hey F,
good to see you going strong.
quick question for you if you have time.
you mentioned game theory early on in this thread.this is becoming more apparent to me in my trading.would you be able to go over your understanding of this again when you have time? would it equate to the institutions deciding on a bullish movement for themselves and yet selling sharply firstly to essentially trap the unaware? or would this be defined as something else? the 'randomness' of the markets is being called into question in my own mind and I am just trying to put a label on what regularly transpires I guess.
thanks for any input.
cheers,
Hi flipya4it
I remember going back over 13 yrs ago when I first dabbled in FX being told and also reading everywhere that this market was so large - it could not be manipulated like stocks and shares and it was a genuine open market all down to traders buying and selling etc
In essence - that's correct - but the fact that its not fully regulated - it's being played with and manipulated by the big players as well as the liquidity providers.
Because of this you cannot just depend on Technical analysis and Fundamentals to make accurate assessments - you need also to think with a devious cunning mind on how the gameplay or ploy might pan out
This is were the "gameplay" theory comes into the equation
Lets just say for example there are 2 million traders buying and selling the EU on most days. Maybe 90% of these trader don't matter - their size even grouped together as no real impact on the main moves. Instead just 4 to 7 large Banks control over 60% of the FX markets and they have the ability to move prices against all and sundry.
So although they may compete against each other - as you would expect - they also can mislead the masses by setting up false sentiments and wrong directions with price.
This can happen on both small movements of 10 -30 pips as well as larger moves ranging from 100 to 300+ pips.
For them to make the monies they require they need to be taking money off the rest of the traders participating - and so if they can start a move off and then get the masses or sheeple to join in - at some point its worth for them to exit and allow more traders to "buy in" to a false direction - whilst they go large - changing the direction and gaining at other traders and investors expense.
So we need too be aware of how their "gameplay" works - so that we can take advantage off it.
In a nutshell its all about going against traditional TA methods - ie setting up false patterns and moves that will lead to most traders making a wrong decision and ending up making a loss.
The FX markets are not totally random - there is an order to them and that's why I and i am sure many other retail traders who trade in the "now" are able to basically follow every pip move through out a session. We are followers - but by incorporating price action with price structure at the so called "coalface" (ie the noise or start of every move) we can end up with a higher probability of making a winning trade.
As we know - we are kidding ourselves trying to be 100% accurate and catching every interim daily high or low - but as I and several other traders will testify we can be 70 -85% accurate and then with clever money management - make a lot more money than we risk or lose.
Gameplay means every session - think what you would do to catch all other traditional type traders out
Yesterday was a classic on the EU - a large move against the previous falls and then once all the bulls had joined in above 1050 and 1080 + then the large fall again them .
I will try and explain more with examples later on today or in the week
Hope your trading is going OK and all the best
Regards
F
