of these candidates at the elections and the outcome of it would have mayor impact over the financial markets in the world.
Usually the elections have positive impact over the USA economy, but this time the circumstances are different due to the newly occurred situation with the Corona virus pandemic. Therefore, the US Dollar may be noted as the most affected from all the other currencies, which largely depends on the developments in the USA economy.
At the beginning of Corona virus pandemic, the US dollar became safe haven currency for investing in the world (together with the Japanese Yen), so the currency pair EUR/USD at mid-March 2020 reached the highest level relative to the EUR (1, 0658), i.e. the April level of 2017, as a consequence of increased demand for US dollars and need for liquidity in this currency. Unlike this period, for the past three months the pair registered the lowest level in the past two years (1.1941), which is an indication of high currency volatility in period of mayor changes and movements at the world markets. An index of US Dollar was reduced by almost 7% for the last quarter, although for the first three months of the year it grew continuously. Having in mind the economic recovery of Europe from the Corona virus pandemic, as well as the manner of dealing with, the introduction of restrictions and relaxation of measures compared to the one of USA, it is concluded that it has contributed to a weaker USD relative to the EUR. Continue reading “Presidential elections in the USA and consequences over change of value of the US Dollar- magazine Economy and Business”