| Many new forex traders go into the market with the | | | | Therefore some banks will have to loose out if they |
| idea that technical analysis done right like the text | | | | are not part of the collective and what does one |
| book tells them is just about the same as the holy | | | | have to do to get in. I think that it is a myth that |
| grail. It is just what you do. I will tell you now, that | | | | banks can unduly influence the market |
| you will most likely loose a significant amount of | | | | Scenario |
| money if you do just that. | | | | A trader analyzes the market, the market is rising on |
| Firstly let us get something very straight. technical | | | | this pair, it looks like a buy position. The thing that |
| analysis is a backward looking analysis. The process | | | | the trader hasn't noticed is the dwindling volume in |
| involves analyzing events already gone. Now behavior | | | | the market the trades are leaving the market on this |
| being what it is means that past behavior generally | | | | one. Sorry it looks like you are approaching a peak in |
| sets some predictors. Lets say that again "Past | | | | the market. The market may get news that |
| behavior generally sets some predictors". You got | | | | continues its climb. It is also reaching a point where it |
| that. You see what you are saying is based on a | | | | might take a tumble. The analysis of indicators |
| historical perspective the mob rule of a lot of people | | | | correctly will advise you to stay out on this one until |
| doing things together makes likely behaviors to | | | | better conditions prevail and remember you can be |
| happen across the collective markets. These | | | | buying or selling to achieve your desired returns. |
| indicators give a feel for the markets direction of | | | | With this scenario, if the forex trading analysis comes |
| movement. | | | | out to show the MACD correctly indicating a liquid |
| Scenario | | | | market and the moving averages moving correctly to |
| The market has moved up to a threshold at which | | | | suggest entry to the market. STOP, take a breath |
| your technical analysis suggests a turn is imminent. | | | | and ask yourself this " Is there a fundamental force |
| The trader takes a sell as the next direction is down. | | | | that is telling you that the masses might just have it |
| Along comes the government and raises interest | | | | wrong on this occasion" if so go with the gut instinct |
| rates a bit unexpected and the market continues to | | | | and stay put until a clearer indicator identifies the true |
| rise. The indicators of you were reading them | | | | nature, you might miss a bit, but you might save a |
| suggested that it might turn, but it also indicated that | | | | lot. |
| the forex traders had left the floor, no one was in | | | | Many new forex traders show who are using |
| the market on that pair, it was becoming relatively | | | | technical analysis overload their indicators. Don't even |
| illiquid. Don't be the brave one and go in, wait until the | | | | bother! I keep it reasonably simple. I only use |
| market sets the new direction. | | | | candlestick charts. I only use MACD and simple |
| There are some who believe that the currency pairs | | | | moving averages at 5 and 25 to analyze the market. |
| are pushed around by banks working as a collective. I | | | | Your mind may better understand other indicators. |
| know the banks have to move a lot of funds. They | | | | That is fine use them if you feel more comfortable. |
| also have to at times find a a large amount of | | | | These are the ones I know and understand best. |
| currency to get a deal for a large corporation moving. | | | | Keep it simple for looking for general market |
| Ever purchased some heavy equipment to start a | | | | directions and likely turning points and then with |
| mine, probably not but you get the idea. Those guys | | | | practice include other indicators to more clearly |
| need a huge amount of a currency to fund the | | | | identify a change point |
| purchase of equipment. Not enough banks from | | | | I hope this helps you to better understand the |
| around the world could collectively agree on exactly | | | | nature of technical trading and the forex markets. |
| the currency movement that was to be produced. | | | | |