Market fundamentals. Part 1
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  1. #1
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    Market fundamentals. Part 1

    Hi traders!

    Let's talk a bit about market fundamentals. If you want to survive and obtain ongoing success in trading, you'd better rely on fundamental principles that don't change not setups. There are bunch of setups over there, candlestick configurations and other stuff.
    But if you know principles, you will be more flexible and your success will be more solid


    What you can rely on trading markets?



    1. Imbalance creates trends, balance creates trading ranges


    Yes, exactly this sequence. Not "trend is your friend", but imbalance is your friend, because trend is an outcome, imbalance is a market condition that creates this outcome.

    "Trend-oriented" mindset often pushes traders seek for bad trade locations, when opportunity no longer exists.
    Imbalance is what you really need.

    Though trading is not a science, it has some unwritten laws beyond price action:

    First - big market participants create trends and rely on fundamental analysis. Biggest players don't rely on charts in decision making process.

    They have charts for just one thing - to know how crowd thinks and where majority will step in the markets. Big players need "hot spots" on the market (when many traders are in) to have liquidity. Their positions require liquidity and without liquidity they will be unable to accumulate enough volume for their positions.

    Imagine player with pip size equal to 100.000 USD or higher. Of course, he will need liquidity and will build his position long enough.

    That's why they monitor charts to know when traders will step in. But the reason they need to build a position is not techical analysis. Reason is fundamental analysis and analysis of real supply and demand.


    It's hard to spot "big player" but one thing will help you. Address yourself a question - who loses on the market? Who is caught in short or long positions? If you understand that long players are losing, you automatically know that bigger timeframe short player opposes them.
    Smart money players create imbalance and absorb volumes.

    Who provides liquidity, who consumes it? Like Warren Buffet said - if you find yourself near the poker table and don't know who loses money - it's you who loses it.


    2. Keep an eye on hot spots in the market


    What is a hot spot? They are: important extremums, round numbers, option barriers, in a nutshell - spots that traders are watching.
    If you know that volumes are there, big guys are also there.

    Every trend can be divided into several parts - young trend, mature trend and culmination.

    Young trend and culminational phase represent great imbalance but with one nuance - big players are building positions in young trend, and covering their positions during culmination.

    If you see "obvious" trend and see very hot market, be aware - avoid being a laggard.


    Later on I will apply some charts.

    See you and trade responsibly!

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    Thank you dear this is nice post and from this post any one new camer or old trader can get lot of knowledge and implement in real forex account i also like your second one hot spot that is very important when market penetrate sharply and you have no choice where to enter and where to leave trade it will help you right decsion on trade so successful trader always want to find this point and put trade and some risk involve but us SL to save his investment

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    Quote Originally Posted by Value trader View Post
    1. Imbalance creates trends, balance creates trading ranges
    Who provides liquidity, who consumes it? Like Warren Buffet said - if you find yourself near the poker table and don't know who loses money - it's you who loses it.
    Yes when traders sentiments are in favour or against a particular currency it goes in trend, but when sentiments are mixed and traders sentiments are indecisive market trades in ranges. By understanding the broad traders mentality we can understand and deal the market efficiently. Warren buffet said it right you can not win the competition if you do not know about the other candidates in competition.

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    I do accepts the fact that the imbalance creates the market trading because in the cause of that, the sentiments of the traders and the focus will shift, if this happens, you will see the market tending towards a unified direction, this case goes to the trading sense where the bias of the market is over 50% to the other side, the remaining percentage will not same the balance to the market that time.

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    Actually i do not like Fundamental trading . The post is nice and much clear . Mostly the hot spot is much helpful . Because when a trader is in critical position and do not have any choice what to do then a fundamental trader can use hot spot . There are risk also. It seems complex to me .
    I like technical analysis as it is more simple .

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    Well, as for what i can see, only the fundamental trader know exactly what is happening in the market and what they need to do in order to trade for the long term. As long you have the fundamental knowledge, it's safe for a long term investment but if you didn't have them, long term would be risky.

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    Quote Originally Posted by raazsr1 View Post
    Actually i do not like Fundamental trading . The post is nice and much clear . Mostly the hot spot is much helpful . Because when a trader is in critical position and do not have any choice what to do then a fundamental trader can use hot spot . There are risk also. It seems complex to me .
    I like technical analysis as it is more simple .
    By fundamentals I mean not fundamental analysis, I mean - what laws work on the market, what is natural for the market?
    Setups work for some period of time, then other setups beat them. But fundamentals - it's what you can rely on.
    It's not about the news or economic releases. It's about natural things for the market

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    Quote Originally Posted by raazsr1 View Post
    Actually i do not like Fundamental trading . The post is nice and much clear . Mostly the hot spot is much helpful . Because when a trader is in critical position and do not have any choice what to do then a fundamental trader can use hot spot . There are risk also. It seems complex to me .
    I like technical analysis as it is more simple .
    How?I think that fundamental analysis is one of the best analyzes that can be relied upon in Forex beside a lot of ways other trading, but it is the foundation and I do achieve substantial profits by trading using this type of analysis and rely on the news in trading so I advise a lot of novice traders focus it

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    Quote Originally Posted by Value trader View Post
    That's why they monitor charts to know when traders will step in. But the reason they need to build a position is not techical analysis. Reason is fundamental analysis and analysis of real supply and demand.
    i have been trading using fundamental analysis and the results is amazing, still i'd like to adds some technical analysis into my knowledge, because i have seen so many good technical traders can spot a good level of market's price when they see something is coming. as what you have mentioned, they needs my fundamental analysis to determine which directions is the market will be moving to, and i need their technical analysis about where to set some TP and SL.

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    Rookie rinaji's Avatar
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    Quote Originally Posted by amrmorasamir View Post
    How?I think that fundamental analysis is one of the best analyzes that can be relied upon in Forex beside a lot of ways other trading, but it is the foundation and I do achieve substantial profits by trading using this type of analysis and rely on the news in trading so I advise a lot of novice traders focus it
    I have another opinion with you, I think beginners should not be forced to learn fundamental analysis, except for those who know about the macro economy, beginners should start with learning technical analysis, because this method is more convenient, and perhaps learn how to work with the economic calendar as a simple indicator for fundamental analysis. While the fundamentals are not only economic news scheduled in the calendar, but more than that, the fundamentals are more complex. So it took a lot of time to get master it.

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