How You Make Money Trading Forex

[PYenner]

Quote-
After a while I visualize that I can be self-employed trading. But I realized that if I truly want to get my edge on the markets, the best I can do is to run stats , back and forth in order to look what system/strategy will be more consistent. After two years, I finally found what I was looking for.

Comment-
Well said, I would call this "letting the market speak to you".
The market is the reality, what people say is mostly just guesses and old wives tales, myth and fairy tales. Listen to what they say but judge their words against what the market does. It is the market you need to study and understand, once you have an understanding then you have a means to trade safely and profitably. As long as you rely on just other peoples words you are at risk, risk is not knowing what either you or the market are doing.
Your thinking needs to be ahead of the market, waiting for it to come to you.

Quote-
You can buy all the books, read all articles , even buy expensive seminars etc, but ultimately trading comes down to grabbing your own edge, your own unique perspective on the market, and nobody else's. Very much like a fingerprint. I mean, of course is good to read stuff about successful traders, but just in the light of shaping your system, which as I said it's your edge, your little baby.

Comment-
Your trading strategy should aim at minimizing risk and guesswork.
You must work out your own "lever", a reasoned out thing you can rely on, facts not words or myths. No one else can reason it out for you and give it to you, you must reason it out for yourself if you are to trade safely and profitably.

In forex, the prices are the facts, treat them like a science in order to take the gamble out of trading. That is my aim, my "fingerprint".
It is the banks that move the prices in forex, they are actually not just one step ahead of your thinking, they are permanently about 12 steps ahead of your thinking.
They win by staying ahead of your thinking, to win do you have to get ahead of their thinking? You have to get ahead of some stage of their thinking, but you would have to be a mind reader to outwit them completely.

A first step is to start thinking like your enemy, banks trade in unleveraged lots, they can move the price of a pair 3,500 pips in a year.
How do they do that while keeping a minimum of their own money in the market at any time?
How many lots must be traded to move the price one pip?
How many currencies are the banks using to move the prices in the pair I am trading?
What other charts must move the same way as my chart when they use Euro based accounts, USD accounts, CHF accounts? How many must move the opposite way? The way pair prices work with and against each other gives you huge insights into what and how the banks have to do when they want to move prices in your pair.
The answers are all recorded in the charts waiting for you to seek them out.
You can treat it as a science, then you have facts, not guesses.

It is what you understand that gives you reliable things you can trade on, it is what you don't understand that puts you at risk, guesses. You must use your own brain to keep from shooting yourself in the wallet.

Asking questions like these has been paying off for me but I have a long way to go yet. There is a lot to learn but learn from the charts, the mechanics by which prices are moved, they are fact, everything else is less than fact and should be viewed with suspicion.

[MidKnight]

Hi Pyenner,

You said:
"How many lots must be traded to move the price one pip?"

AFAIK, the answer to that is zero. All we see on the charts is typically a moving bid and for all practical purposes, no transactions have to occur for that bid to move. Price strictly a means of advertising, and the banks like to advertise, it is how they get business

Best regards,
MK

[PYenner]

	Quote:	MidKnight
	AFAIK, the answer to that is zero. All we see on the charts is typically a moving bid and for all practical purposes, no transactions have to occur for that bid to move.

Thanks MK

To me that seems more like slipping the price up rather than trading the price up. Not what I first expected in a "trading" system that is "driven by supply and demand".

We get to trade only at the "market" price, banks get to trade either side of the "market" price. Their thinking and tactics have to be very different from ours, it would be interesting to see all the dirty tricks they use as they compete against each other.

The view and the trading system we are given is very artificial and differs from the real underlying machanism, fool's paradise?

I suspect there is little real competition left between the banks.
My suspicion is that the Reserve Bank of Scotland (RSB or RBS?) has been the only real market mover for years, a monopoly trader fixing prices at its pleasure.
But the surveys are years out of date, wonder why?

Cynics United

[PYenner]

So its us against the trading robot in the basement of the RSB (or RBS?) in London? Human v's terminator, year 20 and counting...

[phil895]

I think trading Forex is like you as water on a wet dog, he will fade right and fade left untill you are dried off (and your pocket book) of his hair, only a few hard nose type such as fleas that are able to cling on for a full meal. Forex requires very much good understanding of FA and TA; you will need a lot of practice, play it small. And in order to succeed you will need to stick with your plan and don't be discourage or faded in either direction by the short term data in front of you.

Pips to everyone.

Phil