Download - Project in Forex
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TABLE OF CONTENTS
Acknowledgement … … … … … … i
Abstract … … … … … … ii
Table of contents … … … … … … 1
Introduction … … … … … … 2
Background … … … … … … 3
Area of Research … … … … … … 4-5
Hypothesis … … … … … … 5
Methodology … … … … … … 6
Data Presentation and Analysis …. …. …. … … … 6-12
Summary of the findings …. …. …. … … … 12
Recommendations …. …. …. … … … 12
Conclusion …. …. …. … … … 13
References/Bibliography …. …. …. … … … 13
Appendix …. …. …. … … …
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INTRODUCTION
Unemployment is a great problem in Bangladesh. There are lots of people who completed
their graduation but after that they are jobless. In present world people are able to do lots of
works and businesses through online, and there are many people who are earning money through
online. FOREX is one of them, which is a very good source of earning but very risky business.
The foreign exchange market, which is usually known as “forex” or “FX,” is the largest
financial market in the world. In FOREX people trade with different country’s currency pairs.
There are many currency pairs, like EUR/USD, GBP/USD etc. The currencies paired with USD
are called major currencies. Other currencies like EUR/GBP, CYN/CHF these are called cross
currencies. There are lots of currencies like these. The major currencies are
Symbol Country Currency Nickname
USD United States Dollar Buck
EUR Euro zone members Euro Fiber
JPY Japan Yen Yen
GBP Great Britain Pound Cable
CHF Switzerland Franc Swissy
CAD Canada Dollar Loonie
AUD Australia Dollar Aussie
NZD New Zealand Dollar Kiwi
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BACKGROUND
We are in 21ST century; Internet makes our life easier. With the help of Internet, people
are able to do different kinds of business staying at any corner of the world. People just need a
computer or cell phone and internet connection. Online business is a very easier thing, people do
not need to go at anywhere, and they can just stay at home and do business. FOREX is one of
them.
Physically there is no market called the foreign exchange market. It is actually a
mechanism through which one country’s currency can be exchanged with other country’s
currency. There is no geographic location of FOREX. Foreign exchange market is known as an
OTC (over the counter) market as there is no physical place where the participant meets to
execute the deals, as like the stock exchange. The working hour of Foreign exchange market is
24 hours a day and five days in a week.
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AREA OF RESEARCH
At the beginning of the research, I identified four questions as my area of research. I worked
on it and got the answers from my primary and secondary data analysis. I have discussed about
all these inside my research paper. I summarized my findings and the questions along with the
answers are provided here.
a) Why forex is a safer place to invest in?
Forex is considered a safer place to invest in, because there is no chance of theft, robbery,
giving extortion etc. People can stay anywhere and can do their business, because here one
has to trade with electronic money so there is no chance of losing the money except from
having a loss in the business.
b) Why forex is easier comparing to the other businesses?
There is no physical hard work for this business, one can do it by sitting or while walking
or by lying on a bed. One just needs a computer and an internet connection.
c) Factors that influence forex market
FOREX actually depends on the condition of currency of a country. The currencies are
influenced by many factors, like economical factor, financial factors, social factors, political
factors, customer’s sentiment etc.
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d) Why most of the people are having losses?
Most of the people incur losses in forex at initial stage. It is only because of lack of
knowledge and lack of practice in virtual market. People should learn the basic things of
forex, and the three analysis: Technical, fundamental, sentimental analysis.
e) Is risk management very important?
Risk management is very important in this market. If people have a lack in risk
management, they would fail in most of the trade in overall business. A successful trader
follows a very good risk management strategy.
HYPOTHESIS
There are many people doing business in forex. Forex is very easier and very profitable
and also very risky. There are good opportunities of earning money through forex, but people are
having great losses at initial stage, they are not getting success from forex.
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METHODOLOGY
At the beginning, I prepared my research proposal and after the approval of my proposal,
I made my research outline and questionnaire which includes some multiple choice questions
and open ended questions. Though it was very hard to find out people who do business in forex,
but I was able to find very few people. Some responded to my questionnaire, some did not.
Secondly, I looked for books, articles, blogs, forums and databases on my research topic.
Websites were the major sources which I used for my research.
DATA PRESENTATION AND ANALYSIS
On the basis of my questionnaire survey, I did the analysis. I have made my research
questionnaire which includes some multiple choice questions and open ended question. I will
present those data graphically and then analyze it.
The participants were male in my survey, there were no female, most of them were 22-28 years
old and very few of 18-21 years old.
Primary Data Analysis:
On the basis of my questionnaire survey and interview I did the analysis. I have made my
research questionnaire which includes some multiple choice questions and open ended question.
I will present those data graphically and then analyze it.
The participants were male in my survey, there were no female, most of them were 22-28
years old, and very few of 18-21 years old. 15 questions was asked to them, I choose some of the
important questions among those.
