What are you doing when analyzing the markets looking for a trade? Are you just watching what the big guys are doing and follow them?
Only in the sense that I’m following price.
And remember that every time a bank buys a huge amount of some currency, another bank has sold it to them.
Which one do you want to “follow”?
Or is it that you don’t ever trade big news events?
It’s very, very easy to get the overall direction right, and still lose money because of spikes in both directions, especially when you’re trading against a counterparty “broker”. It’s too risky for me. I value my capital and need to preserve it.
Screentime? Loads and loads and loads and loads of screentime??
Technical analysis backtesting? Tons of it.
Comparison of fundamental data versus price action. Over heaps of months?
I think you are currently at the Mr Theory rank. Proceed to the next Mr Gambler rank please.
That’s all well and fine until the market teaches you that no matter how much time you devote to studying, it has a humbling experience waiting for you. I devoted a lot of time to back testing different day strategies and researching the fundamentals to see how they correlate. You know what I learned from it? In the end, it still is a 50-50 proposition and an informed SWAG. Ahh yes, here’s one for Falstaff. “The point of diminishing returns”. No further back testing and/or research will net any further gains. I avoid getting caught up in the paralysis of analysis. After a while of that everything starts to blend together and nothing makes sense anymore.My question was relating to a trade I took on the Fed’s rate hike yesterday that went the opposite way. It was a matter of timing. Had I sat on my hands and waited for today. I would be in PIP City right now…Especially after Draghi’s dovish talk helped things along. My entry was simply too early. Currently, I am at break even with the trade. Hindsight is 20/20 because after the fact the answer is always obvious. .Thanks for your input.
But they are always right, as they set the price. And price is the only universal fact in the market at any one time. Everything else is opinion or judgement.
Well said chistianov. Thanks much!
Do you mean "diminishing marginal Utility ? "
Yes I know the frustration - Walk away - come back three weeks later ? 3 months ? 3 hours ?
Your subconscious will then have absorbed enough to let you move forward .
Personally - I don’t think the "80-20 principle " works on this particular variant of Gambling !
My entry was simply too early. Currently, I am at break even with the trade.
Look at that with respect to @tommor 's input - Now that’s a "LEARNING EXPERIENCE "
A very perplexing week it has been!
The way I trade the news may be a bit unorthodox, but it does keep me out of trouble. First, I never trade the EUR/USD during a news event like a FED whatever (i.e. when Janet Yellen sneezes and it sends shock waves through the financial world). I pick another major such as NZD/USD or AUD/USD, etc. Next, I check the results of the news event like everyone else. But then I wait for the first 5 Min. candle to close. Sometimes I will wait for two to close. I let the dust settle a bit. I find out which way the cows are running and then I follow the herd. I’m hoping for a large breakout candle to close and then I just get in at the market, knowing I probably have at least a measured move worth of profit.
Don’t get trampled by the cows. Wait to see which direction the herd is running, then follow from behind where it is safe.
I agree…one reason why the markets move opposite to the “fundamentals” is partly because decisions like these are priced in ahead of time. But as someone with a Masters in Economics and a former Central Bank Economist, I can tell yu that because most news releases are short-term data that varies from one month/week to the next, you will always have this issue of the market moving opposite to what it is “supposed to”.
Long-Term data is more reliable and is more in sync with the movements of currencies. But trying to use volatile data in the short-term is a hit and miss stressful activity. Yes you might capture a small gain as the market initially reacts in the expected way, but using this approach is unlikely to be something that can give you consistent, large Pip Gains.
This is why people like me use Candlestick Patterns on the Larger Time Frames, These Stable Signals tell us exactly where the market is headed with more precision because they also price in the net reaction of the market on the smaller time frames to the data/interest rate decisions released earlier in the day. So instead of trying to guess and trade the initial reaction - which often is a red herring - you simply calmly wait until the 4 H or Daily Chart has closed since they will reflect the more dominant reaction to the news item - whether its in sync with Economic Fundamentals or not.
So, at the end of the day, if you trade the Forex, it is really not necessary to know anything about Finance, Politics or Economics - ironically. Just need to know where to enter, where to place your stops and where to set your trading targets.
The fact that the market isn’t moving the way it should according to our assumptions - is the essence of the market. Not everything happens within the template, that’s why when trading you have to conbine several indicators, etc.
There seem also to be many successful traders saying the opposite, that you have to use something other than indicators.
Certainly many unsuccessful traders seem to be combining indicators.
The successful traders I know who don’t use indicators, use price action instead.
The successful traders I know who do use indicators are using only one or two, for directional bais only, and are entering and exiting their trades by using price action instead.
Just what I’ve seen and noticed, myself, over the decades. But nothing that I’ve ever seen has persuaded me that “combining several indicators” has - on its own - ever made anyone profitable.