RSS
Tools
Apr 3
6.3 Psychology Of The Market

 

Overview of Forex Trading Breakout:
1. Fundamentals & Technical
2. Rumors and News
3. Fear and Intervention
4. Flock Mentality
5. Conclusion
1. Fundamentals and technical of forex trading :
An optimistic person would make us believe that the value of a currency is a true image of its countries assets and economic evolution. This assessment is far from the truth. What verify the value of a currency is forex trading market opinions and what shapes that opinion. This will be comprehensively covered in the fundamentals of this course.
In this section we will concisely see how the forex trading market act and verify the direction what currencies take from a trader’s point of view.
There are two basic tools for forex trading to guide traders towards a strategy. These tools are the fundamentals and technical analysis. The maximum emphasis is put on technical as traders around the world use identical charts and tools in predicting forex trading market tendency. The reason behind forex trading markets being so predictable some times is because majority are using the identical graph for determining patterns and numerous traders who have all similar graphic representation line will probably either set their trades and direction to follow that line.
Therefore, the fundamentals like the release of economic information, danger of war or an individual occurrence can set the forex trading market in rage. These have to be well thought out while deciding to trade or not.
The forex trading market responds often ahead of economic information is released, usually position itself according to the forex trading market anticipation of the information. If there is a inconsistency from those anticipations the forex trading market will react in negative or positive way. A good plan every now and then in a quiet forex trading market is to place orders for trades either side of the present forex trading market price only before a major information release and the trade will be triggered if there is an unexpected movement. It is not significant that which way the trade will go, the significant is that the least one of the trades will be triggered in the appropriate direction. One final note on caution is that a small whip lash can befall and the wrong trade will be triggered.
2. Forex Trading - Rumors and News :
There is a consistent debate between several traders about what is mot significant, fundamentals or technical analysis of forex trading. there are traders who use technical analysis and many don’t use fundamentals. It would be a very na?e person who totally disregarded the fundamentals, as they often clarify quick changes in forex trading market attitudes. Usually a trader will have a news service that is open to world events, like a bomb going of someplace or the announcement of economic information will be the spark for establishing movement in the forex trading market.
Once examine the news services, its significant not to get preoccupied in rumors. Rumors are frequently put out about futures contracts about to finish at a certain price. These rumors are in fact placed by traders and institutions who are being caught in positions they would somewhat not be in and making all effort to take the forex trading market up or down. World events does effect forex trading market. Acts of terrorism and threats of war can also effect the forex trading markets into new directions and effect the forex trading trends within few minutes. But frequently after these occurrences the forex trading markets tend to resolve and go back to regular forex trading patterns.
3. Fear and Intervention :
Due to the enormous size of the Forex trading market no one country or institution can have consistent influence on the forex trading market. On the other hand some countries use their central banks to impact the forex trading market both in the short term as well as long term. In 2002 the Bank of Japan observer that the US dollar was rapidly devaluing against the Yen and was beginning to affect the enthusiasm of the Japanese exports to the USA. To stop the forex trading trend they would place orders for US dollars, up to 10 billion dollar within minutes. The forex trading market respond with the US dollar going high up to 150 points within minutes. They would use this method at anytime and at various prices. The real effect of 10 billion would usually not live longer in a forex trading market that trades 1.5 trillion dollars a day, but the current terror it has created in the forex trading market place managed US dollar to stay for many more months against the Yen. Fear of intervention let the US dollar reversing from its downward forex trading trend.
4. Flock Mentality :
Whenever a trade gains momentum and keeps on moving up or down, its been driven by nothing else than everyone following each other. An information announced or even may activate some forex traders to buy or sell. Others often small traders observe the movement and believe that there may be some move on or a new forex trading trend underway. They place orders to sell their position and move either up or down to gain momentum. The price will consistently move up or down at an increasing pace till the number of traders going in the forex trading market or reducing their contact has gone down and the price begins to level out. Together with this lots of the traders who acted soon on in the trade could take gains or buy back in that will cause the move to stop or even converse the forex trading trend, frequently going back to the price it began from or become constant at its new level. It is always significant not to go into these trades close to the end of such a move except you see an evidence of a pull back and the chances of prolongation of forex trading trend. This is the time to examine at fundamentals and technical analysis to observe what is the reason that caused such a move and the chances of it ongoing. In spirit what we are trying to explain is that the trade set up not the response. Do not trade the response, trade the s etup. Only trade moves or set ups your forex trading diagrams or plan are informing you to, or go in them if your forex trading diagrams tell you that there is still many more movements in the present forex trading trend.
5. Conclusion :
To be a successful trader you should have the ability to control your emotions and effectively employ tools and strategies to avoid its influence over your decisions. The most successful traders are not women because they are not good in controlling their emotions. There is no room for self centered behavior or emotional uncertainty in the forex trading market place.
Find out the motives behind the fluctuations in the forex trading market place, it might be the fundamental or technical analysis or a combination of both. If one of them doesn?t seem right, do not trade. Avoid forex trading against the trend and emphasize a number of times through this manual “the trend is your friend”
However, knowledge and experience will make it possible for you to understand the psychology of the forex trading market and evaluate the balance between fundamental and technical analysis.
Only you can help yourself, through consciousness of your emotions and then employ the essential behavioral changes that will make you a successful trader.
Lastly, knowing that training, understanding or information will not help you to be a successful forex trader unless you are able to trade in the right emotional state and without any fear. If you feel its not the right time, leave it until you feel right. Do not try to over trade to over come your previous losses or increase your profits, fasten to the plan. Know your weaknesses and strengths. Be responsible to yourself and your investment and your emotions.