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Analysis 1:
Why you choose FOREX as a business?
a. It’s easier
b. More profitable
c. I prefer online business more.
d. I will not prefer forex
a b c d0%
10%20%30%40%50%60%70%80%90%
100%
Series1
There are lots of businesses in this world, but forex is very easier business. But according
to the survey people responded that they choose it because forex is very profitable business. 88%
of the people said that they do business in forex because it is very profitable. 4% said it’s easier
and the rest said they prefer online business.
Analysis 2:
How do you think of investing in Forex Trading Market in general?
a. Very profitable
b. Good form of investment
c. Less profitable
d. Too much risky
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a b c d0%
10%20%30%40%50%60%70%80%90%
100%
Series1
People were asked how they think about forex trading. Most of them said it is very
profitable business, almost 92% said so, 12% respond was about risk in forex. And almost 0%
respond was about good form of investment and less profitability.
Analysis 3:
What about you income or loss in first 5 months?
a. Overall had a profit
b. Overall had a loss
c. I don’t business in forex
a b c0%
10%
20%
30%
40%
50%
60%
70%
Series1
In the first 5 months most of the people had a profit, almost 66 % people were
gainer and almost 34% was looser. But it is about the first 5 months, it cannot be
considered a short time period. It is little bit long term period. So, in the long run they are
gainer.
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Analysis 4:
Why you incurred losses in forex?
a. For being greedy- To make money in short time.
b. Lack of theoretical knowledge
c. Lack of strategy
d. All of the above
e. Others
a b c d e0%
10%20%30%40%50%60%70%80%90%
Series1
In my previous analysis I found majority people was gainer after 5 months time period,
but initially almost 95% people were looser in forex. They were asked the reason that why do
they incurred losses initially, the majority replied that they had losses because of being greedy,
having lacks in theoretical knowledge and poor strategy. They said that it is very easy to earn
money in forex so they became very greedy about earning money not considering the important
parts of forex, those are good knowledge and strategy.
Analysis 5:
. What is the most important thing one should follow while doing business in forex?
a. Fundamental analysis
b. Technical analysis
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c. Sentimental analysis
d. Money management
e. All of the above
a b c d e0%
20%
40%
60%
80%
100%
Series1
Most of the people incurred losses in forex initially because of theoretical knowledge
about forex. But what kinds of theory they should learn? Four most important parts people
should gain knowledge about are Fundamental analysis, Technical analysis, Sentimental
analysis, Money management. When they were asked about these, 92% of them said all of these
are very important.
Overall Findings:
People mentioned that forex is a very profitable business, and very easy to operate. But in
initial stage almost 95% people incur losses in forex. This is because of lack of knowledge about
forex. People do not learn technical analysis, fundamental analysis and sentimental analysis.
They also do not follow money management, which is a very important reason for having losses
in forex. Becoming greedy also one of the major reason for having losses.
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Secondary Data presentation and Analysis:
Beside the survey and interviewing people I also looked for some of the other sources
about why do people incur lose in forex. Many experienced traders shared their knowledge about
this.
A trader nicknamed samnur said that, people incur losses because of: “taking risk more
and more, having greed mentality, having emotional tendency, trade without market trend”( “The
most important causes of loss in forex”, 2013)
Another person parthobipasha said “I think lack of knowledge is one of the most
important causes of loss in forex trading. We should learn a lot to be a successful forex trader.
Greed is the reason of loss too. We should control our greed while trading in forex to be a
successful trader we should control our emotion too.”( “The most important causes of loss in
forex”, 2013)
People fail to make a good strategy and apply knowledge into the market. That is why
they are found to incur losses. An expert said that “While understanding the macroeconomic,
technical and fundamental analysis necessary for trading forex is as important as the requisite
trading psychology, one of the largest factors that separate success from failure is a trader's
ability to manage a trading account.”(R.,Stammers, n.d.)
People need to continue learning process and developing their knowledge. After lots of
learnings and practice they will be successful. In a forex trading forum it is said that “Only after
investing in foreign currencies for a certain period of time and going through different analysis
on a regular basis, people can know the points to be avoided.”( “Forex trading”,2011)
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Monali Jaiswal stated that “Knowledge is must: good knowledge is very essential before
trading. Understanding of subject, terminology, financial market behavior, current trends, foreign
news are must for the trader.”(“ Lessons for Forex Newbies”, 2009)
There are lots of other reasons that people have loss on forex. But for the beginners some
few reasons are found and they are mentioned above.
SUMMARY OF RESEARCH FINDINGS
After the overall research it is found that people have losses in forex in initial stage
because of lack of knowledge, being greedy and having poor strategy. There is no limit of
learning things about forex, but people have to know at least some of the simple things so that
they can make profit. Among them, learning technical analysis, fundamental analysis, money
management, controlling emotions about earning money, not becoming greedy, these are the
most important factors.
RECOMMENDATIONS
Do not start business with very low capital.
Learn some basics about forex.
Learn theory about different kinds of analysis, including money management.
Controlling emotions is very much necessary.
People should not become greedy, they should control their emotions, must have a
relaxed calm mind while trading in forex.
CONCLUSION
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Forex is a good form of investment; people can money easily from this business. This
business can be executed through internet. One just needs a computer and an internet connection.
