Gerald Segal September 26, at 9: How do I do it Reply. What is Price Action Trading Analysis? The world then decided to have fixed exchange rates that resulted in the U. Another advantage of the forex markets is the fact that they trade 24 hours around the clock, starting each day in Australia and ending in New York.
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Flags and Pennant Forex Strategy. Also, notice that price rallies a significant distance before beginning to decline back to the Demand level. These two factors tell us that Demand greatly exceeds Supply at this level, banks are aggressive buyers. The fact that price rallies a significant distance from that level before returning back to the level clearly shows us what our initial profit zone is.
They help us quantify bank dealer desk Supply and Demand in a market which is the key to knowing where the significant buy and sell orders are. The plan with this trade was to buy if and when price declined back to that area of Demand. This trade was high probability, but how do we know that? Well, being very confident that there is significant Demand at that level, this tells us that we will be buying from a seller who is selling at a price level where Demand exceeds Supply.
Selling after a decline in price and at a price level where Demand exceeds Supply is the most novice move a trader can take. Furthermore, these are the two most novice decisions a buyer and seller of anything can make.
They are selling after that big decline in price and into that price level where Demand exceeds Supply. So, by changing our mindset to thinking like a bank, which leads to acting like a bank, we can then buy where banks are buying which is opposite of what most traders and investors do; which is exactly what we did when price returned to our Demand level. Next week we will look at the outcome of this low risk, high reward, high probability trading opportunity.
Disclaimer This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. This perception is not entirely true, though. A better approach to the discussion of risk would be to understand the differences between a decentralized market versus a centralized market and then determine where regulation would be appropriate.
The interbank market is made up of several banks trading with each other around the world. The banks themselves have to determine and accept sovereign risk and credit risk , and for this they have many internal auditing processes to keep them as safe as possible.
The regulations are industry- imposed for the sake and protection of each participating bank. Since the market is made by each of the participating banks providing offers and bids for a particular currency, the market pricing mechanism is derived from supply and demand. Due to the huge flows within the system, it is almost impossible for any one rogue trader to influence the price of a currency.
This is a positive move for retail traders who will gain a benefit by seeing more competitive pricing and centralized liquidity. Banks of course do not have this issue and can, therefore, remain decentralized. Traders with direct access to the forex banks are also less exposed than those retail traders who deal with relatively small and unregulated forex brokers , which can and sometimes do re-quote prices and even trade against their own customers.
It seems that the discussion of regulation has arisen because of the need to protect the unsophisticated retail trader who has been led to believe that forex trading is a surefire profit -making scheme. For the serious and educated retail trader, there is now the opportunity to open accounts at many of the major banks or the larger, more liquid brokers.
As with any financial investment, it pays to remember the caveat emptor rule — "buyer beware! The forex markets are the largest in terms of volume traded in the world and therefore offer the most liquidity, thus making it easy to enter and exit a position in any of the major currencies within a fraction of a second.
Leverage in the range of Of course, a trader must understand the use of leverage and the risks that leverage can impose on an account. Leverage has to be used judiciously and cautiously if it is to provide any benefits. A lack of understanding or wisdom in this regard can easily wipe out a trader's account. For more on leverage, check out " Forex Leverage: Another advantage of the forex markets is the fact that they trade 24 hours around the clock, starting each day in Australia and ending in New York.
Trading currencies is a "macroeconomic" endeavor. A currency trader needs to have a big-picture understanding of the economies of the various countries and their inter-connectedness in order to grasp the fundamentals that drive currency values.