Today, we have more news than ever and its delivered in the click of a mouse and many traders want to trade it and make profits - after all it's the fundamental supply and demand situation that drives forex
prices...
No it isn't!
Supply and demand fundamentals are not important by themselves - it's how they are perceived that determines price.
Here is a simple equation for market movement to illustrate the above:
Supply and Demand (facts and news) + Investor Perception = Price
From the above you can see that it is investors who determine price.
We all have the same facts to look at but we don't all draw the same conclusions from what we see and this is the problem when trading news stories.
If you could win by trading the news, with today's quality of it and lightening communications, the percentage of traders who would win would be far greater but the fact is:
The same amount of people who lost in forex trading 50 years ago lose today and this statistic won't change because you can't trade news stories in isolation.
The problems with trading news stories are greater today than they have ever been.
Why?
Because we all get the information quickly and it's instantly discounted by the market, we all have the information at the same time in any corner of the globe online and no one has an advantage of getting it first before the herd.
The problem that is always present and has been since markets started trading is:
You don't know how the traders are going to view the news because their all driven by their individual motivations and emotions furthermore, the news always reflects the views of the crowd and the crowd is always wrong.
Will Rogers once said:
"I only believe what I read in the papers"
He was joking of course, but it's surprising how many people read a paper or see a view on CNBC and think they can trade it and win - they can't.
FACT:
Markets collapse and turn when they are most bullish and rally when they are most bearish - this is nothing to do with the facts but how the investors perceive them.
News stories can be used but it's not in the way you may think.
If a bullish piece of news fails to push market higher, or bearish news fails to push a market lower, then you may have a trend change at hand.
You need to check and to do this, look at a forex chart and see the technical view of price only. Here you are seeing the reality or the truth in black and white.
This gives you a detached non emotional view of price and you can decide which way to trade. Using the news in this contrary fashion is a great way to spot situations which you can time entry with your technical indicators.
There is an old saying:
" If you can hold your head, when everyone around you is losing theirs you probably haven't heard the news"
In the above instance you have - but you're not taking the view of the majority.
If you use news in the above way and combine it with forex charts to time your trading signal, then you have a powerful combination for bigger forex profits.
Lets Trding Forex :)
Tuesday, November 18, 2008
Discover the Secrets in Forex Market
The Foreign Exchange market takes place wherever one currency
is traded for another. Also referred to as the Forex, FX, or currency market, the Foreign Exchange market is the largest and most liquid financial market in the world. Here, large banks, central banks, governments, multinational corporations, currency speculators, and other financial markets and institutions trade to reach their ultimate goal of making profit. According to reports on Forex news, the average daily trade in the international Forex market, including related markets, is currently almost US$4 trillion. That's a lot of money, and you might want to have a share.
Through the use of the Internet, you can discover the well-kept secrets to becoming a successful Forex trader, making you earn not just a healthy income, but a robust profit, if you dare. The first thing you have to do, of course, is to read up on the subject so you can be better informed and thus, make better money-making decisions. You have to read articles related to Forex news.
One of the most important things that you have to understand is that there are a number of factors that affect foreign currency trading. Ultimately, currency prices in the Forex market are dictated by the result of supply and demand forces, as with any other market in the world. However, in order to make sense of patterns, you'll do well to consider several factors, including economic issues and political conditions. Being regularly updated on Forex news is vital to your success as a foreign currency trader.
The economic factors include economic policies embraced by one country and disseminated by agencies of a government and its central banks, economic conditions, which are manifested through economic reports, and other economic indicators. The most important of these factors is economic policy. This encompasses a government fiscal policy, which pertains to the budget or spending practices of an entire nation, and monetary policy, through which a government's central bank influences the cost and supply of money, which is then reflected by the rise or fall of interest rates. Economic conditions, on the other hand, include everything from the way the government budget deficits of surpluses, inflation levels and trends, the balance of trade levels and trends, and the overall economic growth and health of a country. You can find Forex news about global economics in the news, whether on a cable television channel or in a section of a newspaper.
