Friday, December 12, 2008

Forex Price Movement - How and Why Forex Prices Move and How to Make Huge Gains

Most traders lack a basic understanding of how and why Forex prices move and lose, here we will give you the equation for market movement and how you can make huge gains...

Right here is a simple equation for Forex Price movement:

Fundamentals (Supply and demand facts) + Investor perception = Price

Simple? Yes but let's think about it in more detail and we will come to a compelling conclusion.

There is no doubt that the supply and demand facts are important, as they reflect the economic cycle of the country and this is reflected in big trends that can last for months or years - but the news and facts by themselves are NOT important, as its investors make a price. Investors all see the facts differently and draw their own conclusions from what they see and their overall view makes the price. Therefore the most important variable is investor sentiment.

Being human the influence of greed and fear will always push prices to far, in either direction (up or down) and these price spikes never last long and prices will always return to more realistic values.

These price spikes are easy to see on a Forex chart and that is why the study of charts is so profitable in Forex.

By simply following the truth and acting on the price action, you are seeing not just the facts but how the investors perceive them. By doing this you can follow trends and spot reversals within the trend, when prices become overbought or oversold or at the end of a trend, when prices run to far in either direction.

Forex charts give the whole picture and human nature is constant and that's why chart patterns repeat again and again. Do NOT However make this mistake:

Human nature may be constant but it DOES NOT conform to a mathematical theory and you therefore cannot predict with certainty what will happen next. There are many who sell predictive systems - but try and predict and you are hoping or guessing and that will lead to an account wipe out.

You are simply trading the odds and while you may not be right every time, if you constantly trade the odds, run your profits and keep your losses small, you can make a lot of money.

So Use price charts, to watch Forex price movement, trade the reality of price change ( and don't predict), only trade high odds set ups and with the odds on your side and good money management you can pile up huge gains over time.

Forex trading is not about mathematical certainty but if you know and trade the odds and the reality of price change, you can make a lot of money and enjoy Forex trading success.

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Article Source: http://EzineArticles.com/?expert=Kelly_Price

1 comments:

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