WHAT IS ARBITA?
Arbitrage, to explain briefly, is to make a risk-free profit by simultaneously buying from the low-priced market and selling in the high-priced market, in case the price of the same security, currency or precious metal traded in different markets is different. These products can be precious metals such as gold or securities such as stocks. The aim here is to make a profit completely risk-free. One of the most asked questions today is Arbitrage, that is, how to make risk-free profits?” is the question. For this, many large-scale and globally known companies seek an answer to this question by creating arbitrage pricing models. However, in today's capital markets and money market conditions, this is more difficult than it seems. Because now almost all markets are intertwined and information sharing has reached incredible speeds.For this reason, it has become increasingly difficult to manually mispricing in any market and thereby making profits by arbitrage. When this is the case, arbitrage transactions have become made with algorithmic software. These softwares perform risk-free arbitrage transactions by sending orders to both exchanges at the same time, when an arbitrage opportunity arises for the same security traded in different markets.They make risk-free arbitrage transactions by sending orders to both exchanges at the same time.They make risk-free arbitrage transactions by sending orders to both exchanges at the same time.
WHAT IS THE BULLISH MARKET?
Bear and bull market concepts, which are frequently encountered terms in financial markets, provide information about the direction (trend) of the market. The bullish market is the period when the market is in an upward trend, that is, the prices will follow an optimistic environment in the future and investors will start buying. It is assumed that the origin of this term comes from the belief that they lift everything from the bottom up with their horns. It is also possible to encounter comments such as "the beginning of the bull market", which we mostly see in stock markets and commodities such as gold, in the forex market. In a bear market, the situation is the opposite of that in a bull market. In other words, the market is in a downward trend and a pessimistic atmosphere prevails in the market. For a bull market to start, technically it is expected to have risen 20% from the lowest level of the relevant market.
Stages of a Bull Market
1. Stage-Collection: It is the stage where the goods with very cheap value, which are sold by the losing and discouraged investors, are started to be collected by the big investors. There is no clear uptrend yet and there is still little interest in the market in general.
Stage 2-Buying Wave: It is the stage in which the signs of improvement in the market are clearly noticed after the collecting stage, and small investors are now included in the buying wave, and the transaction volumes increase.
3. Stage-Saturation: With the increase in volume, the market has reached a certain saturation and the buyer in the market has decreased considerably. It indicates the end of the Bull Market, then the start of the hard bearish wave can be expected.
Bull Market Examples
Gold has been in a significant bull market since the early 2000s. Gold prices had risen from levels of 800 dollars an ounce to 1900 dollars an ounce. This is an example of a strong gold bull market formation.
WHAT IS SUPPORT RESISTANCE?
Support and resistance concepts are a technical analysis concept used not only in forex markets, but also in all financial markets. In general, support can be described as the level at which the decline in prices is expected to stop. The cessation of sales in the financial product at support levels is interpreted as the reaction of buyers at this level. However, it should be noted that if the important support levels are broken, that is, if the downside support points are passed, the sales will accelerate and the support point will now become a resistance point. Breaking a support point does not mean that prices sag below the support level. We can clearly say that a support level has been broken when it closes below this level. When we look at the historical charts in the Forex markets, the first thing that catches our eye is that the sales have stopped,The places where the prices cannot fall further below this level are the support levels.
WHAT IS A MICRO LOT?
The ever-increasing transaction volume in the forex markets plays an important role in attracting more players to trade in the forex markets by arousing the interest of professional and institutional investors as well as people with different expertise and/or lower collateral. Leveraged transactions in forex markets result in investors with low collateral gaining higher profits/losses thanks to leverage.
WHAT IS INFLATION?
Inflation is the increase in the prices of goods and services. However, the prices of goods and services can increase or decrease over time. Inflation is not simply an increase in the price of a particular good or service, but a continuous increase in the general level of prices. In other words, it is not inflation if the prices of only some goods increase continuously or the prices of all goods increase once. For example, a monthly inflation rate of 1 percent indicates that the general level of prices increased by 1 percent in that month compared to the previous month. The fact that annual inflation is 30 percent means that prices have increased by 30 percent on average compared to the previous year, for example, a basket of goods bought for 200 TL last year can only be bought for 260 TL this year. falling inflation; decrease in prices, increase in purchasing power of people,It doesn't mean increased income.
Lower inflation means less rise in prices, less purchasing power of people, and consequently stability and prosperity. Since inflation rates can directly affect the steps to be taken by central banks in monetary policies, they are also very effective on exchange rates. Because the inflation rate is the leading indicator for the changes to be made by the central banks on the interest rates. For example, while the expectation of an increase in interest rates comes to the fore in case the inflation rates deviate upwards from the targets of the central banks, the expectation of a decrease in the interest rates comes to the fore when the inflation rate is below the targets of the central banks.
