Forex trading for beginners – Profitable trading system – Basic forex trading for beginners.
The Forex market is very dynamic with a large number of participants. It is also well established in the market. As you might expect, a combination of popularity and time has led traders to countless strategies.
Because of the time value of money, the profit earned in the future must be discounted to represent the dollar today – just like a dollar taken into a bank account today would be valuable. Than in the future after it has obtained some benefits, reversed. Reducing future cash flows depends on a lot of things including the cost of capital (the cost of the loan or the investment, which depends on the interest rate), the risk of the business (on the market Stock market is usually estimated using the beta) and the cost of doing nothing and keeping your money in the bank (opportunity cost or risk free rate).
Once the appropriate discount rate has been estimated, the hardest part is determining what the future cash flow will be – one month from now, one year from now, five years from now. . Financial analysts are attempting to calculate these amounts in a variety of ways to account for company factors and macroeconomic factors such as overall economic health. Fortunately, the stock market reflects expectations of future cash flows at a fair P / E ratio. The 10x P / E ratio means that a company is being valued today at 10 times its current earnings. The P / E ratio of 20x for the same company means that for the same income, the market is giving it twice as much value, indicating that the future cash flow will be larger. Of course, there are some complex pricing models that analysts can use in addition to, or instead of, P / E ratios such as using dividend discount models or free cash flow models.
Because the future is not known today, many people’s estimates will be different, giving some of the higher expected stock prices and some lower stock prices. If the current price is lower than the expected price, people will buy it. If it is higher, people will sell it. As an economy is growing, people are spending and profits are rising. Companies invest in projects, expand their business and hire more people. Investors are optimistic and expectations for future cash flow will increase, and stocks will enter a bull market. Simply put, the stock market can fall as expectations of future cash flows decrease, making the price of the company appear too high, thus making people sell shares. If more people came to this decision than someone who bought those stocks, the price would fall until it reached the point where people would start believing they were worth it.
See it again: https://youtu.be/p8J1uXZq42Q