Speculation in the Foreign Exchange Market Report - MPE707, 2019

This report presents a practical analysis of foreign exchange (FX) market speculation, focusing on trading strategies and financial outcomes. The student engaged in currency trading using a demo account, executing 12 transactions as required by the MPE707 International Banking and Finance course. The report details the student's trading activities, including the currencies traded (e.g., EUR/USD, NZD/USD), profit and loss figures, and the application of strategies like stop-loss orders and day trading. The analysis incorporates market research, economic factors, and technical analysis to inform investment decisions. The report also discusses the use of trading platforms, market sentiments, and various investment instruments. It highlights successful trades and identifies areas for improvement, providing insights into the complexities of the FX market and the importance of risk management. The student applied both top-down and bottom-up approaches, alongside fundamental and technical analysis, to make informed trading decisions. Finally, the report includes an executive summary and a word count of 1950, excluding the executive summary, footnotes, and appendices.

SPECULATION IN THE FOREIGN EXCHANGE MARKET
TRIMESTER 1, 2019
STUDENT DETAILS:
Last Name First Name Student ID
ACCOUNT DETAILS:
Username Current Password
IBF-
ACCOUNT BALANCE (PROVIDE THE FINAL BALANCE AFTER YOU HAVE CLOSED ALL POSITIONS AND CANCELLED ALL PENDING ORDERS):
AUD Balance
MY CLOSED TRADES (PROVIDE THE NUMBER OF COMPLETED TRADES IN EACH OF THE BOXES BELOW – EXCEPT FOR THE LAST BOX WHERE YOU SHOULD
PROVIDE THE NAMES OF CURRENCIES, COMMODITIES AND INDICES IF ANY):
Day Trading
Forwards
Pending Orders (note this will not
count toward the 12 required trades)
Vanilla Options (note this is not
required but you must report if you
have traded. Options can be counted
toward the 12 required trades)

Names of currencies, commodities
and indices traded (such as AUD,
USD…) (note commodities and
indices are not required but you must
report if you have traded)
WORD COUNT (excluding executive summary, footnotes and appendices to the report):
Word count 1950

Executive Summary
The Stock market of any country is considered as one of the tool that defines the economic
parameter of the country. This is considered as one of the platform where the company receives
the money and raise the capital from the public. This is considered as the market where the
company raises money for its capital investment so that they are able to operate accordingly. The
investors who are working in this industry has to identify various resources and has to consider
various approaches through which the investment has to be done. The easy market is a platform
that helps in giving the online platform to the investors through which they are able perform
trading in the stock market. Various significant tools were considered for the purpose of
investment and the market feasibility research were done before making investment. This report
contains the specification which helps in identifying the strategies which are required so as to
conduct the analysis of the stocks

Contents
Executive Summary.........................................................................................................................3
Introduction......................................................................................................................................5
Main body........................................................................................................................................7
Conclusion.....................................................................................................................................11
References......................................................................................................................................12
Appendix........................................................................................................................................14
.

Introduction
The stock market is considered as the market where the buyer and the seller of different stock
come together so that they are able to invest in different markets. This is considered as the
market where the investors invest in a manner so that they are able to earn maximum profit
through the process of investment. This market consist of two types of functions which are
primary market and the secondary market. It is considered as the market where the companies
dilute their stocks to the public so that they are able to achieve the objective raising the money.
Thus investment in the stock market is considered to be one of the difficult task for the investors
as the market is considered to be volatile and the investment that has to be done in this market
needs market research (Baddeley, 2017). The investors for the purpose of making investment has
to study the market and has to be considered to be long sighted so that they are able to predict the
option of investment. For doing the investment in different stocks of the company various
fundamental analysis and the different approaches has to be applied by the investors so that they
are able to achieve the objective of maximising the return on the investment that are made. The
graph of the company were considered so as to make investment in the various companies and
the indices were considered to maximise the performance of the portfolios. While making the
investment various indexes were considered and the market study approach were considered
before investing the money in the market (Chen and Chen, 2016). While in a month after
considering the research and applying various models the investment were made in various
currencies and the indices of the world. Hence around 12 transactions were made and maximum
of them were considered to be profitable. While this is seen that the total balance that was given
for investment was AUD 50,000 and these were invested in various stocks for the purpose of
maximising the return on the investment that were made. There were various deals done at a
positive return and this helped in increasing the feasibility of investment that were made (Bodie,
2015). The investment were made in various currencies of the world by considering the
economic factor of the country. However the use of stop loss element was taken while making
the investment in the stocks this helped in reducing the risk of loss that occurs to the investors.
This report is based on the strategies and the approaches that are considered for investing the
money in the stock market so that high profit can be gained and loss can be avoided (Kvist,
2015). Also the report contains the transactions that were done while investing in the stocks
market.

