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The four constituent parts of the financial markets: Bonds, Commodity, Currency, Stock (bonds, commodities, currencies, securities).


The bond market

Under the watchful eye of the trader, bond is a noun of American debt. Understand simple bond issuers is the debtor. The bond buyer's main creditors. To be able to borrow debt, requiring the debtor must have the ability to repay the debt (no one is still sure that when lending the borrower will pull down owe it or not have the ability to repay). Debtor's repayment ability was evaluated through the debtor's own CREDIBILITY and that of the noun class that is called the professional level of credit (credit rating), this level of class are classified from high to low. According to Standard & poor's highest trust level is class AAA for the Organization, the borrower has the ability to pay is the highest debt and lowest D for those who have and will be insolvent. The higher the confidence level class reputation of borrowers higher debt, higher the reputation risk or low debt pile insolvent, this risk is lower then the cost or pay interest to creditors. Because of this principle that the return on the bonds of the Governments that rank high as America always lower a lot of emerging countries like Vietnam have low credibility level class. This is one of the basic factors that decide the bond yield.

Yield (return) is the soul of the bond, so any analysis of the bond are both derived from the analysis of yield. Review of trading, bonds is a medium weapon to attack, just to defend. Called strike is like this: feeling (expectations) of the market about the economy will improve in the future, people will bravely debt (bond release) do eat more. This makes the number of borrowers in the market increases, the number of borrowers increased then i submerged the ability to borrow less money away, so to compete the loan is money, borrowers pay higher interest rates (i.e., to yield higher). In cases such as the above, yield increase reflects confidence in the economy should be better in the future. Easy-going nature back, calling the bonds are defensive because other stock in that with Bonds: bonds is essentially debt while stock imply general capital contribution. The debt associated with the liability to pay, other than stock, the seller of the stock does not have to avoid compulsory is charged in case of failed business as with BOND. So they run on bond because the three-digit low risk. When high risk people search about to bond, especially bond of those countries have high credibility. The most recent example is the financial crisis in 2008, though the center of the crisis is in the us but people still search on with Uncle Sam to lend money (buy a bond from the u. S Treasury), the evidence for this is the return on 10-year-term bond of America fell from 5.2% to the highest level in January 2007 to a low of nearly 2% in 2009

People avoid the storm, but again ran into the center of the storm was because of America when that confidence level is down though from AAA down to AA + but look around the world, the u.s. is still prestigious national (rank) of the highest order with a strong economy. Many people find about bond will make an appearance on the market many loans. Many people have the need for the loan, then the probability is low. So lenders will require a low income level is lower than when the loan, for which the yield reduction. In such case, bond is the defensive role.


Professional trader is usually considered the mobilization of bond spread (or bond yield) to speculate in market sentiment (market psychology or comments) about the future economy. In most cases, when the yield increase means that the feel of the market economy in the future will be brighter. That is, the economy will grow. The downside of growth is inflation, a consequence of inflation as prices escalated. Therefore, the successful commodity trading houses often considered very carefully the bond's yield. When the yield increase, they expect commodity prices s increases and vice versa.

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There are many ways of classifying bond. But on the way, bond trading are often categorized by period. Bond maturity under two years is short, maturity in the range of 3 to 7 years is the medium term and on 7 years is the long term. Due to the nature of the bond is the debt should in theory if the longer term, the increased risks, the increased risk will require a higher loan interest rates. Therefore, often the longer term bond, the yield is as high and short term bond yield as low. In such cases, if people bring bond yield of different maturities levels arranged in order from short term to long term, it will be a Normal yield curve (the curve return standard form). Yield curve was dubbed the wand in the economy, called wand because of the EXTRAORDINARY mobilization of the yield curve can accurately forecast to 86% before each crisis (statistics from the great depression 1929-present). I highlighted two unusual words to say to the image of an Inverted yield curve (the curve return on reverse). Inverted yield curve occurred paradoxically that occurs is the longer term bond, the yield, the lower back. This form appears when every economic then about to step into a crisis or at least a reduced adjustment period (probability prediction of yield curve right in. 86% if statistics from 1929 to the present). The process of converting from a normal yield curve to an inverted yield curve will often go through a stage called the yield curve Flatten. Flatten yield curve means income curve flat form, it occurs when the return of a different term is relatively equal. This is usually the period of transformation in the economy from the peak of growth entering recession. The follow-up of the yield curve will provide earlier insight trader on the market. Bring the advantages that other tools may not have been.02 3 hinh thai yield curve

