hey there,
i start this thread bc this forum is really big on short term trading, which i think is highly risky and very very tuff to predict, so this goes out for all the few people who are actually no gamblers, or geniuses...
what we want to predict in forex and in financing in general is the future or future price action, so first thing i learned is that indicators are based on historical prices and everything that has happened in the past is already priced in. but more important, if you think about it, this means that all that indicators can do is show you, what you already see on your chart in a slightly diffrent perspective by weighing the past price moves. all that crossing lines, ema, rsi, and stuff is 99% bull and if you are the 1% making more than 500 pibs a month of it you are one of a kind and prob could make even more money playing poker or something like that, because you must be pretty talented in mind games. i mean you cant be serious if you say the market is overbought because its above the 50ema, have you ever thought that there could be a reason that the price should go up and stay there???
just think about it for a sec. where do you actually get to learn technical analysis stuff? you get it from books, meaning from people making their money writing about forex but not from trading forex, or you get it from retail brokers making there money when you trade forex but not from trading forex. these are people who WANT your money. they want you to get interested in forex by telling you that you can make a bunch of money. just look at the news feed of this web page and you will see thousands of articals "analysing" the market, but if you read it carefully you will see that 90% are analysing s***, they are just stating the facts everybody knows and making some wild predictions, based on truely nothing.
now back to the initial idea of this thread...
i believe that even though the forex marked is sold as a trillion dollar market there are just a few big players setting the tone, which are banks, funds and of cause businesses, which by the way most people dont even consider to play a role, but they do tremendously (ill explain later). the reason for this is, that all the retail, intraday, short term, proprietary traders (you name it) open positons and after a few min, hours or days, of cause, CLOSE it again. now what does this to a weekly chart??? NOTHING AT ALL. if you open a position and close it with about the same amount plus minus 50 pibs, it does simply nothing to the market. and this is why you need the edge in intraday trading to be profitable. in simple words you steal money from people who made the wrong guess. but if you would bundle all short term traders into a fantasy market, the weekly or monthly chart would simply not change, it would move up and down some but at the end of the week you will get the same price like at the beginning, because the money is just transfered between the traders but no positions are held long enough to create real demand.
so what we do by looking at higher time frames? we take out most of the crazy people(short term traders) and focus on the guys who run business and who most of the time dont even want to make money on the market, or if they do they all want to see the market to go in one direction, because a business is run by many people who have the same interest which is an as safe as possible income and not by one.
an example for players who dont want to make money in forex are the thousands of european import businesses, who got all scared when the euro fell below 1.20 and now all need to do a currency coverage for the next few years combining a euro demand worth billions if not trillions of dollars. and the important thing about is that we know what they gonna do with that money. they will pay their imports within the next few years. so they will not close this massiv position at once but slowly from time to time, by importing goods for example...
if you like what you have read so far, feel free to discuss or add some new ideas about the market and where it will go in the long run. i would like this thread to be a meeting point for open minded people who are not sucked into the forex retail world, like i have been before, and have a more financing, stock market point of view to it. to me the most important tools to analyse the market are (in order):
1. sentiment (market opinion) part of the european business example would fall in this category and in the next
2. analysed economic data (interest rates for example)
3. simple charting (support and resistance, triangles and so on)
i start this thread bc this forum is really big on short term trading, which i think is highly risky and very very tuff to predict, so this goes out for all the few people who are actually no gamblers, or geniuses...
what we want to predict in forex and in financing in general is the future or future price action, so first thing i learned is that indicators are based on historical prices and everything that has happened in the past is already priced in. but more important, if you think about it, this means that all that indicators can do is show you, what you already see on your chart in a slightly diffrent perspective by weighing the past price moves. all that crossing lines, ema, rsi, and stuff is 99% bull and if you are the 1% making more than 500 pibs a month of it you are one of a kind and prob could make even more money playing poker or something like that, because you must be pretty talented in mind games. i mean you cant be serious if you say the market is overbought because its above the 50ema, have you ever thought that there could be a reason that the price should go up and stay there???
just think about it for a sec. where do you actually get to learn technical analysis stuff? you get it from books, meaning from people making their money writing about forex but not from trading forex, or you get it from retail brokers making there money when you trade forex but not from trading forex. these are people who WANT your money. they want you to get interested in forex by telling you that you can make a bunch of money. just look at the news feed of this web page and you will see thousands of articals "analysing" the market, but if you read it carefully you will see that 90% are analysing s***, they are just stating the facts everybody knows and making some wild predictions, based on truely nothing.
now back to the initial idea of this thread...
i believe that even though the forex marked is sold as a trillion dollar market there are just a few big players setting the tone, which are banks, funds and of cause businesses, which by the way most people dont even consider to play a role, but they do tremendously (ill explain later). the reason for this is, that all the retail, intraday, short term, proprietary traders (you name it) open positons and after a few min, hours or days, of cause, CLOSE it again. now what does this to a weekly chart??? NOTHING AT ALL. if you open a position and close it with about the same amount plus minus 50 pibs, it does simply nothing to the market. and this is why you need the edge in intraday trading to be profitable. in simple words you steal money from people who made the wrong guess. but if you would bundle all short term traders into a fantasy market, the weekly or monthly chart would simply not change, it would move up and down some but at the end of the week you will get the same price like at the beginning, because the money is just transfered between the traders but no positions are held long enough to create real demand.
so what we do by looking at higher time frames? we take out most of the crazy people(short term traders) and focus on the guys who run business and who most of the time dont even want to make money on the market, or if they do they all want to see the market to go in one direction, because a business is run by many people who have the same interest which is an as safe as possible income and not by one.
an example for players who dont want to make money in forex are the thousands of european import businesses, who got all scared when the euro fell below 1.20 and now all need to do a currency coverage for the next few years combining a euro demand worth billions if not trillions of dollars. and the important thing about is that we know what they gonna do with that money. they will pay their imports within the next few years. so they will not close this massiv position at once but slowly from time to time, by importing goods for example...
if you like what you have read so far, feel free to discuss or add some new ideas about the market and where it will go in the long run. i would like this thread to be a meeting point for open minded people who are not sucked into the forex retail world, like i have been before, and have a more financing, stock market point of view to it. to me the most important tools to analyse the market are (in order):
1. sentiment (market opinion) part of the european business example would fall in this category and in the next
2. analysed economic data (interest rates for example)
3. simple charting (support and resistance, triangles and so on)