Forex Price Movement - Learn How This Important Factor Works or Lose

Forex Price Movement - Learn How This Important Factor Works or Lose

by kelly Price

Many forex traders think they need to study news stories and the fundamentals to win on the other hand, forex chartists think that charts move to some hocus pocus theory that predicts the future but the most important variable is much simpler and learn how to gauge it and you can enjoy currency trading success.

First lets look at the benefits and flaws of both forex techncial and fundamental analysis.

Let's start with a simple equation.

Fundamentals (Supply and demand) + Investor Perception = Price

Nice and simple that's the way any investment market moves and it's obvious that the most important variable is investor perception or sentiment.

The person who simply acts on news has no chance of winning, as it's discounted immediately and he is playing catch up. For evidence of this look at every major bull move and bear move and you will find that the fundamentals are almost always at their most bullish at an important market top and most bearish at an important market bottom.

The person who uses forex technical analysis will argue that as the fundamentals are immediately discounted in the price, so all you need to do is follow price action and this is by far the better way of trading - but it has one flaw.

You can't see how far a move will go as greed and fear take hold of investor's. Sure price spikes never last - but when are they going to end?

This is where you look at the fundamentals for clues to warn of technical tops i.e the sentiment.

You can do this by watching the news.

For example recently it was said the euro would gain on the dollar and make new highs because the US had cut interest rates - what happened?

The euro tried to get through an important resistance price and failed (we pointed this out in an article last week and the euro has plunged since) what was going on?

The news was discounted and bullish euro news didn't push it higher.

This meant the sentiment was at a bullish extreme and prices recoiled back.

If ever you see bullish news that doesn't push a market higher and bearish news that doesn't push a market lower, combined with a price spike on the charts, chances are you are going to get a move the other way.

There is a famous saying:

"If you can hold your head when all around you everyone is losing theirs you probably haven't heard the news"

In forex terms you have but you are drawing different conclusions - while the lemmings are blinded by greed and fear and never see a move ending, you are looking for a contrary trend.

If you look for price spikes and then look at the contrary view, then you can get some trading opportunities.

Are there any concrete indicators for judging investor sentiment?

Yes there are two great ones - % bullish and the Net Traders Positions report and we will look at these in the next article in this series.

If you want to maximize your profits and enjoy currency trading success you need to use market sentiment to anticipate forex price movement.

Forex Trading Info - Getting the Right Info For Forex Success

Forex Trading Info - Getting the Right Info For Forex Success

by Kelly Price

The fact is anyone can learn forex trading and get the right forex trading info to success but you need to get the right in of succeed. It's a fact that 95% of traders fail because they simply fall prey to common myths, or don't get the right forex education.

The first point to make is there are no secrets to successful trading it's simply based upon a logical, robust method which you understand can have confidence in and apply with discipline.

Forex trading success is very much a personal affair and only you can give yourself success. Many traders make the mistake of trying to follow other traders.

The problem is they don't understand the logic or method and therefore don't have confidence in it and as soon as a few losses come, discipline goes out of the window and they lose.

If you want to start trading then the simplest and most time efficient way to do it is to use forex charts and technical analysis to time your trading signals.

All the information you need is available on the net and you can get it for free.

A Great Methodology That Works

The hard bit is combining the indicators to generate the signal. The easiest way to do this is to use a breakout methodology. This methodology is simple to understand, timeless and works and you only need to understand the concept of support and resistance. You then need some momentum indicators to help you gauge the strength of the breakout and use them for timing.

The above is a simple robust method which can and will, make you big gains and we have discussed all the above in our other articles.

Should You Pay for Advice?

There is a lot of forex trading info for sale, most is junk and normally tries to sell you a mechanical trading system, with a simulated track record of gains - avoid them. Also avoid any vendor who sells material that stresses the following:

- Day trading is a good way to make money - You can predict forex prices with scientific accuracy - They have secrets they will reveal - You can make regular profits

All the above are myths and are simply designed to appeal to naivety and greed.

If you want to pay for forex trading info look for - sensible advice, the logic of the forex trading system is revealed and you have some sort of money back guarantee.

Information From the Best

If you want some great advice from traders who have walked the walk then go to your online bookstore and you can get some wisdom from some of the greatest traders of all time. Two great books to start with are "Way of the Turtle" by Curtis Faith and Market Wizards by Jack Shwager. These will give you an insight into what makes a great trader.

The Combination for Currency Trading Success

Forex trading is a combination of the right knowledge, confidence in it and the discipline to apply it. This is why you can't simply follow someone else blindly - you need to have confidence in what you are doing to have the all important trait of discipline.

If you do your homework and get the right forex trading info, avoid the myths and understand success comes from within, you could soon be trading and enjoying currency trading success.