Overview of Forex Trading Breakout:

1. Fundamentals & Technical

2. Rumors and News

3. Fear and Intervention

4. Flock Mentality

5. Conclusion

 

1. Fundamentals and technical of forex trading :

An optimistic person would make us believe that the value of a currency is a true image of its countries assets and economic evolution. This assessment is far from the truth. What verify the value of a currency is forex trading market opinions and what shapes that opinion. This will be comprehensively covered in the fundamentals of this course.

In this section we will concisely see how the forex trading market act and verify the direction what currencies take from a trader’s point of view.

There are two basic tools for forex trading to guide traders towards a strategy. These tools are the fundamentals and technical analysis. The maximum emphasis is put on technical as traders around the world use identical charts and tools in predicting forex trading market tendency. The reason behind forex trading markets being so predictable some times is because majority are using the identical graph for determining patterns and numerous traders who have all similar graphic representation line will probably either set their trades and direction to follow that line.

Therefore, the fundamentals like the release of economic information, danger of war or an individual occurrence can set the forex trading market in rage. These have to be well thought out while deciding to trade or not.

The forex trading market responds often ahead of economic information is released, usually position itself according to the forex trading market anticipation of the information. If there is a inconsistency from those anticipations the forex trading market will react in negative or positive way. A good plan every now and then in a quiet forex trading market is to place orders for trades either side of the present forex trading market price only before a major information release and the trade will be triggered if there is an unexpected movement. It is not significant that which way the trade will go, the significant is that the least one of the trades will be triggered in the appropriate direction. One final note on caution is that a small whip lash can befall and the wrong trade will be triggered.

 

2. Forex Trading - Rumors and News :

There is a consistent debate between several traders about what is mot significant, fundamentals or technical analysis of forex trading. there are traders who use technical analysis and many don’t use fundamentals. It would be a very na?e person who totally disregarded the fundamentals, as they often clarify quick changes in forex trading market attitudes. Usually a trader will have a news service that is open to world events, like a bomb going of someplace or the announcement of economic information will be the spark for establishing movement in the forex trading market.

