Understanding Forex Market

[ARTjoMS 10]

Hi there,

 

I seems to me like there is quite a lot of information about market that is not really open to public. And there are questions that I am looking answer for, but struggle to find...

 

''It is estimated that 95% of forex participants are currency speculators'' - are banks regarded as speculators? This number feels high to me as it resembles percent of people who lose money, after i read this i wanted to unintentionally continued to myself... ''and they all including banks lose money ''

 

Here a few questions:

1) How big part of market is using technical analysis as their primary tool?

2) It feels to me that there are some participants who have enough money to move market as they want (at least short term). Do they use it for speculative reasons and... are they succeeding ?

3) What happens in those false breakouts? Who is doing what? You can often hear something like ''big guys come in'', in some sense it is probably true, but to move market you already need to be a big guy...and epsilon plus epsilon is still epsilon

 

I have many more questions like these, but basically I am willing to understand who is doing what and why in the forex martket... Maybe there is some good book on resources that can help answer questions like these?

 

Thanks and good luck

[SIUYA 11]

Hi there,

 

I seems to me like there is quite a lot of information about market that is not really open to public. And there are questions that I am looking answer for, but struggle to find...

 

Information is either not available as it top secret - people are making money on it and then would not sell it. Those who offer top secret information for sale should be avoided.

Also the other reason is that there are lots of ways of trading, executing, operating, many different strategies - every one has an opinion, hence there are many variations or answers to any questions. Basically you have to work a lot of stuff out for yourself.

 

''It is estimated that 95% of forex participants are currency speculators'' - are banks regarded as speculators? This number feels high to me as it resembles percent of people who lose money, after i read this i wanted to unintentionally continued to myself... ''and they all including banks lose money ''

 

Here a few questions:

1) How big part of market is using technical analysis as their primary tool?

 

It is more often quoted 95% of retail traders loose money.......it could also be argued 100% of anyone doing business is a speculator....another circular argument. Plenty of banks do loose money trading, they usually make up for it in fees and spreads

 

as to Q1.....who knows? Who would admit it? who uses it 100%,v 50%? plus how do they use it is important......

lets say - I would believe it is used far less than people think, but as an aid for more than people would like to imagine. (plus there is the difference between numbers of people using it, v amount of money being influenced by it)

 

2) It feels to me that there are some participants who have enough money to move market as they want (at least short term). Do they use it for speculative reasons and... are they succeeding ?

 

short term market movements in FX - of course - you can tick a market which moves it.

Why do they do it - for money of course, if they can see a way of profiting from it.

Are they succeeding - who really knows for certain - if you are and its deemed as manipulation are you going to tell people about it?

 

3) What happens in those false breakouts? Who is doing what? You can often hear something like ''big guys come in'', in some sense it is probably true, but to move market you already need to be a big guy...and epsilon plus epsilon is still epsilon

 

I have many more questions like these, but basically I am willing to understand who is doing what and why in the forex martket... Maybe there is some good book on resources that can help answer questions like these?

 

Thanks and good luck

 

There is a lot of reasons for people doing things in the markets and you will get many many many different answers each from a different perspective. Most people dont know what others are doing. forgot about it when people tell you about big guys, smart money dumb money, professionals - its all jargon and theory.

 

Re false breakouts - first you need to define it, there are many or there are few. but in essence it is simple - some people traded at a level above a congestion, there was no momentum, the price re enetered the congestion.

 

the internet will have plenty of free info, and plenty to think about, if you want to know who is doing what you should look at the statistics of the people and processes in FX, and not listen to retail idiots like ourselves sprout off about 1-2 lots .....enjoy the long and winding road of trying to understand markets.

[ARTjoMS 10]

OK, for the sake of discussion I want to give some examples i am curious about.

 

Here are 3 somewhat similar price movements (that i am throwing in the false break basket) and there are many more in gold/usd like this.

 

My questions are same... who is doing this and for what reasons.

 

 

 

How much money do you actually need to move market like this?

 

How many players are actually causing this? Is it a one man show or 2 big guys betting against each other?

 

I have no idea who is doing the 1st advance, but i would assume that 3rd movement (price reverting back to mean) is partial profit taking from guy who did the 2nd (big upside-down) movement.

 

What happened to the big guys in 1st advance.. are they stepped out?

What happened to guy or guys who made that big 2nd movement.. i am assuming they can't be totally out, but maybe they are out by like 50%?

 

A lot of questions, sorry... but still hoping to get some feedback.

[Obsidian 10]

Hi ARTjoMS,

I think you would like this thread:

http://www.traderslaboratory.com/forums/market-analysis/14300-what-determines-price.html

[Obsidian 10]

...

 

How much money do you actually need to move market like this?

 

How many players are actually causing this? Is it a one man show or 2 big guys betting against each other?

 

 

-Bank of Japan spent around $100 billion for that intervention..around 400pips..you do the math much you need to move it 1 pip:rofl:

 

-Nobody will ever know...

[SIUYA 11]

These days there are a lot of automated systems in place that a triggered to enter and exit on various price levels.

It could be as simple as this.

It could be a combination of factors....eg - the market went up because another market moved and a trader had to hedge in this market.