On the way home can release the sort out left the company (Corporate bond) and Government bonds (Government bond). However, the bond pictures appear in the painting is always market ventures in government bonds. The basic reason for the bias lies in the scale and the safety of government bonds than corporate bonds. Because of this the theory of tẳng background basics has just said to those mentioned above, and in the latter part of the book of bond (if any) are all characteristic of Government bonds. Theory of bond is extremely wide. However, within the framework of the content of this book I will just summary of the basic concepts necessary to a newcomer can bring bond into the painting to analyze the market. The deeper concepts such as bond valuations will not be mentioned here. Readers would like to learn more then please google check or email for tui, I will answer in the range of his knowledge. The theoretical part about bonds please stop in here to find out about a second constituent parts is the currency market.

Money market

Readers of this book in large part if not all of currency trader. You are the people directly involved in the purchase or sale of the day on the currency market. And the game in the market of retail trader we always is a zero sum game. Zero sume game means a game has a total of zero. A total of zero is because of money the winner come from the pockets of the losers. This characteristic of the forex trading made for many people, especially new people involved believe this is just a form of "gambling" no more no less.

A trader when there is full understanding the basics of this market as the constituent parts, audience participation, method of operation and the roles of key currency market economy all know that this is not a "casino"-where only the gamblers observe mutual fine similar to action buy sell again pair of Joe rates – retail trader. Currency market is truly an important component in the national economy. Your participation in this earnest always requires a basic understanding of it. The lack of this knowledge, the trader really is just a gambler.

Currency market (Forex market) is a market to be ranked on par with bond market if only in terms of the scale calculation. However, the biggest difference between the two markets is this: while the bond market is real money, the currency market is leverage. Leverage i.e. lever, the lever then comes with risks. Comes from nature, so the currency market is one of the most fierce markets in all the markets of the financial market. Fire event is not rare in the account here. Trading in a market like the more demanding trader must have special skills.

The presence of th school comes from the demand for the sale, Exchange, and actual investment of the participants in the world economy. A country in EURO land wanted to buy Vietnam's rice will need to use the EUR buy USD contract before then. Thereby making the bridge of Dong VND rises, demand increases do for USD price increases. A company that Vietnam wants to import components of electron Japanese companies need to use the currency conversion Vietnam out Japanese Yen before entering ...

Exchange rates (exchange rate) is a constantly changing variables, the change of it poses risks for profit companies on the business aspects of the economy. Therefore, participants in the currrency market still is the great company. They are here not for the sake of short-term profit making purchases such as small retail trader we. They step here for the purpose of risk hedge volatility of exchange rates.

On the aspects of international investment, an investor in the us want to buy stocks HAG (Hoang Anh Gia Lai group of German physician) will need to convert the USD price before the sale. This conversion process contributed to increase the value of VND and Obama $ discount.

The value for money of a drug into the political side of the nation's economy. When the economy growth will increase the value of local currency and vice versa. If the soul of the bond's yield, the soul of the currency's RATE. Rate in this is the interest rate (interest rate). In most cases the mobility change of the interest rate decision will reduce growth of the currency base. A rise in interest rates would increase the price of the currency, a reduction in interest rates would reduce the value of it. The interest rate is a key macro variables. Left side of main interest is inflation. In the era of overheating growth, consumption demand rising goods often will push inflation up by price. The increase in inflation is the cause of losing currency prices affect other macro variables. To protect against devaluation of the currency, one of the common measures and often is used that is increasing interest rates (monetary policy tightening). In the opposite case, the economic stagnation period, the central bank of the world usually apply liquid does, one of the ways in which liquid does is lower interest rates.

Successful trading in the currency market often requires the trader to track the mobilization of interest. Therefore, the actions of the Central Bank, the central bank officials spoke of the events has always been closely tracking trader.

