In my opinion there are three components to trading. One is fundamental, or news trading. The second is technical analysis, or indicator trading. The third, and only one that matters is market maker trading, or supply and demand. If you want to be successful, you will need to understand all three.
News is required to make the market move. The market does not have to move in the direction of the news though. This is important to understand. In general, good news for a currency moves in that currency's favor and bad news moves against it. This is NOT always the case. Market makers occasionally use news to take your money. Have you ever seen price spike on a news release only to retrace and continue in the direction it was originally going? Happens all the time. However, major economic news will drive a market in the right direction...eventually.
Technical analysis is how the majority of people trade. Me included, although I also use the other two components to my advantage. This involves using some type of indicator, or series of indicators to attempt to determine where the market is most likely headed over your preferred time allotment. Finding the right set of indicators to use, and then finding the right settings to use on them is extremely frustrating though.
Technical analysis is frustrating because of the middlemen. Between you and the price and what your indicators are telling you are market makers and brokers. Their function is to make you lose your money to them. This means that, in essence, it really doesn't matter what your indicators are telling you, they will do whatever they want to do, within reason. Imagine you are the main guy buying and selling currencies for the whole world. You have huge transactions from banks that are both selling and buying. Then you have the small retail traders who have absolutely no influence on the market. Now imagine you just have to fill those orders, eventually, but certainly not all at once. There is no reason you can't play with the price and sell some of the sell orders, then buy some of the buy orders and just do that over and over and over. Meanwhile, this up and down and all around is destroying the retail trader's indicator readings. Add to that, the market makers and brokers can see the distribution between buyers and sellers and will turn the market in the direction of least profit...usually in a hurry. Also realize they can see your stop loss and if it is within reach, and will put you in the negative, there is a really good chance they will trigger it. Finally, speaking of triggers, lol, if you are unfortunate enough to place a pending order on the side of a suspected breakout, you should be prepared to have it triggered right before they race the price the other direction. Are these all things YOU would do if you were in control and had to make money by forcing traders to lose? There is hope though:) In roulette you can bet on black or red, and unless it lands on 0 or 00, you have an almost 50% chance of winning. In trading, it will go up or down, or both at nearly the same time, but you have a 50% chance of being right. The hard part is the wheel doesn't stop turning in Forex, so you have to know when enough is enough.
Isn't this fun?:))
News is required to make the market move. The market does not have to move in the direction of the news though. This is important to understand. In general, good news for a currency moves in that currency's favor and bad news moves against it. This is NOT always the case. Market makers occasionally use news to take your money. Have you ever seen price spike on a news release only to retrace and continue in the direction it was originally going? Happens all the time. However, major economic news will drive a market in the right direction...eventually.
Technical analysis is how the majority of people trade. Me included, although I also use the other two components to my advantage. This involves using some type of indicator, or series of indicators to attempt to determine where the market is most likely headed over your preferred time allotment. Finding the right set of indicators to use, and then finding the right settings to use on them is extremely frustrating though.
Technical analysis is frustrating because of the middlemen. Between you and the price and what your indicators are telling you are market makers and brokers. Their function is to make you lose your money to them. This means that, in essence, it really doesn't matter what your indicators are telling you, they will do whatever they want to do, within reason. Imagine you are the main guy buying and selling currencies for the whole world. You have huge transactions from banks that are both selling and buying. Then you have the small retail traders who have absolutely no influence on the market. Now imagine you just have to fill those orders, eventually, but certainly not all at once. There is no reason you can't play with the price and sell some of the sell orders, then buy some of the buy orders and just do that over and over and over. Meanwhile, this up and down and all around is destroying the retail trader's indicator readings. Add to that, the market makers and brokers can see the distribution between buyers and sellers and will turn the market in the direction of least profit...usually in a hurry. Also realize they can see your stop loss and if it is within reach, and will put you in the negative, there is a really good chance they will trigger it. Finally, speaking of triggers, lol, if you are unfortunate enough to place a pending order on the side of a suspected breakout, you should be prepared to have it triggered right before they race the price the other direction. Are these all things YOU would do if you were in control and had to make money by forcing traders to lose? There is hope though:) In roulette you can bet on black or red, and unless it lands on 0 or 00, you have an almost 50% chance of winning. In trading, it will go up or down, or both at nearly the same time, but you have a 50% chance of being right. The hard part is the wheel doesn't stop turning in Forex, so you have to know when enough is enough.
Isn't this fun?:))
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