EUR / USD: predictions, expectations, alternative

Wealthy whether projections for the market FOREX? Random events in the life of the financial markets to break down and the dust all the predictions of analysts. Waiting for growth (drop) the exchange rate is a primitive projection is built on the irrational psychology of people and their intuition. Financial viability - that the criterion distinguishing the possible expectations of the market and the real price movement.

Extremes, and reality

In a detailed analysis of the macroeconomic situation emerges two extreme scenarios, which may be developments in the world in the coming years.

The first scenario - the positive. The global economy in general is built. Values of this mirosistemy share its core members - the «Group of Eight». This system has a clear technological and financial leaders - United States - and two areas, realizing the high efficiency of world economy: China with its cheap production, high demand, and India as an outsourcing center. On the whole world to this scenario, manage, and probably the next 20-30 years, it expects the relative calm and prosperity.

The second extreme - negative. Potential reserves of the United States is not so great. Attempts by the Americans to force the financial globalization and militarization - on the brink of failure. States could get at the fate of all previous powers of hegemony. Economic growth in China, a united Europe, an attack by international terrorists, the inability to live in debt - all these problems over the next 20-30 years will lead to depletion of the main engine of world economy. While hardly a future life on earth would one of these extreme scenarios. The reality always lies somewhere in between. The point is that any forecast in the financial market - it is the fruit of imagination of analysts, but they, like all human beings are not immune from the set of random events and factors.

It was random events in the life of the financial markets to break down and the dust all macroeconomic projections. Randomness break all the scenarios for the development of macroeconomics, and it means - and forecasts the market FOREX. This is discussed further below.

Good result!

Accurate prediction of prices in the FOREX market, no one can do. Most analysts focus on the probability of occurrence of a given price level, in other words, attempts to give probabilistic (or statistical) prediction. It would seem that there is nothing wrong, but only until such time as not a question: «What are the risks may cause such projections, if they do not come true?»

Virtually none of the analyst, writer and long-term medium-term forecasts in the market FOREX, the risks generally says nothing. But if you do not involve risks to forecasts for prices of financial assets, it becomes a mere expectation of the desired result without taking into account the possible negative effects. To earn money for speculation and to provide forecasts of prices in the FOREX - is not the same thing. On the market there are oscillatory movements in exchange rates with random length. Man is not made to predict what will be the exchange rates through a fixed period of time. Nevertheless, the bulk of players in the FOREX market does not perform any transaction without the projections.

So analysts convenient

Consider the example of prediction of EUR / USD, made by analysts in July 2004 The simplest long-range forecast for July was as follows. Market EUR / USD has not been able to realize in a new upward trend in June 2004 (Fig. 1). Increased confidence of traders in the level of support 1.1760 neprobivaemosti allows to continue to consider all the possible collapse of the market at that level, just as a good opportunity to build long positions.


Fig. 1. Performance of the EUR / USD in May-July 2004 (30-minute charts).

Hedger remain in long positions with the floating feet and the long-term goal of 1.2715 for the summer of 2004, the sample from bottom to top-level 1.2200, then 1.2400/50 noticeable join the army for Euro bulls, which actually is already a reality in summer achieving the goal (the level of 1.2715) . The market is moving in the form Euro Flat, and hence it waits for high volatility. It can not be excluded that the bar may close the week below 1.1700. In this case, it will be necessary to radically reconsider the entire long-term prognosis. In this long-term prognosis of the level of support the market in the 1.1760 is taken from the schedule rate EUR / USD. However, there is no evidence that this is a price level below which the euro is not deleted, and no such evidence, the analyst does not. While those who make predictions, it is convenient to use this level of support as the truth of last resort. If the market were hedger, a long position on EUR / USD in July, they closed. Sample from bottom to top levels of 1.2200 and 1.2450 in July occurred. However, the army of bulls on the euro as analysts predicted, it is not replenished, rather the opposite. Unpredictable market developments launched in the opposite direction from prediction. The long-term goal of 1.2715 is likely to remain so, and desired expectations of analysts.

Alternative expectations

We know that speculation is the only function of the market, able to identify the demand for currency. Any speculation is based on expectations of growth (or fall) the value of the currency exchange rate. The mere expectation of growth (or fall) - is a primitive projection is built on the irrational psychology of people and their intuition. In primitive prognosis, even malomalsky risk analysis.

The magnitude and social significance of speculation in the FOREX market is increasing, when the parties speculations are not only professionals but also to a wider range of people who expect to earn on the growth rate by investing in the speculation on their savings or money obtained on credit. Psychology of such people is not based on a sober analysis, but on intuition. The risks of speculative strategies based on intuition, зашкаливают of all possible limits. Experience shows that the more successful professionals come from speculation, but the expectations have become the victims of the mass of small investors. An alternative to the expectations and forecasts of prices in the financial market can be only trading system that can not only "the profit-factor, but also the risks of the investor. The sustainability of such a trading system should be evaluated with respect to the parameter that is independent of time. Such a trading system developed by us and described in detail in the works. This system is embedded in an algorithm based trading robot. This algorithm is financially feasible. It is the financial viability is the criterion distinguishing the possible expectations on the financial market and the auto trade with the help of robots.

If we consider the expectations of the financial market from the standpoint of this criterion, we can say that the expectations - it is financially not feasible. Speculators primarily interested in the risks that they may encounter in the process of working in the financial market.