Dynamics of interest rates a country's currency is determined by the Central Bank of that country. The central bank usually take out the decision on interest rates on the basis of the review of the key macro variables. One of the variables that are indicators of inflation. Inflation in the economy generally is measured in two ways. On the way to consume goods and services people have CPI (consummer price index), on ways of producing goods people have PPI index (produce price index). Details on CPI and PPI have been talking to in chapter III ought not here anymore. Next, we move through an important constituent parts Tuesday as commodity markets.

Commodity market

Commondity market in the form of the financial market in General and in particular markets related painting that is not a produce market goods typically, this is a market transaction in pure commodities. This means it really is the financial transactions based on the sale of goods and products. The transactions that can be performed through the price for immediate delivery (spot trading), the price of futures contracts (futures contracts), or the contracting option (options) of the goods.

Morphology common transaction and long head of commodity markets is the futures contract. While the GOLD that the daily purchase of MT4 is a spot trading, the OIL is again a futures contract. When trading in commodity markets you need to pay attention to distinguish the two forms. Because while the spot transaction products are traded continuously, then the futures such as oil have term of certain transactions. Oil future in MT4 that you transaction is one month term. Before the contract expires one day then these products stop the transaction and the broker will automatically close your position. Because of this feature of future contracts should be very common phenomenon of profit taking when near to the time of the forced closing of the brokerage.

Measuring tree representing the market average CRB index commodity index (Commondity Research Bureau index). There are two ways to form this index. The first way is calculated it based on the reviews of the market for immediate delivery and the second way is calculated based on the price of commodities futures contracts. Two ways this feature out for the CRB index has two different values but the General uptrend, the triumphs of them are inflation in the economy.

This is an index composed of 22 most commonly used ingredients in the dish. The value of this item 22 is very sensitive to the change of the economy. Once the change of economy because of inflation, the value of the item to change very quickly. In addition, the material was selected as a member of the index most things is the essence of the original material, absolutely not yet manufactured into a product consumed. The reason that people choose the raw materials at the stage on is because people do not like to see its price is affected by the other public price when the item becomes a consumer product. Examples are here to understand, is rubber. From pus on the tree until it turned into a shell of a car or a map then the true price of rubber. Add to that a number of reviews into combined, from the cost of manufactures to carry v. ... v. This index was calculated by the price of a spot market. Spot market is the purchase price on the spot, no cost loans or inventory cost calculated on. Means this is a true international police price most can afford. The price is calculated by this way to avoid any change in price does not stem from inflation that out, because this is an index measuring inflation is the oldest of the U.s. economy.

Twenty-two items which are divided into two categories: Raw Materials & Foods. Raw materials was map not yet processed. Foods are food. Twenty two that include the following:

Original material: Copper scrap, Burlap, Cotton, Hides, Lead scrap, Print cloth, Rosin, Rubber, Steel scrap, Tallow, Tin, Wool tops, Zinc.

Food: Butter, Cocoa beans, Corn, Cottonseed oil, Hogs Lard, Sugar, Wheat, Steers,.

One thing to note about this index. This is one of the oldest index of economic indicators in the United States. If the computer that historically it derives from the 1930s, during the Great Depression of the United States. Thus the method and the item selection is also much when no longer fit with time, largely by Italy. So although it is one of the key indicators to measure the level of inflation in the economy, particularly inflation type called COMMODITY-INDUCED INFLATION, the economists still use CPI made the main index.

Stock market (As VC)

The stock market or the stock market is a division of economic development. It helps countries develop economy, by creating jobs for the nation, through the form of help companies raise capital. Specifically speaking out is like this. The development cycle of a company often started by founders put their own capital, or borrowed your little bit. The first stage of which can make a tiny little company. If Yes and need more development funds, that person can go home loan banks. But if the big development money is needed, then more when the banks do not have enough, or do not dare lend. Because events for a merchant to borrow money, it is the same as removal of capital to do business with people. Options that do not have any partnerships, but if people do eat failed after borrowing money?

Professional translations call it BUSINESS RISK. And the bank does not want the business risk. So people that merchants turned to the stock market to seek investment capital for his company. In contrast, when investors bought shares of companies that they ACCEPT the risks in the business of that company. They are not for the company to borrow money like the House bank, but they put money into the company by buying stock. The amount of shares sold will be put to use in the development of the company. The development of the company will require the additional hiring of people, create more jobs for the economy. And in return, the Government also has more tax money every year. That is why often says, the basics of the stock market is the growth of the economy.
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