Wydawca: Simon Kostrava Kategoria: Biznes, rozwój, prawo Język: angielski Rok wydania: 2016

Forex: Market Turbulence in the Past Decade in the Words of Traders ebook

Simon Kostrava  

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Opis ebooka Forex: Market Turbulence in the Past Decade in the Words of Traders - Simon Kostrava

There is much turbulence in today’s financial markets. Numerous political and nonpolitical events impact currency rates, equity and bond prices. Some events can have a really broad and strong influence and change the value of your holdings, or even zero them.Although we do not want to see a financial Armageddon, we should be prepared. There is no better way of preparing than by looking into history. In my opinion, events are not repeated in the same way, but to know the mistakes of the past can help you to adapt to the future.We have chosen three case studies from the last decade to show you what can happen in the markets.We cover and describe the history of the Swiss National Bank (SNB) and its attempt to cease strengthening the Swiss franc, followed by its approach that resulted in a sudden market crash. A crash that erased almost USD 1 billion from financial markets and left many participants in debt or bankruptcy.Next, we explore the recent story of the Brexit referendum, the result of which was surprising to many participants. However, it has not led to severe losses, as banks and brokerages were able to learn a lesson from the year-old incident with the Swiss franc.As a bonus, we write the history of Slovakia entering the euro zone. Replacing the Slovak koruna with the euro brought about unusual situations, which suggest illegal actions relating to insider trading. This part of an otherwise successful story concerning Slovakia’s entry into the euro zone is not widely known.All three stories are written not only in a factual way but also in the words of direct participants. In other words, traders with whom we spoke in an attempt to reconstruct what people on the trading floor of banks and brokerages thought in relation to the aforementioned events. How were they prepared for such unexpected events and how did they react in the moments immediately after they happened?At the end of the book, we offer you some advice about current currency markets. Can we see patterns similar to above-mentioned events? Could another currency experience an SNB-type crash? Will another country vote to leave the European Union (EU)? Can the fixing rate of another currency entering the euro zone be manipulated?

Opinie o ebooku Forex: Market Turbulence in the Past Decade in the Words of Traders - Simon Kostrava

Fragment ebooka Forex: Market Turbulence in the Past Decade in the Words of Traders - Simon Kostrava

Table of Contents

Forex: Market Turbulence in the Past Decade in the Words of Traders

Contents

1. Forex case studies

2. How the Swiss National Bank ruined the party (twice)

3. Brexit: how a bad idea turned into a market crash

4. The Slovak koruna rate-fixing case

5. And what now?

6. Final remarks

About the author

Other books by Simon Kostrava

Forex Case Studies

Author: Simon Kostrava

Published in 2016

Published by Simon Kostrava

All rights reserved

Cover Photo: Lucia Simonova

All rights reserved

Printed by CreateSpace.com

Available from Amazon.com and other retail outlets

FOREX CASE STUDIES

Market Turbulence in the Past Decade in the Words of Traders

Simon Kostrava

Contents

1. Forex case studies

2. How the Swiss National Bank ruined the party (twice)

2.1 Safe haven

2.2 When interventions do not work

2.3 The SNB ruins the party for the first time

2.4 Three and half years of “stability”

2.5 The SNB ruins the party for the second time

2.6 Counting the losses

3. Brexit: how a bad idea turned into a market crash

3.1 How the bad idea happened

3.2 The days before Brexit

3.3 D-Day

3.4 The days after Brexit

4. The Slovak koruna rate-fixing case

4.1 Slovakia on the road to the EU

4.2 Once in the EU and the ERM II, the future is bright

4.3 Setting the final rate

4.4 What happened next?

5. And what now?

5.1 Can the SNB crash be repeated elsewhere?

5.2 Surprising election results

5.3 Who will be next to join the eurozone?

5.4 Poland

5.5 Hungary

5.6 Czech republic

6. Final remarks

About the author

Other books by Simon Kostrava

1. Forex case studies

There is much turbulence in today’s financial markets. Numerous political and nonpolitical events impact currency rates, equity and bond prices. Some events can have a really broad and strong influence and change the value of your holdings, or even zero them.

Although we do not want to see a financial Armageddon, we should to be prepared. There is no better way of preparing than by looking into history. In my opinion, events are not repeated in the same way, but to know the mistakes of the past can help you to adapt to the future.

We have chosen three case studies from the last decade to show you what can happen on the markets.

We cover and describe the history of the Swiss National Bank (SNB) and its attempt to cease strengthening the Swiss franc, followed by its approach that resulted in a sudden market crash. A crash that erased almost USD 1 billion from financial markets and left many participants in debt or bankruptcy.

Next, we explore the recent story of the Brexit referendum, the result of which was surprising to many participants. However, it has not led to severe losses, as banks and brokerages were able to learn a lesson from the year-old incident with the Swiss franc.

As a bonus, we write up the history of Slovakia entering the eurozone. Replacing the Slovak koruna with the euro brought about unusual situations, which suggest illegal actions relating to insider trading. This part of an otherwise successful story concerning Slovakia’s entry into the eurozone is not widely known.

All three stories are written not only in a factual way, but also in the words of direct participants. In other words, traders with whom we spoke in an attempt to reconstruct what people on the trading floor of banks and brokerages thought in relation to the aforementioned events. How were they prepared for such unexpected events and how did they react in the moments immediately after they happened?

At the end of the book, we offer you some advice about current currency markets. Can we see patterns similar to above-mentioned events? Could another currency experience an SNB-type crash? Will another country vote to leave the European Union (EU)? Can the fixing rate of another currency entering the eurozone be manipulated?

Forex Case Studies

2. How the Swiss National Bank ruined the party (twice)

2.1 Safe haven

When you think about a currency that can withstand any crisis, only one springs to mind. The US dollar. The king of currencies. Sometimes, however, you want to have two currency options with security. So, if you think a bit more, you will conclude that the second best currency option in a crisis is the Swiss franc.

Switzerland, a country of secret bank accounts and solid bankers. A country of neutrality throughout history. No wars and a persistent tendency to remain on good terms with everyone everywhere.

So, your second choice is clear. In a time of crisis, when other currencies weaken, the Swiss franc will definitely hold or even increase its value.

Of course, a strong Swiss franc can sometimes make people in Switzerland, especially in the SNB, nervous. Exporters are first in line when it comes to being unsatisfied. And, in a country that is well known around the world thanks to its watch manufacturers, you can be sure that their voice is clearly heard. A strong franc kills the economy and subsequently employment. You can bet your money that the Swiss Government and the SNB will sometimes listen to those voices.

The first such attempt of note was in 1978 when, after years of strengthening, the SNB decided to set a CHF/DEM floor at the rate CHF 80 for DEM 100 (or CHF 0.8 for DEM 1).

This floor led to a weaker currency situation for Switzerland, while, as a secondary effect, it also brought about inflationary tendencies in the economy. The SNB abandoned this floor in 1982. In other words, it took four years before they realized that they cannot compete with market forces. Unfortunately, they did not learn from that. And if you don’t learn from your own mistakes, you can bet that you will repeat them in future.

2.2 When interventions do not work

As usual in times of crisis, people on forex markets tend to move to safe havens: namely, the US dollar, the Japanese yen and the Swiss franc. One year that was special in this regard was 2008, when the mortgage crisis in the USA escalated and Lehman Brothers filed for bankruptcy protection on September 15. The world was full of financial problems.

The Swiss franc highlighted what people do when they think about a safe haven on the currencies market. The shift in the CHF/EUR rate – from CHF 1.60 for  EUR 1 to CHF 1.45 for EUR 1 – in the course of the turbulent 2008 was not surprising.