Article Thinking the Forex Markets

T2W Bot

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One of the main problems new traders have when they begin their journey down the education path to self-empowerment is that they skip the most important first step, how to properly “think” money and markets. Many of my articles deal with thinking about the trading side of the equation; everything from the mechanics of when to buy and sell to understanding the psychology of you and the person on the other side of your trade. Today, let’s take a walk through the history of one of the best trending markets in the world, Forex. It is an important first step in properly thinking the Forex markets, which is key when attaining an edge in anything we do. The more prepared we are, the more we understand, the better the results.
Strong economies tend to have strong currencies. When we trade the Forex markets, we are trading economies. Therefore, supply and demand for currency depends on the current and expected future health of a country’s economy. To keep things simple let’s discuss the...
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tomorton

Legendary member
7,604 1,041
Yes, it is as simple as that.

It also set me considering the psychological profiles of traders in the different markets we have each selected - in this case, although forex is possibly the purest application of TA, many decent traders wouldn't touch it with a barge pole.
 

Pat Riley

Established member
794 178
tomorton, I think it's more the case that traders do the type of trading they do as a result of exogenous circumstances and events. I'm as certain I could trade forex as a retail trader with outright net directional exposure and risk as could one of those chaps trade what I trade and the way I trade. But it's nothin to do with intelligence of wherewithal and everythin ta do with where you were/are at any given point in time with respect to your intent and motivations and who else accidentally is there (or is not) with ya. I never set out ta be a trader. I always wanted to be a pimp. So almost made the job of me dreams - helping people screw other people, but did so with less integrity.

With respect to Mr. Seiden's textbook definition of the relationship between currencies and the economies to with they 'relate' I'm afraid it's just that - textbook aka little application to reality. Do ya really think on each of those news data releases the blips and spikes are all because of people buying and selling - supply and demand? Nonsense. Anyone involved in global commerce who really needs to convert oodles of dosh into another currently will not be floating it on the spot forex market. And unlikely these days to be havin much to do with forex futures either. Dark pools account for an increasing volume of the commercial market's transactions and currency swaps done at treasury level are how multi-billion deals get covered.

The forex market, particularly the spot market and particulalry at the timeframe most retail spot forex traders operate is almost entirely a speculative endeavour will little to nothing to do with the underlying economies or supply and demand. Supply and demand? How can ya talk of supply and demand in a market where there is effectively unlimited supply?
 

tomorton

Legendary member
7,604 1,041
Supply and demand are not the best choice of vocabulary - suggesting actual goods or real matter underlying the numbers on the screen - but that's just the limitations of English. The movement of prices in forex is entirely speculatively driven, its purely technical. Whether its actually real supply and real demand, the charts respond in the same way as if it was and his point, that that's all you need understand, is a good one.
 

MajorMagnuM

Legendary member
9,284 887
r.e liquidity pools. Ive always wondered about whether their contents change anyway before price revisits?
ty i enjoy your writing
 

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