Main body
Making investment in the stock market is considered to be the strategic process that the investors
has to undergo so that they are able to achieve a good return on the investment that are made by
them. This is seen that there are various number of ways which helps in achieving the investment
in the stock market, these are considered to be value investing, index investing and he growth
investing. This is considered that the investors are considered to be long term investment makers
and as the market in which the investment has to be is considered to be volatile which helps in
giving the maximum return in the long term (Clark, Qiao and Wong, 2016). This was seen that
while investing in various companies and the various indices of the world, market research and
the economic condition of the company were taken for the purpose of the investment. However
for making the investment graph curve and the previous and the future predictability of the
company were considered.
In finance the investment strategy is considered as a set of rules, procedures and the designs
which helped the investors in selections of different investment portfolio. This is seen that there
are the various profit objectives and skills that makes the different profit objectives (van Loon
and Aalbers, 2017). Some of the choices includes the different trade of practices between the risk
and the return that has to be gained by the investor. This is seen that investment in stock market
has concept that specifies that more is the risk in the market more is the return.
Easy market is considered as the trading platform that helped in giving the opportunity to invest
in the stock market of the different world and currencies. While making the investment this took
around 1 month for analysis of the market and completing the trading and the market research.
The investment were made after analysing the market of the world and different indices. Most of
the investment were made in the month of May hence helped in giving positive return for the
same. The stop loss element was used in various transactions that were done so as to reduce the
term of loss that occurs in the market (Demirer, Lee and Lien, 2015). The day trading platforms
were also used to maximise the return on the investment as this is considered to give maximum
return in the short duration of time and also helped in achieving the short term capital gain.
Various investment were made in the various currencies of the world which included the United
States Dollar, Euros also the investment were made in the Chinese stock exchange, Nasdaq,
European market and also in the New Zealand market. This is seen that the most of the

investment that were done were done for the short term purpose so as to achieve the profit of the
day trading platform.
This was seen that the investment in the EUR/USD was done and it helped in increasing the
profit on the investment that was done. This was done through the easy trading platform which
helped in increasing the profit to the amount of the 1,133 AUD. This is considered to be the best
profit return that was achieved within 2 hrs of trading (Bessler and Wolff, 2015). Also various
trading were done in a day trading platform which also resulted in profits as this was seen that
NZD/USD gave a profit of 51.55 AUD, AUD/USD gave the profit of 14.32 AUD, USD/JPY
gave the profit of 77.72 AUD and BRT/USD gave a good profit of 286.39 AUD. These all were
realised in the day trading platform and were received within 2 hours of trading (Gennaioli, Ma
and Shleifer, 2016). While there were various stocks that resulted in loss which includes the
CNX/USD which was giving the loss of 496.86 AUD. Also the NDQ/USD on which the sell
option was generated gave the loss of 435.15 AUD. Hence the total profit through the investment
that were made in a particular day was around 622.20 AUD.
For investing in various market of the countries and the economic development parameter and
the government regulation regarding the promotion of the business were considered
(Chakravorty and Awasthi, 2018). It was also considered that the EUR/USD was one of the stock
that was supposed to grow as the market sentiments of this stock was up and the graph that was
showing in this were showing bottom up approach hence the investment in this stock helped in
giving a better result.
While analysing the current market situation various theoretical tools were considered and the
approaches were taken for the purpose of the study. Top down and the bottom up approach
was used for this purpose as this helped in identifying the stocks that were supposed to give best
result and has grown at a good level.
Also the fundamental analysis and the technical analysis was done so as to analyse the present
and the future prediction of the stock. This approach helped in analysing the future graph of the
stock as if this stock would increase in value in future or will decline accordingly (Ascani,
Crescenzi and Iammarino, 2016). The financial analysis of the technical chart was done for the

