Research On Foreign Exchange Investment And Trend Of Exchange Rate

In recent years, International Financial Market fluctuates greatly, especially on the foreignexchange market. The rates of Foreign Exchange (FX) are changing dramatically. In China, moreand more people are involved in FX transactions for different purposes, some want to avoid therisks of FX rate and interest rate fluctuation, while many other organizations or individuals makeinvestment in exchange market to make profit. Based on the latter perspective, and with an aimto have an accurate prediction of foreign exchange trends, this paper explores the characteristicsof FX market, investment opportunities, determinants of FX rates fluctuation, technical analysisskills and avoidance of exchange investment risk etc.The first part of this paper introduces the fundamentals of foreign exchange investment,including recent development in international foreign exchange market, investment opportunitiesand features, and the exchange rates characteristics of the USD centered seven main worldcurrencies. Only when an accurate knowledge of exchange market conditions and future trendsof exchange rate change is obtained, can an investment be profitable.The second part generally introduces two methods for exchange rate movement prediction:Basic Analysis and Technical Analysis. It provides the theoretical basis for further elaboration ofthe application of the two methods.The third part elaborates the application of Basic analysis method, including introductionsto foreign exchange determinants theory, the influence of factors like political events, economicdata, central bank intervention, consumer confidence etc. on exchange rate change. And a casestudy is introduced to analyze the influence of "information" on exchange rate level andexchange rates fluctuation.The fourth part elaborates the application of Technical Analysis through a large quantity ofdata, diagrams and cases, including 5 chapters: K line, graphics model, trend analysis, technicalindicators, Fibonacci and Wave theory. It is the most difficult part of this paper.The fifth part summaries this dissertation, and introduces the theories and methods of riskcontrol in foreign exchange investment. It is proposed that risk control is the key in foreignexchange investment, because the final objective of any investment is to make profits.