Let's talk about fundamental this time. The market is made up of humans, regardless whether they are trading personally, institution or for the banking sectors, they are all HUMAN.
The fact that most of us tend to overlook is that those candlesticks on our trading station (eg MT4) are simply indicators of what the market participants are currently doing at that moment. These candlesticks are simply behavior indicators. It doesn't really tell you whether to buy, hold or sell coz it takes more than that for you to decide before you should attempt to make any kind of trade entry.
The real indicator of all is the PRICE itself, no others.
The simple fact is that most (new) traders do not know or tend to ignore the reality behind on what really drives these prices to move up and down, fluctuating every now and then without stops...
Instead, most new traders tend to look at the signals as purely signals that are driven electronically like a gambling machine. This is not the way to trade.
The real driver to these prices fluctuation is simply due to the fact that traders BUY and traders SELL. More buyers (BULLS) will push the price UP and more sellers (BEARS) will pull the prices DOWN.
So when you are seeing a sudden spike in prices (say up), it doesn't happen by itself (except for some nasty brokers that are hunting stops). It happened due to the fact that at that particular moment (say after news release) buy orders are exceeding sell orders significantly by (say) a billion dollars or more...
In simple term, when I see such thing... I just say to myself... Oh sh*t, the buyers are in control... (if I were selling) or Yes, I'm on the right side with the bulls (if I were buying)... and so on.
Let's look at one example.
I was going long on Eur/Usd last Thursday (adding to a losing position at 1.2314, aha pls don't laugh...) thinking that the Euro had been severely OVERSOLD and that 1.2000 level could be a strong support for the pair. Though it was widely expected that NFP that Fiday night would produce good figures, base on the price action I was made to believe that the market may predominantly think that Euro has reached its bottom and risk appetite may return accordingly taking chances on the 4 year low price of the pair.
But what happened that night was totally against my position. I was wrong and purely outclassed by the bears on this pair, and my stops at 1.1980 was mercilessly taken out.
After re-analysing the situation, I must admit that I was wrong (again) with my analysis in the first place. I was so much focusing on the technical part of this pair that I missed out on the fundamental.
One simple fundamental fact that I overlooked last week was that the Iranian Government was selling 15B Euro and will add further to a total value of 45B by September this year, decreasing their national reserve in Euro to 20% - 25% only.
Man, this really creates FEAR and if I were to have assets in Euro (say 1B Euro), I would sell them as well knowing on what the Iranian is doing, collectively with other tycoons that may just be doing the same thing.
That indeed was the main factor that drove the Euro lower to even beyond the 1.2000 level.
So the point that I am sharing here is, analyse both sides of the equation before jumping into any decision. Though the fact is no one can really tell on what will happen, but a good analysis will at least increase your chances of taking the correct decision with your trades.
To me, it's all about FEAR and GREED. These two can never be eliminated from human's psychology. For now, it seems that everyone is hating the Euro for sure, in which no serious buyers are seen on site at all.
So the real secrets of reading the market correctly is to have and know as much information as possible before you begin your market analysis. Both fundamental and technical are equally important as I do not believe in acting impulsively base on what currently is happening in the market.
Always look at the bigger picture and be responsible with your decision. Trust me, you will feel more accomplish as a trader if you manage to do this habitually.
To tell you the truth, I am already tired with super system that promise nothing but promises only.
Just remember that TRADING IS NOT EASY and if you were to play around with your money in this market, just forget about it. You can never make it and that is a fact.
I've burned thousands of dollar to find the perfect system that would allow me to trade with no brainer, but I failed. Such thing does not exist.
But when I sit back, looking back at the market with open mind, have the courage to really learn and understand what this market is all about, then only I am still here believing that I can and will prosper with this trading one day, provided I apply all the right things that I have experienced and learned so far.
So guys, bear in mind that it takes more than a good system for you to success. In my own definition, you require at least the followings:
1. Knowledge (ie this is key to everything, not money)
2. Experience (ie feel the sense of losing and the cruelty of the market)
3. Tools (ie proper Trading Station for you to monitor the market)
4. System (ie Rules to apply to initiate your entry and exit)
5. Capital & Risk Management Skills (ie margin for mistakes)
6. Time (ie when and how to trade, what hours in a day or week)
7. Patience & Discipline
All these 7's are equally interrelated, vital and it is for you to master.
By the way, anyone could tell where the Euro is heading this week? I am calling for a minor correction... but of course, I could be wrong if the bears are still strong... pretty extreme this time... ;)
Have A Nice Day...