company which helped in increasing the performance of the company. This was also considered
that price earnings ratio of the stock is desirable or not and this can be understood that if the ROI
of the stock is better than the stock would provide a better return for the growth in the market.
The market efficiency and the random walk theory was also used so as to make the
investment in the company (Lee et. al., 2019). Through this approach current market sentiments
of the stock were taken into account also the situation of the market and the financial data of the
company is used to capture the current situation if it is profitable.
For making investment in various types of investment instruments the news were considered to
be one of the source that helped in making vital decision for the same. While making investment
in the United Sates stock market it was seen that the government of the country were making the
rules more flexible which helped in making investment in that market (Conti et. al., 2019). Also
the economic condition of the company was considered to be healthy that can promote the
business in the countries. This helped in achieving the objective of earning maximum return for
the company so that they are able to achieve the objective of maximising the profit on the
investment made. The
While considering to invest in the market the comprehensive research was performed. While all
the news that were related to the stock in which the investment were made were considered for
the purpose of the study (Vismara, 2016). All the news article and media news were taken into
consideration which could impact the performance of the stock.
Also for investment in the different indices of the country various approaches were applied
which included,
 Momentum trading: Through this strategy the momentum of the stock exchange was
considered and the investment were made accordingly in the stock exchange of various
countries.
 Indexing: This was the strategy used in the while confirming the small proportion of all
the shares in the stock market mostly the funds were invested in the equity portion of the
indices. This can be considered as the strategy which helps in entering and exiting of the
market.
 Dollar cost averaging: Through this strategy investment in the company shares and the
indices were done so that the future forecast can be done (Birtch et. al., 2018). It is the

seen through this approach the company’s future dividend forecast. This is seen that the
companies which pays the stable dividend are less volatile.
 Active vs Passive: This is considered as the strategy where the buy and hold passive
indexing are used to minimise the cost of transaction. In this strategies investors doesn’t
believe to time the market. While here also the investment are made so as to outperform
the benchmark indices. Here the investor’s decisions are considered for the better average
skills and support.
The stop loss feature was also used with every stock that is being invested upon (Paik and Woo,
2017). While the easy trade platform was also considered for the purpose of investment which
helped in gaining the maximum result for the same.

Conclusion
From the above report this is considered that there are various ways to invest in various market
of the country. This is seen that various investment were made in the various indices of the
country. Also the investment were made in the currencies of various countries which helped in
diversifying the portfolio of the company. This is seen that various economic development and
the growth prospects of the countries are considered for making investment in the indices and the
currencies of the company. It is seen that most of the investment that were made in different
stocks allowed to gain maximum profits for the investors.

References
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European Union neighbouring countries? A mixed-methods analysis of Italian investment
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Baddeley, M., 2017. Investment: Theories and Analyses. Macmillan International Higher
Education.
Bessler, W. and Wolff, D., 2015. Do commodities add value in multi-asset portfolios? An out-of-
sample analysis for different investment strategies. Journal of Banking & Finance, 60, pp.1-20.
Birtch, T.A., Au, K.Y.F., Chiang, F.F. and Hofman, P.S., 2018. How perceived risk and return
interacts with familism to influence individuals’ investment strategies: The case of capital
seeking and capital providing behavior in new venture financing. Asia Pacific Journal of
Management, 35(2), pp.471-500.
Bodie, Z., 2015. Thoughts on the future: Life-cycle investing in theory and practice. Financial
Analysts Journal, 71(1), pp.43-48.
Chakravorty, G. and Awasthi, A., 2018. Dynamic Hedging of Currency Risk in Investment
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Chen, T.L. and Chen, F.Y., 2016. An intelligent pattern recognition model for supporting
investment decisions in stock market. Information Sciences, 346, pp.261-274.
Clark, E., Qiao, Z. and Wong, W.K., 2016. Theories of risk: Testing investor behavior on the
taiwan stock and stock index futures markets. Economic Inquiry, 54(2), pp.907-924.
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pp.799-812.
Demirer, R., Lee, H.T. and Lien, D., 2015. Does the stock market drive herd behavior in
commodity futures markets? International Review of Financial Analysis, 39, pp.32-44.
Gennaioli, N., Ma, Y. and Shleifer, A., 2016. Expectations and investment. NBER
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