Is it me ?

[mclhrr]

Is it me or is there any real skill in the speculation of forex markets. Unlike shares which can be evaluated, how do you value a curency. I have made several forays into the spot cable to my cost. As I see it you need a crystal ball to know which way the price is heading I dont see how reading books could help predict things like the Dollar rally on Fri 20 feb for instance when I kept going long on the $/£. The herd mentality seems to be the only real guide, but if like me youre a contrarian type investor this can be very costly. 4 times on Friday I bought at what thought would be the turning point only to be wiped out each time. Help I think I need therapy. Any advice grapefully received.

 

[schoe]

Have a look at JonnyT's forex systems. In my opinion fundamentals are useless in any instrument. TA is the answer keep it simple use price action and a trailing stop. I have one rule with my trading don't try to guess tops and bottoms the odds aren't with you .Go with the trend expecially with forex as it trends very well.

 

[Buk]

.......I take it your longs were at the turns in the mkt on Fri?? (8.00/12.00/4.00/6.00ish)??....without knowing a little more about the trading strategy you adopt, it's a little difficult to evaluate your mkt calls. The skills you speak of are those adopted by traders in any other environment : a good, in depth knowledge of their market/defined trading strategy/risk & money management structure & an overall 'picture' of market direction.

The FX market is extremely liquid, therefore trends tend to develop & act with extreme speed, contrarianism can and will lead to uncomfortable results in a (daily) fast moving environment such as Friday's tank!....those traders shorting Friday's action, will undoubtedly have recognised the breakout of their respective channel boundaries/ranges & used their various 'signals' to enable them to ride the trend on that move, exercising position scaling/profit retention on the move.

As with any other instrument, "the trend is your friend" especially regards currencies....there's no crystal ball involved, merely a recognition that price moves in accordance with market strength, attempting to pick market reversals/tops in such conditions is certainly an occupation for the brave hearted!!....far easier to ride the wave & wait for a period of consolidation to assess the next potentil move.

 

[webwolf]

"a good, in depth knowledge of their market/defined trading strategy/risk & money management structure & an overall 'picture' of market direction."

Well stated, Buk. In addition, the FX market is extremely responsive to news and economic data so it pays to know the news and data being announced daily.

mclhrr: "but if like me youre a contrarian type investor"
You might find it useful to trade in the direction of the trend entering off fibonacci retracements within the trend.

Common techniques in FX trading involve the use of support, resistance and Fibonacci levels. Other indicators popular amongst FX day traders are slow stochastics, MACD, moving averages and not forgetting Eliott Waves.

Trying to trade the turns in FX can be very precarious as you have found out. Try looking for divergence between price action and the oscillator indicators on the larger timeframe charts to show that a turn could be in place. Then use the smaller time frame charts for entry.

With regards to trading the trend, I have to echo the sentiments of schoe and Buk; Trade what you can see.

 

[al-motor]

mclhrr-

Sounds like u are an investor ? in which case, i am guessing that u are looking at everyone talking about a strong £.... I dont know whether that would happen or not, but u must enter at the right time- looking at the daily charts, we have had a swift move up with £ strenghtening- it would be natural for it to retrace sharply for a few days and then move up............ U could possibly use a couple of MAs in the daily chart and look for retrace into there...............


others sometimes use Fib levels..............etc.


Al

 

[mclhrr]

Thanks guys for the pointers your language takes some getting used to though, Fibbonacci Retracement, stochastics, macd, elliot waves AAAAAAARRRGH

 

[Buk]

:?: .....a real bombardment of tech artilliary there my friend huh??.... :cheesy:

have a good look around this Forex section, and explore one or two of the 'getting started' threads to give you a little focus on some of the strategies used by the traders. Keep it simple & concentrate on becoming familiar with the basics (trend analysis/price direction etc....), I've included a few links for you to peruse, hopefully they'll shed a bit more light on the subject for you....ask questions & don't be afraid to put yourself about, there are a lot of experienced, knowledgeable folk on this board only too willing to assist.....good luck & take your time!!

http://www.trading-forex-systems.com/index.html

http://www.forexnews.com./about/default.asp

http://www.trade2win.co.uk/boards/showthread.php?s=&postid=63594#post63594

http://www.trade10.com/

http://www.investopedia.com/articles/technical/

should keep ya busy for a while!!...........

 

[TheBramble]

Thanks guys for the pointers your language takes some getting used to though, Fibbonacci Retracement, stochastics, macd, elliot waves AAAAAAARRRGH

I just wish I was reading these terms for the first time - BEFORE I started trading....

The longer you can hold off taking the plunge - the longer you school yourself in as much depth as you can before you lay out your first £/$ on a trade - the better you will do.

I suspect, like most of us, you'll jump in WAY before your ready and lose. But I also think 'actually' losing rather than just paper losing (does anyone ever lose when they're paper-trading?) is a part of the process.

 

[webwolf]

mclhrr - in addition to this forum, a couple of very useful starting points Technical Analysis:

http://stockcharts.com/education/

"Technical Analysis of the Financial Markets" John J Murphy

Good luck

 

[mclhrr]

Thanks once again folks for all the advice. Im now studying TA at Stockcharts web site. Also have virtual account with Refco/fx which gives you a virtual $50,000 to play with. Lost $750 yesterday but am beginning to grasp the principles. But what happens when everyone has the same knowledge as you guys wont that mean that everyone has the same view and opportunity will diminish ? If I can double my virtual betting bank I will take another plunge for real. Hard to resist even now especially if I see a bullish divergence off the MACD !!!

 

[options]

..."But what happens when everyone has the same knowledge as you guys wont that mean that everyone has the same view and opportunity will diminish ?"

The markets have been around for a few years now. They still work because of opposing views. Your bullish, I'm bearish. You have a market!
Two (or more) people will look at the same thing and have different views. We act rightly or wrongly on those views.

It would be great if there was just one massive player who moved the market with single trades. To become rich all one would have to do is to follow those trades. Pity it doesn't work like that.

 

[Simon]

They still work because of opposing views. Your bullish, I'm bearish. You have a market!
Two (or more) people will look at the same thing and have different views.

& time frames, eg. old Joe Bloggs' who's trading from a 3 min chart taking the other side of John Smith's trade from a 30 min.