Once examine the news services, its significant not to get preoccupied in rumors. Rumors are frequently put out about futures contracts about to finish at a certain price. These rumors are in fact placed by traders and institutions who are being caught in positions they would somewhat not be in and making all effort to take the forex trading market up or down. World events does effect forex trading market. Acts of terrorism and threats of war can also effect the forex trading markets into new directions and effect the forex trading trends within few minutes. But frequently after these occurrences the forex trading markets tend to resolve and go back to regular forex trading patterns.

 

3. Fear and Intervention :

Due to the enormous size of the Forex trading market no one country or institution can have consistent influence on the forex trading market. On the other hand some countries use their central banks to impact the forex trading market both in the short term as well as long term. In 2002 the Bank of Japan observer that the US dollar was rapidly devaluing against the Yen and was beginning to affect the enthusiasm of the Japanese exports to the USA. To stop the forex trading trend they would place orders for US dollars, up to 10 billion dollar within minutes. The forex trading market respond with the US dollar going high up to 150 points within minutes. They would use this method at anytime and at various prices. The real effect of 10 billion would usually not live longer in a forex trading market that trades 1.5 trillion dollars a day, but the current terror it has created in the forex trading market place managed US dollar to stay for many more months against the Yen. Fear of intervention let the US dollar reversing from its downward forex trading trend.

 

4. Flock Mentality :

Whenever a trade gains momentum and keeps on moving up or down, its been driven by nothing else than everyone following each other. An information announced or even may activate some forex traders to buy or sell. Others often small traders observe the movement and believe that there may be some move on or a new forex trading trend underway. They place orders to sell their position and move either up or down to gain momentum. The price will consistently move up or down at an increasing pace till the number of traders going in the forex trading market or reducing their contact has gone down and the price begins to level out. Together with this lots of the traders who acted soon on in the trade could take gains or buy back in that will cause the move to stop or even converse the forex trading trend, frequently going back to the price it began from or become constant at its new level. It is always significant not to go into these trades close to the end of such a move except you see an evidence of a pull back and the chances of prolongation of forex trading trend. This is the time to examine at fundamentals and technical analysis to observe what is the reason that caused such a move and the chances of it ongoing. In spirit what we are trying to explain is that the trade set up not the response. Do not trade the response, trade the s etup. Only trade moves or set ups your forex trading diagrams or plan are informing you to, or go in them if your forex trading diagrams tell you that there is still many more movements in the present forex trading trend.

 

5. Conclusion :

To be a successful trader you should have the ability to control your emotions and effectively employ tools and strategies to avoid its influence over your decisions. The most successful traders are not women because they are not good in controlling their emotions. There is no room for self centered behavior or emotional uncertainty in the forex trading market place.

Find out the motives behind the fluctuations in the forex trading market place, it might be the fundamental or technical analysis or a combination of both. If one of them doesn?t seem right, do not trade. Avoid forex trading against the trend and emphasize a number of times through this manual “the trend is your friend”

However, knowledge and experience will make it possible for you to understand the psychology of the forex trading market and evaluate the balance between fundamental and technical analysis.

Only you can help yourself, through consciousness of your emotions and then employ the essential behavioral changes that will make you a successful trader.

Lastly, knowing that training, understanding or information will not help you to be a successful forex trader unless you are able to trade in the right emotional state and without any fear. If you feel its not the right time, leave it until you feel right. Do not try to over trade to over come your previous losses or increase your profits, fasten to the plan. Know your weaknesses and strengths. Be responsible to yourself and your investment and your emotions.

 


Emotional & Behavioral Part

 

6.1 Trading Psychology

6.2 Trading Like A Pro

6.3 Psychology Of The Market

6.4 The Psychology Of Individual

6.5 Keep A Cool Head

6.6 Mind Over Profits

6.7 The Battle Against Human Nature

6.8 Face the Truth of Forex Trading

6.9 Overcome The Barriers Of Trading

6.10 Expectations Vs Reality In Trading

 


Forex Education

 

The Basics of Currency Forex Trading

Technical Analysis

Technical Indicators

Fundamental Analysis

Intraday Trading

Emotional & Behavioral Part

Risk & Money Management

Trading Guide