Traps of the market
Page 1 of 94 123451151 ... LastLast
Results 1 to 10 of 940

Thread: Traps of the market

  1. #1
    Educator
    Join Date
    Jun 2013
    Posts
    1,105
    Promo (¢)
    15
    Thumbs Up
    Received: 568
    Given: 191

    Traps of the market

    Hi traders!

    I’ve been talking about this numerous times, but nevertheless I see traders making the same mistakes over and over again. I’ve made special webinar on this topic, where I have provided my own view on this dilemma. Now I’ve decided to make a readable version of it.
    I’m doing education groups for traders for about 3,5 years and have my personal statistics of how traders think and what traps do they fall in. I have put this stats in a «top-list» below.


    #1. High/low fallacy.

    The most frequent mistake that traders make usually occurs when price was standing for an extended period of time in some trading range and had broken out eventually to a new highs/lows.

    Traders usually look back to 3-4 days, and rarely know what’s happening on at least one timeframe higher than theirs. So, they have seen numerous false breakouts before and now they think in the say – «this breakout will be false as well». Too often, it is far from true. Market conditions change and they (markets) transit from bracketing to trending conditions.

    There’s a common psychological explanation for this trap. When traders are so bored about low volatility (that usually is associated with the trading range), they become excited with volatility break. They see good prices that «will not hold for too long». It often leads to impulsive trade.
    It is pretty common phenomenon – when we are forced to make a decision, when time is running out, we will more than likely make wrong decision. Our brain operates from «template», from reactive mode when we lack time to make a decision. Reactive thinking means that you don’t keep an eye on a big picture, your attention is absorbed by the current price action in the right side of the chart.

    highlow_fallacy.png

    Solution: I would recommend you to have chart with at least 1 timeframe higher than yours. The goal of it is to make your attention wide, to know not only what’s happening here and now, but what is your global trade location, what trend is on the upper timeframe? Traders have 2-3 monitors not for fun, it really helps them to see the picture in whole, not in fragmentarily.


    #2. Volatility bias.

    Many traders become to trade move actively after volatility breaks, in other words they tend to be more active after «trending» days – days with extended trading range. But if you analyze market statistics for at least last 5 years, you will see that more often market tend to consolidate within a body of the elongated candlestick (of course, I’m talking now about daily charts) for 2-3 days.

    There is a very simple explanation for such market mechanics. Big market participants rarely come to the market and drive it to a new prices, instead they prefer to act as a market makers – to provide liquidity. In other words – they don’t chase running market, they try to accumulate position in consolidation before (most frequently) or after (more rarely) the breakout to make sure that their average fill will not be the worst.

    On Forex market, days with extended volatility often don’t mean anything, it can be simply a «shakeout» or a single player stepping in the market without intention to continue pushing it to whatever side.

    volatility.png

    Solution: Don’t chase the market, find accurate trade location after market settles or when breakout is ready to occur, not after that.


    #3. Fortuneteller syndrome.

    This is the last but not least trader’s trap. It occurs when traders are too emotionally (as well as cognitively) connected to their forecast or market view. They often think in this mode: «If market reaches X point, it will definitely reach Y point.» In other words, confidence in one part of a forecast increases significantly after another part of forecast is completed.

    fortuneteller.png

    Solution: As a solution, we should always remember that market can do anything in any time. Our overall market view can be right but market can go to your targets not in the shape of straight line. Always manage your risk, have a plan for different scenarios.


    Good luck and don't fall into any traps!

    Not allowed!

  2. #2
    Registered user Quid's Avatar
    Join Date
    Feb 2014
    Posts
    5,903
    Promo (¢)
    -75
    Thumbs Up
    Received: 29
    Given: 12
    Quote Originally Posted by Value trader View Post
    Solution: As a solution, we should always remember that market can do anything in any time. Our overall market view can be right but market can go to your targets not in the shape of straight line. Always manage your risk, have a plan for different scenarios.
    What is the point showing all the traps of the market for us,finally what i can really see clear in this topic,telling us about the mistake but sure rinse the behavior to make earning better in this way,so finally the traps are showed on the manner which is not recognized.

