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🎓 EDU 3 of 20: Here is What Moves the Forex Market 📈EDU 3 of 20: What Moves the Forex Market? Hello traders! First of all, I wish you a merry Christmas and a happy holiday season. Now that markets are closed and liquidity is thin, we have got some time to learn more about what it takes to become a successful Forex trader. In the last educational post (2 of 20), we have covered why you shouldn’t rely only on technical analysis in your trading. That’s the most common mistake that new traders make! They follow only charts, and trade when they see a trendline breakout, triangle breakout, MA crossover, or any other signal that won’t return consistent profits over the long run. Professional traders in banks and other large market participants don’t trade with technical analysis! We do use technical levels to find appropriate entry and exit levels, but we will never enter into a trade because of a simple trendline breakout! That’s why institutional traders make millions in the markets, and the average retail trader loses 90% of its capital within 90 days of trading. My mission is to teach you how to trade like a professional trader. So, what are my credentials to claim this? I am a full-time profitable trader and follow the markets since 2008, I worked in the trading department and have first-hand experience, and my passion for the markets helped me to gain academic degrees in financial markets (MSc in fundamental analysis of currency markets.) So, what moves the Forex market? What causes the EUR/USD pair, for example, to move from 1.15 to 1.20? Here are the main determinants in the short-term, medium-term, and long-term. Short-term determinants: 1. Trend-following behavior and herding effect : Market participants tend to buy into uptrends and sell into downtrends, which accelerates the original moves and causes the trend to continue. 2. Investor sentiment : When investors are bullish on a currency, they tend to buy. When they are bearish, they tend to sell. There are ways to measure investor sentiment in the market, and we’ll cover this later in our educational series (hint: We use the futures and options markets to measure investor sentiment) 3. Risk appetite : When investors are willing to take on risk (risk-on), they tend to buy riskier high-yielding assets, such as stocks and high-beta currencies like the AUD and NZD. When they are risk-averse, they tend to park their capital in safe-havens (“Flight to Quality”) such as bonds, gold, the JPY and the CHF. If you can measure the current risk appetite, this can help you identify great day trading opportunities. 4. Market positioning : Certain groups of market participants take longer to change their positions, while others are quicker in rebalancing their portfolios. When large players show a tendency to buy a certain currency, we can expect higher prices for the currency in the future. Real money (like pension funds) are less price-sensitive, while smart money (like hedge funds) are more price-sensitive and quicker in identifying new market trends. Medium-term determinants : 1. Real interest rate differentials : Currencies follow interest rates, and Forex traders are basically interest rate traders. The real interest rate differential between two countries tends to be a leading indicator of future exchange rate movements. The real interest rate represents the nominal interest rate minus the current inflation rate. We follow the real interest rate differential of 10-year government bonds of respective countries (like between the UK and the US for the GBP/USD pair) to get a hint of where the currency pair is heading to. 2. Monetary and fiscal policy : Changes in monetary and fiscal policy can create strong and long-lasting trends in the Forex market. Usually, a tighter monetary policy will put buying pressure in a currency, while looser monetary policy will exert selling pressure in the currency. Tighter fiscal policy is usually bearish for a currency, while looser fiscal policy (i.e. more public investments) is usually bullish for a currency (at least until more fiscal spending starts to negatively impact a country’s budget deficit, which is then bearish for a currency!) 3. Trends in the current account : Countries that run a current account surplus (i.e. they export more than they import) often see their currency appreciate (rise in value) because of capital inflows and higher foreign demand for their currency. A typical example for this is Japan in the 80s and 90s (When the US imported Toyotas, they had to buy Japanese yens to pay for them). Countries that have a current account deficit (i.e. they import more than they export) see capital outflows, which then lead to currency depreciation (fall in value). Long-term determinants : 1. Purchasing Power Parity (PPP) : The PPP is a macro-economic principle that says that different currencies need to have the same purchasing power over time. Let’s say a Porsche costs 100,000 pounds in the UK, and 120,000 USDs in the US. If the current GBP/USD rate is 1.40, a buyer from the UK could exchange 100,000 pounds to 140,000 USDs and buy the Porsche in the US for 120,000 USDs. Over time, this demand for US dollars will cause the GBP/USD exchange rate to fall towards 1.20, which is the Real Exchange Rate according to the PPP. Of course, the buyer has to take into account import taxes and shipping costs to the UK, as well as the time required to complete the purchase and import the car. We also have to make the assumption that Porsches are the same and have the same built quality in the UK and the US. It can take years until a currency pair finally moves towards its PPP equilibrium level. Fun fact : The Economist magazine has created the Bic Mac Index, which compares the prices of a McDonald’s Big Mac in different countries to calculate the PPP exchange rate for different currencies. 2. Terms of Trade : Terms of Trade for a country measures the trends in prices for imports and exports. For example, when oil rises, oil exporting countries will experience a positive trend in their Terms of Trade and likely see their currencies rise in value (take Canada for example.) On the other side, countries that rely on cheap oil will likely see their currencies fall in value when the price of oil rises (India for example.) In the upcoming educational posts, we'll combine the most important currency determinants into an effective framework used by professional traders: The FIST analysis. The stuff I deliver here for free is world-class trading education! There isn't anything like this on the world wide web, and you'll learn a full and profitable trading framework (analysis + execution + risk management) used by professional traders! We are still developing your "Analyst brain", and will then move on to your "Trader brain" (execution) and "Manager brain" (risk and money management) in this fully free 20-part Educational Series! Upcoming post: Introduction to FIST Trading Don't forget to FOLLOW and LIKE to receive new posts! Also, if you have any questions, let me know in the comment section below. Happy holidays again!