E.g; The Central Bank of the Republic of Turkey has set the inflation target for 2016 as 5%. However, domestic and international developments may cause a deviation from this inflation target. Although there is no definite value for this deviation rate, if the CBRT raises interest rates considering the course of global markets, downward movements can be observed in USDTRY and EURTRY rates (due to the appreciation of the Turkish Lira). Or, if the current conjuncture causes the CBRT to reduce interest rates, there may be increases in USDTRY and EURTRY rates (due to the depreciation of the Turkish Lira). Of course, although inflation is not the only factor in exchange rate movements, it is an important data that can cause volatility.
WHAT IS FOREX?
Forex is the abbreviation of the word foreign exchange, which expresses the conversion of two countries' currencies against each other. After forex transactions became popular over time, not only currencies but also commodities entered into forex platforms and started to be traded as forex products. Forex market is the world's largest and most liquid market. According to BIS (Bank of International Settlement) data, the daily trading volume of the forex market is around 5.5 trillion USD. Due to the leverage factor in Forex markets, the fact that even small investment amounts can be traded has caused the market to become so interesting.
Although Forex markets are similar to stock and futures markets in many ways, they are markets with very different and unusual features. We will see the differentiating features of forex markets in the following stages of our article, but the best way to explain which aspects of forex that operates according to the features of the over-the-counter market is to compare the functioning of the forex markets with the features of the organized markets we are used to. In order to better explain the concept of Forex, let's take a brief look at the general characteristics of organized markets, for which BIST (stock market Istanbul) or VIOP (futures and options market) are cited as examples. In organized markets;
• The buyer and the seller do not know each other.
• Operational principles are standard. Items subject to these trading principles are trading hours, transaction sizes, order types, leverage, initial margins, maintenance margins, and clearing conditions.
• Buyer and seller match on the exchange.
• A clearing house acts as a seller to the buyer and buyer to the seller.
• The parties do not need to trust each other.
After taking a look at the features of the organized markets, let's move on to the answer to our question of what is forex, let's first take a look at the features of the over-the-counter markets in order to understand what forex is.
In over-the-counter markets;
• Buyer and seller know each other.
• The parties determine the transaction principles.
• There is no transaction standard.
• Mutual trust is essential.
• Clearing transactions are made by the parties.
Up to this point of our article, we have given preliminary information about what is forex. Features of forex, which is the main product of over-the-counter markets;
• It is at the center of over-the-counter markets.
• The investor should have confidence in the intermediary institution.
• The brokerage house determines the transaction prices.
• The registration of realized transactions is kept by the intermediary institution.
• All transaction features are determined by the brokerage house.
WHAT IS ICHIMOKU?
The ichimoku indicator, also known as ichimoku clouds, is an indicator that helps in determining support, resistance and trend in financial markets. Also known as Ichimoku kinko Hyo, this indicator is also known as the "equality graph". Trend detection and potential signals about the trend can be seen with a single image. The indicator was developed by Japanese journalist Goichi Hosoda in 1969. Although it may seem very complicated when looking at the graphics, it is actually a useful and simple indicator.
In order to understand what the Ichimoku Indicator is, it would be useful to first state what the terms mean in the Ichimoku Kinko Hyo analysis, because we will constantly follow the corresponding terms on the graphs.
• Tenkan Sen: 9-period moving average is the default value.
• Kijun Sen: The 26-period moving average is the default.
Moving averages help us find where support and resistance levels are closest.
Within the emerging market, the 9-period moving average is closer to prices, so if there is a pullback, it will naturally act as the first level of support. The 26-period moving average, which follows prices further away, acts as the next support. The same rules apply to the bear market.
• Senkou Span A: It is obtained by adding the 9-period moving average and the 26-period moving average and dividing it by two, and then shifting the value obtained 26-periods forward.
Senkou Span A acts as a weighted average of 26 periods.
• Senkou Span B: It is obtained by adding the highest and lowest value in 52 periods and dividing by two, and shifting the value obtained 26-period forward. In other words, Senkou Span B is the midpoint of 52 periods (50% retracement rate).
*Ichimoku Cloud: It is the region between Senkou Span A and Senkou Span B. If prices manage to penetrate the cloud by passing through the cloud, it is predicted that the trend will continue in that direction. In other words; If the parity falls below the cloud, the downward trend has begun to dominate, if the pair climbs above the cloud, the upward trend has begun to dominate.
The thickness of the clouds is also an important point. In the thicker cloud region, support (or resistance) is greater; we can say that there is less support (or resistance) in the region where the cloud is thin. Currents are more likely to change direction at such points.
• Chikou Span: It is obtained by moving the closing price back 26 periods. It is a default value but can be changed if desired.