It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong.Markets are designed to allow individuals to look after their private needs and to pursue profit. It's really a great invention and I wouldn't under-estimate the value of that, but they're not designed to take care of social needs.
Monday, April 25, 2011
You see, the forex market is like a huge tug of war.
There are â€˜bulls' and â€˜bears'.
You've probably heard those terms before: bulls are the players who want the market to go up - bears are the ones who want the market to go down.
The pressure from these two camps forces the market price up or down, much like the two tug of war teams inching backwards and forward as they tug on the rope.
In tug of war, who goes forward or backwards depends on who's the strongest at any moment.
Sometimes the teams are equally matched and they pull but there is no movement. Other times, one team loses its foothold and gives away some ground.
Then, all of a sudden, a team slips and begins to slide. The flag on the rope shoots through the finishing line.
It's just like this with forex.
Yes, I know thousands of factors affect market prices of currencies... a country's trade deficit, a government's monetary policy, the actions of banks and speculators...
But basically, it all comes down to how many bulls and bears are pulling against each other.
Forex charts can show you who is pulling the hardest and give you fantastic opportunities to profit.
And you can learn what to look for before risking your own money.
Because the main reason many new traders lose out is that they don't take the time to learn about trading before risking their money.