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The Difference

I have recently been helping a friend with his market outlook and approach, i have only helped a small few as we all know there are many factors in this game, and when one learns that simplicity is the route to succes it becomes much easier.

When giving guidance in the form of answering good questions with really good answers i have come to realise, it still is difficult in the beginning stages for new people in the markets to grasp the difference between a security and the market, reading up on a company, currency pair, bond etc, etc, is what some people in the new stages think is imperative to succesful trading but they couldn't be more wrong in my opinion. I'm certanly not implying to ignore a securities fundies, however i can tell a lot more about what a security is doing by reading the chart as opposed to reading what the talking heads are saying.

It is very important to know whats coming around the bend for sure, you can get blind sided from a critical announcement if one is not prepared, however it still amazes me that people read a positive summary and consider it gold, while the security is going the opposite direction of what the summary suggests. I guess it was how i was mentored and my intial approach was different as well, for that i am grateful.

One must understand the importance of pricing in and how Money Management works in order to get it. One quote that i always remember is" the market is always right and can remain that way longer than you can remain solvent". It doesnt matter what you think it should do, it matters what it is doing.

Price action and charts do not lie, its the brain and its bias that will lie to you. 

So become an expert at reading Price Action then learn how to decifer the Rhetoric. It is critical unless you have deep pockets, sometimes fundies take months or longer to take effect and by then well you might blow an account or two.

Remember there is a huge difference between a security and the market, learn the market and you will fair better, as we all know companies always make themselves sound good even in the face of collapse. 

Genxtrader

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Genxtrader
Forex Trader, Commodities
Previous Contributor: FXstreet, Forexmosgate, Forexmospherians.com
Currencies: Various: Scalp, Swing, Trend Trader
Technical Market Analysis, Site Administrator, Moderator

Comments

  • Hi Gene,

    I like this quote by Peter Borish which confirms everything you've said.

    "Price makes news, not the other way around. A market is going to go where a market is going to go."

  • "The market is always right and can remain that way longer than you can remain solvent" well said Genxtrader, awesome post thanks for sharing

  • love the post 

    thanks

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"Keep a Record of the Business or Currency Pair Traded. Reasons why the Trade was taken. When was the Exit. How and why the Trade turned out the way it did"

"It's my pleasure to be part of this forum, which is always different than other places & with a friendly environment. Glad to be in this team"

"Yes, the truth requires neither our belief nor understanding. However to harness truth and apply it for our benefit we must at a minimum allow that it is possible".

"We all know we will never be 100% Accurate with 100% win rate over 100's or 1000's of trades - but as long as your winning pips and money - add up to a lot more than your losing pips and money - then "Bingo" you are successful winning FX trader"

"I figured this was a legitimate break, so I went on the hunt for evidence, so here in succession is the list of clues I used to make my decision:

Rejection of market and weekly pivot at ema confluence.

Complete and broken head and shoulders on 1hr time frame.

Broadening formation on daily with test and rejection of 200 day ma

Bull hinge on daily and Renko stochastic.

Positive momentum on 5min, 1hr, 4hr and daily chart"

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"Sometimes You Win,

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"Forex Market analysis relies on two types of analysis much like Stock Markets:

Technical Forex Market Analysis views the data on a chart and considers that the News and Data is built into the Price already (economic, political, social, sentimental and psychological). Various tools and indicators will be used by technical traders, for instance MACD, Bollinger Bands, Moving Averages and more.

Fundamental Forex Market Analysis also uses indicators, for instance reports, Gross Domestic Production (GDP), Retail sales, Consumer spending, Industrial Production, Consumer Price Index, Commodities, Economic Calendars, Balance of Trade levels which could identify Trends between other Nations and more."

"Short rapid bursts and quick glimpses of an entry, trigger activated, trail in place and exit strategy and plan already set. Within a blink of an eye, instinctively the buy/sell button is pushed. The hammer falls and clanks decisively, echoing, sparking, like steel upon steel and the trade is executed. A Traders heart beats on with perfect set up, closely aligned with strict parameters, ready to continue the attack or recoil on a wire. Wrap the profit and then stand down, ready for the next hunt"

"When we are talking about sentiment it is very hard to say that this sentiment will prevail another 6, 9, 13 hours. Sentiment is not a constant line. Main trend is bearish, tech picture on daily is bearish, even intraday neutral. Nobody restrict to play long eur short usd position with the target at 1.12 or even 1.1361, this is every traders individual choice as always"

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