It could be one person exiting a position and getting squeezed out by his broker - it might be a hedge fund being wound up.

It might be simply a short term lact of opposing orders creating a vacumm that unsophisticed algorithims fall into

It might be a fat finger order, it might be a Kight trading type sceanrio

It might be as a result of a news item - that causes a little bit of relatively greater volatility. In the scheme of things it may actually mean nothing

It might be someone just wanting to get set in an order

It might be 500 people following a newsletter

It might be someone pushing the market trying to set off stops

It might be an option or futures hedge

It might be anything.

 

You assume profit taking in the retracement - not everyone is short term - sometimes its a simple order over the day re loading, maybe it new sellers shorting, maybe it is some short term people taking losses.

 

Reality is - unless you are the one who initialted the order and know you are doing the bulk of the order - the rest is speculative where people are just guessing.

 

As for how much money it takes - often it has nothing to do with size - it has to do with lack of opposing orders - therefore the size is less than you think.

 

It is all part of a market and proving that its it not normally distributed.

[BlueHorseshoe 10]

''It is estimated that 95% of forex participants are currency speculators'' - are banks regarded as speculators?

 

Hi,

 

Remember that 'speculator' is a broad term.

 

For instance, suppose my company makes picture frames and I need to import some lumber to make my products, then I might have to do business in another currency. If I think that this is cheaper to do now than it will be in a week's time when I actually need the lumber, then I might ask my bank to perform the currency conversion today. Effectively I am speculating, but it's rather different to how a retail forex trader speculates.

 

It's also different to how a 'commercial' trades. If I was worried about changes in the price of the lumber itself, then I might hedge with lumber futures - this would imply that I maybe "know" something about it's value beyond publicly known information that a speculator has access to, because I am an end user within that industry (my friend at the sawmill gave me a tip-off!) . . . In the case of the currency swap then I am as in-the-dark as anyone else, and I am "speculating", despite the commercial nature of my interest.

 

Of course, the transaction will be carried out by my bank. They might just charge me their markup and exchange the currency. But they might also think that my speculation about price is incorrect, and take the other side of my position. If they do this based upon some sort of technical information then they're most probably speculating, but if they do it because they "know" something (their friend at the treasury gave them a tip-off!), then they're acting more as a commercial.

 

So these terms are all fairly fluid really . . .

 

Hope that's helpful,

 

BlueHorseshoe

Edited September 23, 2012 by BlueHorseshoe

[mukti 0]

The forex market is the market in which participants can buy, sell, exchange, and speculate on currencies. The forex market is made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors.

[scarlettjhonson 1]

The problem is that we usually start trading forex with real money, thinking that it is like a betting game and that with luck we can earn extra money ... But it is not like that, as you have indicated in several comments you will need a good training , but not only in the technical part, also in the psychological aspect so as not to lose control when you have lost.
 
 

[CrazyCzarina 17]

Right, many traders are having this issue that they never tried to study the market seriously before investing with the market. If they have started with learning then the result might be different for many ones.

[Michael99 0]

On 7/7/2019 at 10:09 PM, scarlettjhonson said:

The problem is that we usually start trading forex with real money, thinking that it is like a betting game and that with luck we can earn extra money ... But it is not like that, as you have indicated in several comments you will need a good training , but not only in the technical part, also in the psychological aspect so as not to lose control when you have lost.
 
 

That is why I always advise everyone to first try forex trading on a free demo. After all, that is the purpose of this account, right? It is very hard for me to understand why people overlook this opportunity. If people are unsure what companies offer forex demo, just use the good old Google, everything is there. Then you are able to find sites like this one - https://tradingbeasts.com/free-demo-account-for-forex-and-cfd-trading/ which advice what regulated brokers offer FX demo accounts.

[CrazyCzarina 17]

There are millions of people who are earning profit from forex market, so ti understand the market fluctuations and scenario is very important. One can build up this by Trading in forex and practicing on it by strategically planning to trade.

[landorra 3]

I'm not sure 'millions of people' are earning profit. I bet the opposite is true: millions are losing money for just a few earning profit.

[fxeconomist 11]

On 9/10/2019 at 6:23 PM, Michael99 said:

That is why I always advise everyone to first try forex trading on a free demo. After all, that is the purpose of this account, right? It is very hard for me to understand why people overlook this opportunity. If people are unsure what companies offer forex demo, just use the good old Google, everything is there. Then you are able to find sites like this one - https://tradingbeasts.com/free-demo-account-for-forex-and-cfd-trading/ which advice what regulated brokers offer FX demo accounts.

I wonder why didn't they include such popular and reliable brokers as Hotforex, IB or Tickmill. They all have FCA license. 

[CrazyCzarina 17]

Understanding Forex market requires lots of patience and learning attitude by not having fear to fail instead learn from mistake by not repeating it and move ahead. Many times trader takes wrong decision out of over confidence and turns in loss.

[fxeconomist 11]

I wonder why didn't they include such popular and reliable brokers as Hotforex or Tickmill. They obtained FCA license so traders are under protection. 

[CrazyCzarina 17]

This might be because the traders lack knowledge and they are allured by the offers provided by the unregulated brokers and gradually face the loss.