Currency Trading is just really the largest "money game" on the Planet - played by loads of all different people and organisations around the World.
We have really 2 main sections - you could say "them and us" - with us being part of the retail section or community - ie individuals - not working for Banks or Hedge Funds, commercial organisations etc - but instead just for ourselves. "We" only account for approximately 5 to 8% of the total FX market - whereas just 5 very large banks account for anything between 55 and 70%.
That leaves something like 22 to 30+% of the market being made up of loads of commercial businesses and even governments etc - not just Hedge Funds or small Banks - but even car manufacturers and massive international global businesses who are trading in anything up to 200+ countries around the World.
Not everyone participating is wanting to make a gain - many transactions happen everyday - what ever the price of the currency pair is - ie - when you go on Holiday to the US or the Far East etc - you transfer your pounds or Euros into dollars or Yen etc - and accept the best price transfer you can get at that time of the transaction etc. If I am say buying a holiday Villa in Spain and the transaction as to be completed by end of the month - I have to accept the Pound/ Euro exchange rate - ie I cannot wait another 3 or 6 months and save myself say £5000 simply because the pound has strengthened again the Euro etc etc.
As I am sure you know every day multi Trillions of dollars are transacted. The middlemen - ie brokers etc will always make their money out of their cut of the deal - many individuals nowadays use specialised companies as they know they can get a better rate than just using their high street bank.
Now here's were it gets interesting - the currency market once you take the transaction cost out of the equation is a "zero- sum" game - basically there as to be participants willing to sell a currency for others to buy it - and the price of a currency will therefore depend really on good old "demand and supply".
We now have a basis for the "Game" - ie buyers want to buy at a cheap price - sellers want to sell at a high price - basis of any business model .
Large Banks want to make Large Profits - expected - but for this to happen it means there will be other participants in the market who will lose out - ie make a loss on their transactions. Sometimes it does not matter - ie If I am buying a villa in Spain at a real knock down price ( say the owner needs a very quick sale ) I am not bothered at paying an extra £1 -3K on the currency transfer on a particular day if I have bought the property at say £20 -50K below market valuation - as I think I have still got a good deal.
You could say its all "swings and roundabouts" etc - but lets now go back to the "them and us" scenario - ie commercial organisations and retail individuals - we both want to make Profits - by basically buying at a lower price and then selling it at a high price etc
Unfortunately - retail traders are the real small fry - maybe the least knowledgeable and also under - capitalised and easily swayed by false sentiments
We are like the "mugs" or the "easy pickings" in this "money game" - simple because we will be set up and misinformed - or deceived - or basically "lied" - to take wrong decisions and bad trades.
First rule of playing the FX trading game - Only believe a proper experienced retail trader who is on your side - ie someone you can trust
Why should you believe Banks - Hedge Funds - Brokers - commercial traders etc etc - they want you to lose your money - so they can have it.
How do they deceive you ?
There are just so many ways - I could write a complete book on it - anything from false sentiment on charts to false information and basic lies etc etc
A typical example is when a Bank says - this next 3 months we are going to heavily sell the Dollar. What they don't tell you is that they are only going to do that after price as gone up another 500 or 1000 pips - yes they will then start selling heavily - just after you have been stopped out ;-)
So How do we stay in the "game" and actually make a positive return on our capital - ie profits ?
Technical analysis - Fundamental analysis - Luck - etc etc - is just not enough on their own - you need to be "streetwise" - business savvy etc - you need to think that so many other traders want your money ( as their profits) and so expect to be tricked and get to understand "gameplay"
I spent 25+ years in many businesses at Senior Director level - both large and small and so was used to "business gameplay" before I got into FX trading approx 14 years ago.
I hope to delving into this side with more blogs in the future on this forum
What's nice is now - There's no restrictions - "I can say it how it is "
Whether you agree or disagree is with you ;-)