So anyone can do this business if internet is available over there. Forex trading seems to be very
easy, but in reality it is not so easy. People want to earn lots of money, they become greedy, and
this tendency leads to having loss in forex. People do not have patience while trading. They must
have patience and gain knowledge as much as possible. Learning the basics is not enough for
forex, technical analysis, fundamental analysis, sentimental analysis and money management is
must. If someone has lack in these sectors there is a very high possibility of having losses.
References/Bibliography
1. http://www.babypips.com/
2. http://bdpips.com/
3. https://www.mayzus.com/forum/archive/index.php/t-16062.html
4. http://online-affiliate-programs.com/forex-trading-psychology/
5. http://fxtrade.oanda.com/learn/top-10-ways-new-forex-traders-lose-money
6. http://www.investopedia.com/articles/forex/10/top-reasons-forex-traders-fail.asp
APPENDIX
Name: Md. Mahiyan Chowdhury.
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Batch: spring 2011(11th semester) ID: 111 0441 030
Major: Finance and Accounting, International business.
Mobile no: 01722966509
Address: 27, Bijoy Nagar. Dhaka-1000
Tentative title of the research: Why most of the people incur losses in FOREX?
Area: Currency exchange. Foreign Exchange Market.
Research problems and statement:
Unemployment is one of the major problems in Bangladesh. Now days there are lots of people
who are doing business or jobs in internet. It is found that people are taking interest in FOREX
market to make an investment, but unfortunately maximum numbers of people are having losses
though it is a profitable business.
My research problems are:
Why forex is a safer place to invest in?
Why forex is easier comparing to the other businesses?
Factors that influence forex market.
Why most of the people are having losses?
Is risk management very important?
Objective: My main objective is to find out the maximum reasons for incurring losses in Forex
market.
Rationale: Though Forex market is pretty much good to make profit, but most of the people are
incurring losses. There are some specific reasons for that. If they became aware of these reasons
they will not incur losses. So it is very important to analyze the reasons for having losses in
Forex.
Methodology:
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I am going to search for all the available sources for Forex. Internet, books, newspapers,
journals, articles are good sources for the research. I will also talk to investors of forex, ask them
necessary questions through questioner about incurring losses or gaining profits. I will also
interview some experts.
References:
1. “Currency Trading and Inter-market Analysis: How to Profit from the Shifting Currents
in Global Markets” - By Ashraf Laïdi
2. “ForeX Trading for Maximum Profit: The Best Kept Secret Off Wall Street” - By Raghee
Horner
3. “Beat the Forex Dealer: An insider’s look into trading today’s foreign exchange market”
- By Agustin Silvani.
4. “Mastering the Trade: Proven Techniques for Profiting from Intraday and Swing Trading
Setups”- By John F. Carter
5. "Thirty Days of FOREX Trading: Trades, Tactics, and Techniques" - By Raghee Horner
6. "Day Trading & Swing Trading the Currency Market" - Written by Kathy Lien
7. "The 10 Essentials of Forex Trading" - Jared F. Martinez
8. "7 Winning Strategies for Trading Forex" - Grace Cheng
QUESTIONNAIRE
Unemployment is increasing day by day in Bangladesh. For the lack of job opportunity people
are involving in online business. FOREX (Foreign Exchange market) is one of those businesses.
But most of the people incur loss in initial stage in this business. The purpose of this research is
to find out the reasons for incurring loss in FOREX.
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Answer the following question:
1. What is you gender: _________
2. What is your age: _______
3. What is your occupation: ______________________________________
4. Why you choose FOREX as a business?
e. It’s easier
f. More profitable
g. I prefer online business more.
h. I will not prefer forex
5. How do you think of investing in Forex Trading Market in general?
e. Very profitable
f. Good form of investment
g. Less profitable
h. Too much risky
6. For how long you are doing business in Forex?
a. 5 months – 1 year
b. 1 year – 2 years
c. More than 2 years
d. I do not do business in forex
7. What about you income or loss in first 5 months?
d. Overall had aprofit
e. Overall had a loss
f. I don’t business in forex
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8. How you made a profit in forex?
a. Proper strategy
b. Enough knowledge
c. Patience
d. Luck by chance
e. All of the above
9. Why you incurred losses in forex?
f. For being greedy- To make money in short time.
g. Lack of theoretical knowledge
h. Lack of strategy
i. All of the above
j. Others
10. What is the most important thing one should follow while doing business in forex?
f. Fundamental analysis
g. Technical analysis
h. Sentimental analysis
i. Money management
j. All of the above
11. According the previous answer, why do you think it is (or all are) important?
Answer.____________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________
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12. What a new forex trader should follow in starting of business?
Answer:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________
13. What is the most specific reason for having a huge loss in forex?
Answer:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________
14. Patience and Relaxed mind is necessary than money for the business.
a) Strongly Agree
b) Agree
c) Neutral
d) Disagree
e) Strongly disagree
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15. How does the forex market differ from other markets?
Answer:
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
_____________________