Education
by MujkanovicFX
2
Understanding ForexForex – also known as FX – is short for “Foreign Exchange”. It represents a market where one can exchange and trade different currencies across the globe. To understand how forex works, let’s use the example of overseas travel. If you’re from the United States and are travelling to Japan, chances are you would head to a local currency dealer before your trip to change some US dollars for the equivalent in Japanese yen. Let’s say the rate you exchanged was 1 USD ( US Dollar ) to 108 JPY (Japanese yen). This means that for every 1 USD you give the money changer, you get 108 JPY in return. Now you’ve headed off on your trip, had your lifetime’s fill of sushi, taken way too many pictures of Mount Fuji and are now back in the US a month later. You still have some Japanese yen currency left which, of course, isn’t of much use at American shops, so you decide to change it back to USD. Once again you visit your local currency dealer and ask to change your JPY back to USD. The rate you’re quoted is now 104 JPY to 1 USD. Let’s pause for a moment: you may not have realised, but you’ve just made a profit without even planning to! Previously, every 1 USD got you 108 JPY, now you get that same 1 USD back for just 104 JPY. That, my friend, is a simplified explanation of how profit can be made by trading the fluctuation of currencies against each other. In this case, the JPY strengthened against the USD while you were holding onto it, resulting in you effectively making money when you returned to the US and decided to convert it back to USD. Now, it’s important to take note that when trading Forex, you always need to consider two currencies (hence, we call it a “currency pair”). In the above example, we were essentially trading the USD/JPY currency pair. It’s not enough to think that one currency might strengthen – you have to think of which currency it would strengthen against. Thanks to the globalisation of financial markets, when we trade on the FX market, we now have the luxury of trading a lot of different currencies against each other all from the comfort of your home. Think the yen is going to strengthen against the Euro (EUR)? Then buy the yen, sell the Euro (selling EUR/JPY )! This concept might seem a bit complicated right now, but just remember that when you’re trading forex, you’re essentially betting that one currency will strengthen against another currency. * * The exchange rate on the chart is 104.056 Japanese Yen (JPY) for every 1 United States Dollar (USD) **
Education
by CeoCodes
17
Why most people fail as retail traders?I see two main reasons which complement each other for the high rate of failure. First and foremost, the media and the industry promote this idea that it’s easy to become a profitable trader and anybody can go it. This is, of course, not true. Theoretically, anybody can do it if willing to put the effort and approach it as a business. Practically almost nobody approaches trading with the same rigorousness as any other professional endeavor. Let’s put aside the first reason, about which there is not much we can do. A big chunk of the industry relies on peoples being naive and we’re not going to change that. On top of the first reason, we have a second reason related to people themselves. Most of those who try trading financial markets simply don’t manage their emotions and risk well enough to survive the learning curve. Managing your own emotions turns out to be a complex endeavor and constantly changing market conditions lengthen the learning curve. One of the things that makes this business so attractive is also the main thing that makes it so difficult to master. The direct and sometimes violent feedback you receive from the market, after each trading decision, has an astonishing impact on a human’s ability to keep his psychological well being in check and control his own reactions. It has the potential to disrupt executive functions and trigger instinctual “fight or flight” responses. This leads to emotional trading or trading on tilt which quickly generates more losses than any other mistake you could make in this business. Most other jobs have a protective buffer zone between usual day to day work decisions and the ultimate feedback — end of the month paycheck. This profession doesn’t. Every little call you make has an immediate impact on your capital. Every little mistake can take a portion of your capital away and every good decision can bring it all back and more. This kind of psychological exposure is heavily distressful and being aware of its mechanisms makes a huge difference. So … psychology differentiates the pro. Don’t get me wrong … professional discretionary traders are not emotionless but are much more aware and in control of their reactions. The successful pro deeply understands that trading is mainly about people's perceptions and the rest are just details. You may ask yourself how can such a level be reached? A starting point is to stay away from any market, financial instrument, time frame, trading technique, or any combination of those that doesn’t fit who you are deep inside. The least the exposure to triggers that can awake the demons within, the best. Always seek strategies that you understand and match your inner self. For example … if you are impatient trade shorter time frames, if you are very risk-averse don’t use huge margin, if you are risk-averse but you don’t have enough capital use margin with a tight risk management (maybe options), if you have a statistical mind try quantitative approaches etc. There are infinite possibilities to adapt to yourself and is a must to do it if you want to have a chance. It always amuses me to see the vast majority of educational resources geared towards what market does when most of the success in this business is knowing how you adapt to the market, whatever it may do. And, of course, the market is, more or less, the other traders.
