Currency Trading Practice -
Each student will set up a practice account on the real-time online currency trading platform Oanda. The account starts with a $100,000 "play money".
Learning Objectives:
- Gain knowledge in how the retail FOREX market operates and how exchange rates respond to new information
- Learn how to use different types of orders
- Become familiar with interest rates and how financing charges are assessed in the FOREX market
- Learn about the use of leverage in FOREX trading, margin accounts
- Become familiar with technical analysis
- Become familiar with fundamental analysis
Students will explore forecasts, establish trading strategies and practice currency trading using different types of orders and submit two reports.
Oanda account instructions. During the first week of the semester, each student will set up a personal practice account. The account will have a beginning balance of $100,000 play money. Trading in the account must begin during the second week of the semester. Before starting to trade, you need to go through lesson 1-6 of "How to trade a currency".
Report 1 -
Technical analysis in the foreign exchange market has been shown to be potentially profitable in the short run in studies.
Use technical analysis and trade at least 10% of the funds your practice account in a minimum of 3 foreign currencies and at least 10 transactions. Each trade needs to be justified and accompanied by a printout of a technical indicator pointing to a reason to buy/sell a currency.
You need to use at least once a market order, limit order, stop loss, take profit.
Report 1 should contain transaction history for at least 10 transactions and all supporting information used to in decision making (i.e. news articles links and screenshots for each transaction, technical indicators screenshot for each transaction, etc).
Report 2 -
Formulate a foreign exchange trading strategy based on fundamental analysis. The strategy should be based on a discussion of interest rates, inflation, other economic indicators, Balance of payments data, major financial events such as the Greek debt crisis, political events, etc. Take a long position in at least one currency based on fundamental analysis and hold the position till the end of the semester. The strategy formulation and trade needs to be justified and accompanied by a printout of a news articles, economic announcements, etc.
Remember exchange rates are bilateral, so, for example, if you are using fundamental analysis on NZD/JPY find GDP growth, inflation, interest rates, BOP data for both New Zealand and Japan.
All trading activity and supporting articles links and screenshots and website links need to be gathered and submitted in the form of a final report in the end of the semester. Finish with a conclusion, supporting the choice of currencies and explain the reasons for the success/failure. All positions should be liquidated by the last day of class and detailed transaction history should be attached to the report.
Attachment:- Assignment File.rar