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The
delusion conceptually propounds that intraweek and intraday
FOREX currency quotes movement is governed by either
improvement or by deterioration of the state’s economic
situation. But in reality, even in case the actual Forex news
are superior to the estimated one, the FOREX quotes up/down
movement is of 50/50 probability. This statement is thoroughly
important. Once the job of Forex trader is gambling on FOREX
exchange rates differential (FOREX pairs up/down movement),
the following is to be realized to obtain faultless profit:
FOREX pairs pricing mechanism (say at point X where you are
completing the market analysis) Factors imparting
growth/decline to FOREX rates (up/down from point X). Thus,
having understood the FOREX ratesfactors effective at the
extra-exchange (book-maker) FOREX market and the given
currency motive factors, a trader must possess distinct
knowledge of whether to buy or to sell the given currency
pair. So, what are these factors? FOREX student suggest
unambiguous interpretation of factors responsible for the
price formation and the fluctuations there of:Forex rate
constitutes a demand-supply balance for a given goods
(currency). Any violation of this balance, (for instance, in
case where the estimated news is in disagreement with the
issued official one), results in the FOREX rates reciprocation
in chase of a new demand-supply balance. Poor demand brings
about decline in a certain currency rate, with a high demand
leading to the growth of the latter. The situation continues
as long as the currency buy/sell demand comes to balance at
another level or at another point. Referring to the B.
Williams (“Trading Chaos 2” Chapter 1 “The market is
what you are thinking of it”):Each world market is dedicated
to distribute or share limited amount of something… among
those desirous to obtain it most of all. The market affects it
by way of finding out and identifying the exact price?
Underlying the buyer’/sellers’ power absolute equilibrium
point.The above point is readily established by stock,
futures, bonds, FOREX and options markets, be it either via an
open auction or by virtue of a computerized facility. Markets
spot this point prior to any misbalance being detectable by
You or by me or even by traders at the exchange floor. With
this scenario holding true – and it really does – we are
in position to jump at certain simple yet important
conclusions as regards the information being circulated
through the market and enjoying doubtless acceptance”.
Thomas Demark was more laconic in “Technical analysis - an
emerging science”:“Price movement is governed by demand
and supply. Should demand exceed supply, there’s a price
rally and if visa versa, there’s a price decline. All
economists do share these underlying principles”. Hence, the
role of fundamental analysis for FOREX market is readily
apparent. In scholar fiction one will discover roughly the
following explanation, persistently wandering from book to
book, from site to site and suggesting attaining successful
trading at FOREX market by way of scrutinizing the country’s
economic fundamental data, viz. by tracking the factors
reflective of the country’s economy condition as below:State
economy condition dynamics indicators (GDP, trade &
payments balance, current account, industrial production, etc.
It is knowledge, that the higher the above indicators – the
faster the economic and the currency price growth); Stock
indices, via average arithmetic index of the country’s
securities market condition and dynamics. E.g.: 0.3% daily DJI
growth in the USA means that this certain day the shares of 30
leading US companies, being pictured by DJU, went 0.3% more
expensive. By similarity, DAX30 is the major German index,
incorporating the price of shares of the country’s 30
leading companies. The country’s interest rate, since
the higher the rate, the greater number of investors is
eager
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