Forex Trader Education for Advanced Traders might include a chapter for those who may not be entirely convinced of the integrity of the trading models being supplied by the automated robotic type systems.
The constant flux of the currency markets is a stochastic process i.e. its behaviour is non predictable insofar as its state at any one time does not fully determine its next state. In other words the market will not rise or fall because of itself. It takes outside momentum to move the market. For example if an earth quake were to happen in California without warning, people around the globe might start selling dollars as fast as they could for fear of an economic collapse or a partial collapse in the U.S. This would provide a great opportunity to some traders to make substantial amounts of money.
At that point in time, as the U.S. dollar falls, an automated system will not act to take full advantage of the failure and may in fact negate trading by its use of out of date parameters. From a positive point of view the stop loss function may well save traders many thousands of dollars as the currency begins to fall in value.
Fluctuations will vary from very small fluctuations to extremely large fluctuations in a currency sense. There could well be swing of several cents or a swing of tenths of a cent from hour to hour. These fluctuations are brought about by breaking news stories mainly.
Some of the more sophisticated traders swear by what is known as price action i.e. what happens to the market as it fluctuates. Those traders may not be aware that an earthquake has occurred in California but they see that the price of the dollar has begun to move downward and they get on the bandwagon. This price action approach is used by traders in many markets - the stock markets, the bonds markets, the commodities markets and the stock market derivatives markets.
However I would strongly recommend that anyone who is thinking seriously about taking up trading move in the following sequence
• Buy a good trading software programme as I did when I bought the one recommended below
• Learn the basics and thereafter learn in depth everything you can about the business
• Trade with paper money for at least two weeks so that you can come to grips with the subtle nuances of the system
• Trade small first and only move upwards when your confidence and skills improve.
| Click on the link to buy the best trading software around http://www.forexaut.info Richard Tyrell is a full time Forex trader who makes in excess of $7,000 per week. See http://www.forexaut.info for more. |
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