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What is bad, and how do foreign exchange transactions treat good and bad?

2022-01-19

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What we often say is good and bad, which is a choice of trading direction. Whether we choose to buy or sell at a certain time is the decisive factor for whether our transaction is ultimately profitable or lost. This article will give you a specific introduction to what is bad, and how foreign exchange transactions look at good and bad.

What is bad

Bad news is a professional term in the stock market, which mainly refers to bad news that causes the foreign exchange market to fall. Once there is a negative situation in the foreign exchange market, it is often ushered in a short market. A large number of investors began to sell their chips, and the exchange rate would fluctuate greatly. It is easy to have a capital stampede.

Bad news refers to information that can cause stock prices to fall, such as deteriorating operating performance of listed companies, bank tightening, bank interest rate hikes, economic recession, inflation, natural and man-made disasters, etc. Bad news. Bad news often leads to the overall decline of the foreign exchange market, and continuous bad news will cause the price of the foreign exchange market to continue to fall, forming a "bear market".

The bad news actually comes from many aspects, such as the performance loss of the listed company itself, financial fraud, etc., or some policy factors, such as interest rate hikes and monetary tightening. These news will have a negative impact on the growth of the stock market. Therefore, all belong to the category of bad news.

To a certain extent, bearishness can have many effects. For example, the "herd effect" of the market, when the bad news is announced, may only be a part of small funds selling. However, these funds led to a sell-off in the market, and a large number of investors began to follow suit and sell, so there was a situation of smashing the market. At this point, if there is no escaped funds, it is likely to cause serious losses.

How do foreign exchange transactions look at the good and the bad?

It is also necessary to maintain a rational and objective attitude towards the judgment of good and bad. Positives and negatives can be considered from both fundamentals and technical aspects, and may also be formed from the joint influence of multiple aspects. You cannot make your own conclusions by looking at one angle independently.

For example, in 2002, the European Central Bank announced a reduction in interest rates. According to normal thinking, when the interest rate of a country’s currency fell, it was an obvious negative factor. The euro should fall, but at that time, the war between the United States and Iraq was about to break out, and the euro The gains were suppressed, but were instead released after the euro rate cut, creating a positive situation. This is a classic example of not thinking about things from a single fundamental.

In the same way, we will also use technical indicators to judge when the moderator is good or bad when trading. Through technical indicators, we can reflect the upward trend or downward trend of the market, whether it is about to peak or bottom. These are positive. The negative reference factor is also a method often used by traders. Especially in short-term trading, the fundamental influence does not affect the market. In this case, the best way is to judge whether it is good or bad through the technical side.

Now everyone should know what is bad. Although bad is a professional term in the stock market, it can also be used in investment industries such as foreign exchange. When doing foreign exchange investment, if you can grasp the negative side, you can make your investment just more favorable. For details, you can refer to the precautions mentioned above.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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What is bad, and how do foreign exchange transactions treat good and bad?

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