COINBASE:BTCUSDEducation
by Mihai_Iacob
1
How NOT to Invest Lets me discuss basic human psychology. Most investors only want to invest when stocks are BOOMing and reaching an all time high! Does this sound like you? While most investors avoid stocks when they first begin or when they reach their lows. Some Rules of investing: 1) Buy when the stocks dips at appropriate levels & better yet at early stages - do your due diligence 2) Never buy ATH wait for a pull back or another opportunity (There is always another opportunity) 3) Check RSI Levels (Oversold) & MACD (Cross over downtrend) :: (BASIC TA) 4) Only invest in sound companies that you believe in the long-term 5) Buy the hype sell the news (To an extent) 6) When everybody is talking about it - its time to plan your exit 7) Be an early adopter on the technology bell curve not a late adopter or WORSE a LAGGARD. (Bitcoin @ $1 = Innovator - Bitcoin @ $100 Early Adopter... ect) Example: Chinese EV stocks Here is an example of LI Auto the time to buy was when nobody was talking about EV (Electronic Vehicle stocks) if you perhaps could see the future in these companies & foreign country opportunities. That was the time. Most people rushed in at $50 when the stock was HOT. As you can see the RSI was very overbought & MACD cross over. Now you can buy in at a much more FAIR cost @ 30 & on a 3 point trend line. If you believe in a stock this is the proper way to DCA. There was also a negative news event (big surprise) but I doubt much traction will come of it. Many Americans invest in Chinese stocks. Happy Trading!
NASDAQ:LIEducation
by GlobalHealthWealth
1
USDCAD Trade Analysis by WAVE FX Academy: TARGET 1.3400Hi Traders, Here's my Analysis on UsdCad Daily Timeframe: Price action testing market’s 38.2 Fibonnaci retracement level, coming out of a daily resistance level. From here we may see the market make another attempt to break resistance at 1.3420. Failure would see potential fall to around 1.3100 Pin bar rejection at 4Hr support, which previously acted as strong resistance. This level is also in confluence with the 38.2 daily fib rejection. Bullish divergence is evident in the market structure on this timeframe as well. On the 1Hr timeframe we are also seeing bullish divergence in the market, however we are seeing rejection in the market from the 1Hr resistance level. My overall bias is LONG and to see price action hitting 1.3400- 1.3500 region. I will however be monitoring the price action on the 1Hr timeframe for added confirmation based on one of my trading strategies. An entry will be taken only if all rules of my strategy are satisfied. Add this pair to your watchlist and see if the rules of your strategy provides an entry. Like and Comment your thoughts . All feedbacks are welcome. If you are new to FOREX trading, here are the definition for words you may seen mentioned above. Price Action: Change in the price value of a traded instrument whether Forex, Commodities or Indices. Market Structure: This is classified as any group of candlesticks placed together with the use of Support, Resistance and Trendlines . once grouped they would provide a pattern to indicate a possible movement in price action. Support: Areas in the market where price tends to reverse after a sell off (lower price action) Resistance: Areas in the market where price tends stop, pause or reverse after bull run (higher price action) Uptrend: price action in the market creating a series of high highs and higher lows. Downtrend: price action creating a series of lower lows and lower highs

Long: Taking a position to buy the base currency Short: Taking a position to sell the base currency.