The political factors include internal, regional, and international political conditions and events that can have a significant effect on currency markets and one country's currency value. The most common example of this is political upheaval and instability, manifested by strong and constant protests out in the streets against a government. The presence of this kind of activity creates a negative impact on a nation's economy, resulting to a fall in the value of its currency.
Now you know how important it is to tune in to Forex news. Keep yourself updated and you're sure to be ten steps ahead in becoming a successful foreign currency trader.
is traded for another. Also referred to as the Forex, FX, or currency market, the Foreign Exchange market is the largest and most liquid financial market in the world. Here, large banks, central banks, governments, multinational corporations, currency speculators, and other financial markets and institutions trade to reach their ultimate goal of making profit. According to reports on Forex news, the average daily trade in the international Forex market, including related markets, is currently almost US$4 trillion. That's a lot of money, and you might want to have a share.
Through the use of the Internet, you can discover the well-kept secrets to becoming a successful Forex trader, making you earn not just a healthy income, but a robust profit, if you dare. The first thing you have to do, of course, is to read up on the subject so you can be better informed and thus, make better money-making decisions. You have to read articles related to Forex news.
One of the most important things that you have to understand is that there are a number of factors that affect foreign currency trading. Ultimately, currency prices in the Forex market are dictated by the result of supply and demand forces, as with any other market in the world. However, in order to make sense of patterns, you'll do well to consider several factors, including economic issues and political conditions. Being regularly updated on Forex news is vital to your success as a foreign currency trader.
The economic factors include economic policies embraced by one country and disseminated by agencies of a government and its central banks, economic conditions, which are manifested through economic reports, and other economic indicators. The most important of these factors is economic policy. This encompasses a government fiscal policy, which pertains to the budget or spending practices of an entire nation, and monetary policy, through which a government's central bank influences the cost and supply of money, which is then reflected by the rise or fall of interest rates. Economic conditions, on the other hand, include everything from the way the government budget deficits of surpluses, inflation levels and trends, the balance of trade levels and trends, and the overall economic growth and health of a country. You can find Forex news about global economics in the news, whether on a cable television channel or in a section of a newspaper.
The political factors include internal, regional, and international political conditions and events that can have a significant effect on currency markets and one country's currency value. The most common example of this is political upheaval and instability, manifested by strong and constant protests out in the streets against a government. The presence of this kind of activity creates a negative impact on a nation's economy, resulting to a fall in the value of its currency.
Now you know how important it is to tune in to Forex news. Keep yourself updated and you're sure to be ten steps ahead in becoming a successful foreign currency trader.
Most Traders Use it in the Wrong Way and Lose! You know Why?
Most Traders Use it in the Wrong Way and Lose! You know Why?
It's a fact that today is forex news sources are better than ever and its delivered quicker yet the ratio of losers to winners in forex trading remains the same as it did 50 years ago 95% lose and only 5% lose. The news can be useful but you need to know how to use it.
First let's look at a simple equation:
Forex Fundamentals (supply and demand news) + Investor Psychology = Price
The facts are there for all of us to see but assessing the impact of the news is hard because humans (millions of them) all motivated differently see the facts but they all draw their own personal conclusions from them and that's the price.
If it were easy to trade by following the news then there would be a lot more winners than there actually are. Will Rogers once said:
"I only believe what I see in the papers"
Of course he was making a joke but I am amazed by how many traders think that because a story appears on Reuters or another newswire, they can trade it - you can't.
The fact is that humans always push prices top far up or down, as their emotions come into play and most major tops are formed when the news is most bullish and vice versa in a bear market.
It's a fact that prices generally move in line with the long term fundamentals but prices spike to far from fair value up or down along the way and history shows us these spikes don't last.
You can spot them easily on a forex chart and trade them for profit.
