Forex price movement is not as simple as it may first appear and traders make some assumptions that are completely wrong base their forex trading strategies on it and lose. Let's look at how prices really move …
Let's start first of all, with two fatal errors traders make, when trying to make money in contracts and they are:
You Can Predict What Forex Prices Will Do.
Traders are obsessed with buying bottoms and selling tops. They simply see a level and jump in and hope it holds – but prediction is just hiring or guessing and you do not get rewarded for that in forex trading.
It always makes me laugh, when you see sellers selling systems, saying they can predict with 90% accuracy! It's a joke.
If you want to win, you trade the confirmation of price movement and I will return to this in a moment – but first let's look at an extension of this point.
Markets Move to Science.
You have a school of thought that says that markets move to a scientific law and the most famous are – Elliot, Gann and the disciples of Fibonacci.
Well if they or anyone else knew the law, there would be no market, as we would all know the price in advance!
The far out crowd love these theories, with their mystical connotations but the facts do not support their argument.
You can trade Breaking News
Not a good idea, as the news is actually unimportant by itself, its how it is perceived that determines the course of events which, leads me into how the markets really move.
How Prices Really Move
The equation for market movement is:
Fundamentals + Human Perception of them = Forex Market Movement
Humans are not logical that they are influenced by their emotions and this is why markets are not scientific – true human nature is constant but it's not science however we do know the following:
– Humans will always push prices to far up or down and these price spikes are temporary and can be traded for profit.
– Always trade the truth never predict and sure you do not get perfect timing but the odds are in your favor and that's vital.
An Odds Game You can Win
Forex is simply an odds game sure you cant predict but you can win, not every trade of course but by trading high odds set ups, you can have more winners than losers and pile up big profits overtime.
Greed and fear drive prices and make price spikes which are easy to see on a forex chart and can be traded for profit.
Any trader needs to treat forex as an odds game, trading the reality of price change when the odds are in their favor, with strict forex money management and if you do this – you will win.
Do not Look For Perfection – Look to Win
In forex markets people having trying to predict and find some secret code of movement that simply is not there. While forex price movement looks chaotic, you can win, by simply trading the reality of price movement.
Sure you will not achieve perfection (that's impossible) but by trading the odds, you can put a lot of dollars in your pocket and that's the whole aim of trading.