Long
by wavefxacademy
XAUUSD Analysis by Wave FX Academy (GOLD TO $1920)Hi Traders, Here's my thoughts on XAUUSD (GOLD) Corrective market structure on the Daily timeframe coming out of a strong bull run with price hitting all time highs. 4Hr Timeframe showing a completion of a 5wave cycle using the elliot wave principles, as such, I would be looking for a pullback between the 38.8 and 61.8 fib of that cycle. Current price action on the 1Hr showing an active downtrend structure, however, with price breaking the trend line resistance and also leaning against the 1Hr structural resistance we could see a break out to the upside. My overall bias is LONG and to see price action hitting $1920. I will however be monitoring the price action between 1870 and 1860. 
I've labeled the areas based on what I will be anticipating. An entry will be taken only if all rules of my strategy are satisfied. Add this pair to your watchlist and see if the rules of your strategy provides an entry. Like and Comment your thoughts . All feedbacks are welcome. If you are new to FOREX trading, here are the definition for words you may seen mentioned above. Price Action: Change in the price value of a traded instrument whether Forex, Commodities or Indices. Market Structure: This is classified as any group of candlesticks placed together with the use of Support, Resistance and Trendlines . Once grouped they would provide a pattern to indicate a possible movement in price action. Support: Areas in the market where price tends to reverse after a sell off (lower price action) Resistance: Areas in the market where price tends stop, pause or reverse after bull run (higher price action) Uptrend: price action in the market creating a series of high highs and higher lows. Downtrend: price action creating a series of lower lows and lower highs

Long: Taking a position to buy the base currency Short: Taking a position to sell the base currency.
FOREXCOM:XAUUSDLong
by wavefxacademy
6
EURCAD Day Trade Analysis by Wave FX (Price to HIT 1.5700)Hi Traders, Here's my thoughts on EurUsd Ranging market on the Daily timeframe with 4Hr support holding firm, current price action on the 1Hr providing confluence to Daily and 4Hr. My overall bias is LONG and to see price action hitting $1.5700 
I've labeled the areas based on what I will be anticipating. An entry will be taken only if all rules of my strategy are satisfied. Add this pair to your watchlist and see if the rules of your strategy provides an entry. Like and Comment your thoughts . All feedbacks are welcome. If you are new to FOREX trading, here are the definition for words you may seen mentioned above. Price Action: Change in the price value of a traded instrument whether Forex, Commodities or Indices. Market Structure: This is classified as any group of candlesticks placed together with the use of Support, Resistance and Trendlines. once grouped they would provide a pattern to indicate a possible movement in price action. Support: Areas in the market where price tends to reverse after a sell off (lower price action) Resistance: Areas in the market where price tends stop, pause or reverse after bull run (higher price action) Uptrend: price action in the market creating a series of high highs and higher lows. Downtrend: price action creating a series of lower lows and lower highs

Long: Taking a position to buy the base currency Short: Taking a position to sell the base currency.
Long
by wavefxacademy
2
EURGBP TO hit 0.93 Analysis by WAVE FX AcademyHi Traders, Here's an my Intraday trading analysis on EurGbp. Daily timeframe shows where we have tested the 61.8 fib level based on the recent bullish impulse. This is an indication that the market may have completed its correction. The 4Hr shows price in a down channel, but there was also a strong rejection of the 4Hr support too, then finally to tie all our analysis together, price action on the 1Hr timeframe provides a breakout of market structure resistance, now acting as support, with provides enough confluence to start looking for buying opportunities. My overall bias is LONG and to see price action hitting 0.9300. I will however be monitoring the price action between on the 41Hr timeframe for added confirmation based on one of my trading strategies. 
I've labeled the areas based on what I will be anticipating. An entry will be taken only if all rules of my strategy are satisfied. Add this pair to your watchlist and see if the rules of your strategy provides an entry. Like and Comment your thoughts . All feedbacks are welcome. If you are new to FOREX trading, here are the definition for words you may seen mentioned above. Price Action: Change in the price value of a traded instrument whether Forex, Commodities or Indices. Market Structure: This is classified as any group of candlesticks placed together with the use of Support, Resistance and Trendlines . once grouped they would provide a pattern to indicate a possible movement in price action. Support: Areas in the market where price tends to reverse after a sell off (lower price action) Resistance: Areas in the market where price tends stop, pause or reverse after bull run (higher price action) Uptrend: price action in the market creating a series of high highs and higher lows. Downtrend: price action creating a series of lower lows and lower highs

Long: Taking a position to buy the base currency Short: Taking a position to sell the base currency.
