While I had intended to write this post on Saturday, I never got round to building the courage to do anything. Now! I am here and ready to fill in some of the tiny gaps which might be troubling you when it comes to the forex market. For others who read my blog, it will just be a great glimpse into the forex market and why there are endless possibilities to make money in this minefield.
“Opportunity is missed by most people because it is dressed in overalls and looks like work.” – Thomas A. Edison
The canvas is now blank, and the forex markets are as vague as ever, so let us start on the fundamentals. Be patient as I am laying the foundations, enabling you to open your eyes into why you should trade the forex markets.
Who is the competition?
It has always been strange to me how people never understand who they are competition is. Within forex, it is straightforward and if you don’t know the game then learn the rules first. Enemy number one is yourself, yes I said it yourself. There is no doubt whatever stage you are in on your forex journey; you will be looking for a trading system that always wins. Let me make this as clear as possible right now.
“YES! there is a system where you can win every time, but you are not in the position or power to have that system.”
Before I talk about the system, you will need to stay posted to my blog. Today is not that day to talk about the system, but I will tell you where it is currently located. At least for the forex markets, the owner of the system is right in front of you. Still, don’t know who owns the system, well let me give you the answer
Drum roll, please………🥁🥁
THE BIG BANKS
image take for Wikipedia
Now! Some of you might have already known this, and I am sure I have mentioned this before on my blog, but this is a fresh start at Little Big Movement. So, let us talk about these banks and who they are. Just do a quick google search for FOREX and Wikipedia will give you the top 10 currency traders. Remember FOREX stands for Foreign Exchange, which is the trading of currencies. Now the problem you have is that these large institutions are built on the model of taking from the poor or the stupid money. This is why your foundation of understanding forex should start with Wikipedia.
Take the time to read the links above but to summarise, the banks control the game, they create the rules, and they regulate the laws. The last point is vital because there are no regulations in the forex over the counter (OTC) markets. The economic environment creates financial control on the speed in which markets move but the majority of the time the large institutions move the price in any direction which they feel is best for them while still conforming to the economics in the end.
“When and what direction markets move will never be in your control.” – Nathaniel (me)
Comprende? Sorry if you thought it was brief but you have more than enough information to head out and read a little more. At least you now understand that you are playing monopoly against the banker (i said it 🤣), it is time to realise that the game has one flaw/rule the banks can never get rid of. When you play the trading game, you can only BUY or Sell. With the combinations of economics and the defined BUY and SELL rule you have a 50% chance of Winning or Losing. It might sound great, but the problem is how long do you sit on your trade before you take the profit or a loss? 🤦🏾♂️
🤷🏾♂️ The uncertainty is the is why we have a market. The Big Banks know that everyone is playing a guessing game in FOREX using formulas (technicals) or Economics (fundamentals). All they need to do is push price in the direction where the majority of people would stand to lose the most money, while still conforming to the economics of the countries currency they are trying to manipulate. I would love to talk about flash crashes and market manipulation, but it is not the right time.
Great, I have provided all this resource, but I have not told you how to trade forex with this information. Well, dear readers as you might have read at the start of the post, there is no wholly grail. You need to put the work in and find a strategy that works for you.
“WTF…..you are leaving me out to dry” – Little Big Movement Audience
Ok! maybe I am a little 🤦🏾♂️🤣, so let me help you along this dark path with how you should at least try to tackle trading. We all have probably used eBay once in our lifetime, and I think eBay is where you should start.
“WTF…..this guy is talking rubbish” – Little Big Movement Audience
Just hear me out for a moment. Let us look at the price of a PS4 and the eBay model as an exchange to buy and sell. There is a market/demand for PS4s all year round, and depending on the time of the year the AVERAGE price can fluctuate. So now if you take your approach to eBay and you look at buying currency in the same way, you would want to BUY LOW as a buyer and SELL HIGH as a seller. It does not matter what market you are trading; the thought process does not change. You need first to understand what you deem is the average price, then find a price below that to buy and price above the average price to sell.
We then need to look at this using our second variable, TIME. If you are on eBay, you are not just looking at the daily price, but you are defining the average price over hours, days, weeks and months. This approach should be used when looking to buy or sell anything, including currencies. The problem that many people have is that they want to limit there trading to one single time frame. Buyers and seller do not work this way on eBay. Look at an eBay listing, and you will see listing ending in hours, days, weeks, months and some lasting forever. To me, this stipulates that there are buyers and sells defining prices depending on the duration of the listing. This approach has a direct relation to trading FOREX, where there are day traders (Minutes – Hours), swing traders (Days – Weeks) and investors (Weeks – Months). If you don’t understand where I am going with this then hopefully an explanation of the diagram below will make this clearer.
It is straightforward; the problem traders have is that they forget that just like eBay, there are buyers and sells trading in there own defined time frame. Like the triangle on the left, traders who trade in the hour time frame do not believe they need to know what is happening on the time frames above them. The smarter traders who do are sometimes only using the higher time frames for nothing more than support and resistance. WRONG! in so many ways, as the price/areas on higher time frames are not support or resistance. Look at the average price on higher time frames as critical indicators of when buyers and sellers, who have been looking at price using more extended historical periods are looking to make their move (Remeber the eBay listings). You will never know where price is going to go because the banks control that on every time frame. What you should be doing is conforming to the triangle on the right. The top-down approach is vital with the higher time frames being your foundation to understand when the longer term traders will be looking to enter the market. This should enable you to know why the price is starting to move or breaking out. Yes, this is what the banks do, and as soon as everyone is on the same side (going LONG or SHORT), they swing the market the other way and catch traders out.
So! Forget about all the cool charting tools and economics for a moment. The banks at the primary level are doing this, and they are not afraid to buy when the price is below the average or sell when it is above. The BANKS are in control which means psychology does not play a part in buying or sell on the FOREX markets (eBay), only the real fundamentals of that currency market (PS4). Once you have figured that out on your time frame, you will become a better trader.
Thank you for taking the time to read this post and I wish you all the best in your trading.
Part two will be next weekend. Peace and love ✌🏾👨🏾🏫
Nathaniel – “THe BiPolar TraDer”
Little Big Movement