There is a well know saying:
"If you can hold onto your head when everyone around you is losing theirs, you probably haven't heard the news"
In forex trading this means you sit back in a detached fashion and look at your forex charts and when you see a price spike you start to question the news.
For example - the euro spiked to 1.50 recently and everyone said that the dollar was finished - yet its rallied and will probably rally further.
Why?
Because all the news stories have been discounted: Interest rate cuts, the sub prime mortgage crisis, the US will slip into recession etc and things can only get better and people also didn't pay attention to GDP which is robust.
The dollar was simply oversold and rallied, when the news was at its most bearish.
This doesn't just happen in forex, it happens in any market.
I read a great story about oil going to $160.00 dollars a barrel and that $100.00 a barrel was sustainable.
Well - there is no shortage of oil.
Global demand is actually falling and the true value of oil is in the $70 - 80 region. When people said $100 a barrel was a forgone conclusion - it was time to sell.
The fact is we are not creatures of logic, we are creatures of emotion.
Humans are also pack animals, we like to be with the crowd and the news reflects this.
The facts are the crowd never wins.
If you look at a forex chart and you see a piece of bullish news that fails to rally a market or a bearish piece of news that doesn't cause a market to fall - that is telling you to look at your charts and look for a contrary trade.
Forex news can be useful - but not in the way that many traders think.
The above are just a couple of examples, of how you can use forex news ( or any market news) to generate contrary trades, enjoy currency trading success and join the elite winning minority.
want to forex Indicator?
Click here
It's a fact that today is forex news sources are better than ever and its delivered quicker yet the ratio of losers to winners in forex trading remains the same as it did 50 years ago 95% lose and only 5% lose. The news can be useful but you need to know how to use it.
First let's look at a simple equation:
Forex Fundamentals (supply and demand news) + Investor Psychology = Price
The facts are there for all of us to see but assessing the impact of the news is hard because humans (millions of them) all motivated differently see the facts but they all draw their own personal conclusions from them and that's the price.
If it were easy to trade by following the news then there would be a lot more winners than there actually are. Will Rogers once said:
"I only believe what I see in the papers"
Of course he was making a joke but I am amazed by how many traders think that because a story appears on Reuters or another newswire, they can trade it - you can't.
The fact is that humans always push prices top far up or down, as their emotions come into play and most major tops are formed when the news is most bullish and vice versa in a bear market.
It's a fact that prices generally move in line with the long term fundamentals but prices spike to far from fair value up or down along the way and history shows us these spikes don't last.
You can spot them easily on a forex chart and trade them for profit.
There is a well know saying:
"If you can hold onto your head when everyone around you is losing theirs, you probably haven't heard the news"
In forex trading this means you sit back in a detached fashion and look at your forex charts and when you see a price spike you start to question the news.
For example - the euro spiked to 1.50 recently and everyone said that the dollar was finished - yet its rallied and will probably rally further.
Why?
Because all the news stories have been discounted: Interest rate cuts, the sub prime mortgage crisis, the US will slip into recession etc and things can only get better and people also didn't pay attention to GDP which is robust.
The dollar was simply oversold and rallied, when the news was at its most bearish.
This doesn't just happen in forex, it happens in any market.
I read a great story about oil going to $160.00 dollars a barrel and that $100.00 a barrel was sustainable.
Well - there is no shortage of oil.
Global demand is actually falling and the true value of oil is in the $70 - 80 region. When people said $100 a barrel was a forgone conclusion - it was time to sell.
The fact is we are not creatures of logic, we are creatures of emotion.
Humans are also pack animals, we like to be with the crowd and the news reflects this.
The facts are the crowd never wins.
If you look at a forex chart and you see a piece of bullish news that fails to rally a market or a bearish piece of news that doesn't cause a market to fall - that is telling you to look at your charts and look for a contrary trade.
Forex news can be useful - but not in the way that many traders think.
The above are just a couple of examples, of how you can use forex news ( or any market news) to generate contrary trades, enjoy currency trading success and join the elite winning minority.
want to forex Indicator?
Click here
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