Sequence of Analysis

1. Let the market stretch
2. Support / Resistance
3. Price Actions
4. MACD / Stochastic
5. Overbought / oversold - two long candle (hourly / 4H / Daily

Tuesday, October 28, 2008

When The forex Market Move?

The basic fundamental problem of every trader is a matter of when?!! Yes, when the market will move?

Even those who have the most experience who have spent years trading and studying forex the market still fail to get the precise timing of breakout. In fact there are many have become de-motivated after experiencing failures over and over again. The harder they tried and the worst it becomes and the more knowledge they have the scarier the market will look as their mindset becoming over cautious towards every movement.

This nerve breaking experience actually applies to every traders including of those the professional and novice alike. No one will ever escape it unless we just simply accept the fact it is actually work that way. The more you try to defy the fact the worst you will become because you are not willing to move on, but would rather prefer to remember the losses you made.

Therefore because of this we need to understand that everyone’s problem is simply because we cannot know when the market will move. This is a fact that we cannot deny and it is always true. Studying the precise market movement will be like a journey searching for the origin of life on this planet and end up still no answer. No matter how hard we try there will always be something that is very frustrating obstacle stand in the way especially the fundamental aspects of the market. Let’s say for example we try to predict when the market will move up and at the same time there is significant fundamental data will be released. As we expected the market to move up instead it goes to the opposite direction and wipe out significant amount of the margin. Due to extreme fears of losing the entire margin we may take a quick action to close the position as soon as possible. This is one of the most frustrating situations we don’t want to be.

Second scenario would be most of the time during significant breakout and the market is going for extreme oversold/overbought position. Everyone’s mindset quickly shifts to the thoughts of instant reversal. Instead of making immediate reversal the market moving slowly in side way flat direction, after long hours of frustration to wait we close that position. And suddenly at the same time the market move quickly for reversal which gives another big disappointment for closing the position early.

This is a dilemma of when?!! Please do not study when the market will move because you will end up getting the biggest frustration in your life. Instead you should learn how to guess the ideal time using the available time frame. Learn how to use MACD and Stochastic combination within a time frame of daily, 4 hourly, hourly, etc until 5 minutes. This will sharpen your instinct to determine the ideal time of market movement.

A simple example is if both Moving Average Convergence/Divergence and Slow Stochastic in 30 time frames are moving up. Therefore you will expect that the market in 5 minute time frame will move either to middle or to the top of Bollinger band line. This is depending on the starting position of the market if the market start from the bottom therefore it will end up in the middle or if it is start from the middle then it will end up on the top line of the Bollinger band.

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