Logical thinking or observation?
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Thread: Logical thinking or observation?

  1. #1

    Logical thinking or observation?

    There are basically two types of getting knowledge – observation and logical conclusion. Both ways are applicable.
    To develop ongoing success, we have to apply both types of research.

    Analysis is very important for creating hypothesis, trading system, to have solid fundamental reasons for applying any approach. Many people (on this forum too) say – knowledge is very important to become successful Forex trader (or trader in whole).
    But I would say, observation is also as important as making logical conclusions.
    Many years ago, famous trader Jesse Livermore has earned a lot of money discovering what he called «market conditions».
    What was he doing?

    Before making any trade, he was doing small trades and discovered – how market was reacting on his orders? Was market aggressive and greedy enough to purchase quickly small portions of his position or was leaving it alone for some time?
    So, Jesse Livermore was not only good at reading charts. He put significant effort in exploring market conditions or sentiment of the market. That would have straight impact on his financial profits.

    Why not to follow his example and pay more attention to market conditions?
    Market can ignore your trend lines or analysis if market is too frightened or neutral about security you are trading.
    So, I would suggest everyone to not forget that market is a sphere where human beings with all their biases can improve probability of some setups and screw probability of others.

    Every trader, that survived previous several years, knows that market conditions were quickly shifting from trending to balancing, volatility was also changing very quickly.

    If you will give a little research for that, you would probably understand that most of your setups are «state-oriented». One works fine when market hysterically squeezes from one side to another (you can work with fast momentum trades), other works fine when savvy dominates among traders (level-based pullback trading).

    And I think, if you will be able to recognize that «state of mind» that dominates the market right now, you will be able to select proper trading system/method that would benefit you.

    Every research on the market starts with proper questions.
    What makes traders tick right now? What is the «weather» of the market, what are market conditions?

    Good luck!

    P.S. And guys, please don't type something like "Agree, it's very important". I'm great believer that you can be clever and interesting collocutors.

  2. #2
    Join Date
    Sep 2013
    This is very great to know, there are ways of approaching the things of the traders and the in-depth of the market situation as well, in this, i know that it is never perfect for the traders to rely on what they knwo alone, in all, it is a good option that you understand the real fundamentals of trading, and the way that you wish to adopts you doing yourself personally, this pays traders more at last.

  3. #3
    Join Date
    Aug 2013
    State Himachal Pradesh
    I think observation is much necessary in this business rather than logical thinking because logic will not give you help always but if you will go deeply in market and will do good observation I am sure you will able to do good trade in the market and earn well here to so do hard work and grow you skill here

  4. #4
    Logical thinking is what is most important in forex trading. Just observing the charts alone is not enough to get accurate entry signal but undertstanding the logic behind the current behavior of market price and combining it with fundamental analysis will give accurate entry signals

  5. #5
    A logical thinking is necessary here . Just observation doesnt work. Because then it leads to guessing , and guessing in this forex trading business is considered haram in Islam and its very very risky.
    So logical thinking, with proper reason behind that trade or setup must be known . ANd then only, after fully observing, thinking logically, then we should trade the pair and analyze the market accordingly.

  6. #6
    Both are required in order to generate consistent profit from trading, you just cannot rely only on observation or logical thinking, they both go side by side. So its best to train yourself in a manner that you use both in your trading in order to get good money from forex market.
    Train insane OR remain the same

  7. #7
    If our observation is good then we can understand logical points in Forex Market. Because if we have good observation then we will not ignore any good or bad point of Market. And we will be trade with logical thinking. We analysis fundamental and technically with our observation then we predict or give logic of trend movement. So logical thinking and Observation both are good For Forex trading.

  8. #8
    At first you should focus and control chart is a good way to learn how to trade and I think the logic in thinking good, but not used in Forex much better to rely on observation and analysis rely on a good strategy because Forex does not depend on the logic in trading

  9. #9
    Good topic for the dicussion , i think forex trading needs logical thinking as well as your own observation about the market so you can starts the trade , if you dont have logical thinking and observation you cant even open a single trade and if you do so you will get loss immediately ,.,.

  10. #10
    The price of underlying instruments are result of lot of different factors in a world basis, including speculation of big players and big institutional traders. And , when you logical observe all of this how could you predict the future price? It is impossible. How could you know all of this situation, and all of the intentions of big players. So for me observation is far more important than logical thinking.

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