62 63
PROFIT-MAKING AND FINANCIAL INSTITUTIONS
Financial marketsGLOBAL DATA ANALYSIS
Asian markets open up to 8 hours
ahead of European and US markets
due to the time difference. Because
stock, bond, and currency markets
around the world are intimately
linked, what happens on the Asian
markets can affect markets in the
Eurozone, UK, or US, and have a
bearing on opening prices when these
markets begin trading later in the day.
For this reason, investors often look
for signals from Asia to determine the
likely direction of other markets.2016❯❯Hedging A strategy that involves
investors buying shares they think are
likely to rise in price while also selling
shares they think will fall, in order to
maintain a market-neutral position.
❯❯Technical analysis Research aimed
at identifying patterns that indicate if
a share is trending up or down.
❯❯Fundamental analysis An
assessment of revenues, costs, debt,
profit margins, and management.NEED TO KNOW
Tec
hn
ic
al(^) a
n
a
ly
s
is
F
u
n
d
a
m
e
n
ta
l^ a
na
lys
is
$--
$--$--
$--$--
$--
$--$--$--
$--$--
Technical
analysis involves
examining price data
and trading volumes in
an effort to predict the
movements of shares, an
index, or other financial
instruments. The approach
aims to identify patterns that
may indicate future behavior.
Investors use it to help them
determine which way a
share is trending, and to
prepare them to respond
to market signals that
indicate whether the
share is likely to go up
or down in value.GLOBAL PRICE DATA
Because stock, bond, and currency markets around the world are
linked, investors look for signals from Asia to determine the direction
of markets in Europe and the US.TECHNICAL PREDICTIONS
Rather than looking at a company’s
detailed financial data to determine
its worth, investors use price charts
to help predict movements.TRADING VOLUMES
Investors use trading volumes as
well as price data to help predict
the movements of shares, an index,
or other financial instruments.US_062-063_Predicting_market_changes.indd 63 13/10/2016 16:16