Currency Trading – Markets Move to This Formula Understand it Or Lose!


Most traders who engage in currency trading have no idea how prices really move. They then base their forex trading strategy on incorrect logic and lose their money. To win in currency trading you must understand the following equation.

This is the formula for currency market movement:

Fundamentals (supply and demand) + Human Perception of Facts = Market Price

Sounds simple?

It is – but if you think about it you will come to some compelling conclusions and they are:

– Currency markets are impossible to predict

– Following news stories won’t help you

– Technical analysis is not scientific

Let’s examine these points in more detail.

Currency Markets are Impossible to Predict

This is obvious and the reason is, the price is made up of millions of individuals, all governed by emotions who don’t think logically. You therefore can never predict in advance what they are going to do.

Following News Stories won’t help you

We have better news sources than ever today but they won’t help you win.

There stories and viewpoints and just reflect what the crowd thinks or has thought and the crowd always losses.

Furthermore, these stories are instantly discounted and you have the additional problem that – we all see the facts however were not logical beings so we all see them differently!

Technical Analysis is Not Scientific

This really leads on from predicting markets.

You can’t as you never know what the vast mass of traders who contribute to the price is going to do. There is the view that human nature repeats and it does – but not to a scientific theory.

If markets were scientific we would all know the price in advance and there would be no market!

Those who trade thinking the above lose.

Well that sounds daunting – How do I make money trading forex?

THE GOOD NEWS IS:

You can calculate the odds in trading and while you won’t win every trade just like the successful blackjack player if you know how to calculate the odds you will win more than you lose and can enjoy currency trading success over the long term.

So how do you calculate the odds?

The best way is to use forex charts and simply follow and act on the reality of price change.

With forex technical analysis, you simply assume all the fundamental news is reflected instantly in the price. It’s a question of where humans as a mass move prices thats important and they all see the news differently.

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