Long
by wavefxacademy
CADJPY Trade Analysis by WAVE FX Academy (UPDATE: Target $76)Hi Traders, Here's an update on CADJPY Market panning out as expected with the break on the daily trend line support. You can review the my analysis on this (link attached here) We are seeing the $79.00 level being heavily respected over the past 4 trading days with price action failing to close above. This is a good sign that market may give us that bearish run to $75.00 as previously suggested. My overall bias remains SHORT and to see price action hitting 75.00. I will however be monitoring the price action between on the 4Hr timeframe for added confirmation based on one of my trading strategies. 
I've labeled the areas based on what I will be anticipating. An entry will be taken only if all rules of my strategy are satisfied. Add this pair to your watchlist and see if the rules of your strategy provides an entry. Like and Comment your thoughts . All feedbacks are welcome. If you are new to FOREX trading, here are the definition for words you may seen mentioned above. Price Action: Change in the price value of a traded instrument whether Forex, Commodities or Indices. Market Structure: This is classified as any group of candlesticks placed together with the use of Support, Resistance and Trendlines . once grouped they would provide a pattern to indicate a possible movement in price action. Support: Areas in the market where price tends to reverse after a sell off (lower price action) Resistance: Areas in the market where price tends stop, pause or reverse after bull run (higher price action) Uptrend: price action in the market creating a series of high highs and higher lows. Downtrend: price action creating a series of lower lows and lower highs

Long: Taking a position to buy the base currency Short: Taking a position to sell the base currency.
Short
by wavefxacademy
9
GBPUSD Day Trade Analysis by Wave FX Academy (TARGET 1.2550)Hi Traders, Here's my thoughts on GBPUSD Corrective market structure on the Daily timeframe with Daily and 4Hr support holding firm, current price action on the 1Hr showing an active downtrend channel, and as such we could see a break down of the support structure the higher timeframes. My overall bias is Short and to see price action hitting 1.2550. I will however be monitoring the 1.2800 level (1Hr resistance) 
I've labeled the areas based on what I will be anticipating. An entry will be taken only if all rules of my strategy are satisfied. Add this pair to your watchlist and see if the rules of your strategy provides an entry. Like and Comment your thoughts . All feedbacks are welcome. If you are new to FOREX trading, here are the definition for words you may seen mentioned above. Price Action: Change in the price value of a traded instrument whether Forex, Commodities or Indices. Market Structure: This is classified as any group of candlesticks placed together with the use of Support, Resistance and Trendlines . once grouped they would provide a pattern to indicate a possible movement in price action. Support: Areas in the market where price tends to reverse after a sell off (lower price action) Resistance: Areas in the market where price tends stop, pause or reverse after bull run (higher price action) Uptrend: price action in the market creating a series of high highs and higher lows. Downtrend: price action creating a series of lower lows and lower highs

Long: Taking a position to buy the base currency Short: Taking a position to sell the base currency.
Short
by wavefxacademy
XAUUSD Trade UPDATE (GOLD to HIT $1850)Hi Traders, here is my analysis for XAUUSD ( GOLD ) This is an update to my detailed analysis on this pair. 4Hr market structure confirms the bearish triangle formation with price action breakdown below $1920 Based on Elliot Wave Analysis we can identify current price action in the 4th corrective wave, where we will be anticipating and move lower to complete the 5th wave of the cycle. My overall bias is still SHORT and to see price action hitting $1800.00
I've labeled the areas based on what I will be anticipating. An entry will be taken only if all rules of my strategy are satisfied. Add this pair to your watchlist and see if the rules of your strategy provides an entry. Like and Comment your thoughts . All feedbacks are welcome. If you are new to FOREX trading, here are the definition for words you may seen mentioned above. Price Action: Change in the price value of a traded instrument whether Forex, Commodities or Indices. Market Structure: This is classified as any group of candlesticks placed together with the use of Support, Resistance and Trendlines . once grouped they would provide a pattern to indicate a possible movement in price action. Support: Areas in the market where price tends to reverse after a sell off (lower price action) Resistance: Areas in the market where price tends stop, pause or reverse after bull run (higher price action) Uptrend: price action in the market creating a series of high highs and higher lows. Downtrend: price action creating a series of lower lows and lower highs

Long: Taking a position to buy the base currency Short: Taking a position to sell the base currency.
FOREXCOM:XAUUSDShort
by wavefxacademy
2