    Not allowed!

  3. #3
    Banned
    Join Date
    Sep 2013
    Posts
    27,036
    Promo (¢)
    0
    Thumbs Up
    Received: 285
    Given: 50
    I hope forex traders can adhere to the points as above, it is the way that will really make the trader get the success in the doing of it. There so many things you will hear or see in the market, but you will only need to be careful in the way you do your trading validation. Moist importantly, try to pay great attention to the high and lows in the market.

    Not allowed!

  4. #4
    Registered user
    Join Date
    Aug 2013
    Location
    Male
    Posts
    1,963
    Promo (¢)
    500
    Thumbs Up
    Received: 18
    Given: 17
    Through this educator I came to learn new things about traps of the market which is very authentic and interesting also. Forex trading requires a long journey to learn. So, I am trying to learn better forex trading through this forum and this types of educator is very helpful to me to reach the destination.

    Not allowed!

  5. #5
    Registered user
    Join Date
    Aug 2013
    Posts
    11,358
    Promo (¢)
    1,230
    Thumbs Up
    Received: 87
    Given: 1
    Quote Originally Posted by Jamuna View Post
    Through this educator I came to learn new things about traps of the market which is very authentic and interesting also. Forex trading requires a long journey to learn. So, I am trying to learn better forex trading through this forum and this types of educator is very helpful to me to reach the destination.
    Most of the traps are set by the brokers in order to lure traders. Once they have set the lure and make some trap, we need to be aware of when they will just suddenly manipulate the market. Since market manipulation will be something we need to keep watching at so that if anything just suddenly happen then we already prepared for that case.

    Not allowed!

  6. #6
    Registered user
    Join Date
    May 2014
    Posts
    216
    Promo (¢)
    0
    Thumbs Up
    Received: 0
    Given: 0
    Chinese manufacturing unexpectedly fell, underscoring the risk that leaders will need to add stimulus to meet this year’s economic-growth goal. The Purchasing Managers’ Index from HSBC Holdings dropped to 48.1 in March. Weakness is broadly-based with domestic demand softening further. Report gives some indication of how much a slowdown in the first two months of the year extended into March.

    Not allowed!

  7. #7
    Registered user Quid's Avatar
    Join Date
    Feb 2014
    Posts
    5,903
    Promo (¢)
    -75
    Thumbs Up
    Received: 29
    Given: 12
    Quote Originally Posted by kamarul View Post
    Any indicator that it will be used to consistently generate profits if the trader is to understand and control the functions of these indicators therefore the trader should choose one of the indicators that are appropriate and suitable for the trader in accordance with the character of each trader to make it easier for can be controlled from the indicator function.
    Any indicator like that can generate the traps for the traders,if they are making too much risky trade in the account,the function like that doesn't even help them out to pass good analysis,it makes them suffer more losing trades instead in that way.

    Not allowed!

  8. #8
    Registered user
    Join Date
    Feb 2014
    Posts
    95
    Promo (¢)
    30
    Thumbs Up
    Received: 0
    Given: 0
    Traps of the market is generated with any of the indicators used in the forex trading platforms. Indicators will make any one to follow and access with the forex trading to get good knowledge and skills with use of the forex system. so every profits and stop losses is controlled by the indicators function only.
    use one of the best indicators i mentioned below.
    Bollinger Bands
    MACD
    Oscillators
    Moving average lines.

    Not allowed!

  9. #9
    Rookie
    Join Date
    Sep 2013
    Posts
    2,779
    Promo (¢)
    160
    Thumbs Up
    Received: 45
    Given: 32
    Very much explanatory article regarding the traps which the traders should avoid when they are trading in this highly risky forex market. In this business minimizing the risk is the only criteria which will lead us to profits and success. Avoid the trap and make logical and practical gains with good knowledge and simple analysis.

    Not allowed!

  10. #10
    Registered user
    Join Date
    Jul 2014
    Posts
    410
    Promo (¢)
    0
    Thumbs Up
    Received: 0
    Given: 0
    the common traps in the Forex trading system which are used by the market to manipulate the traders only when the trader were having lack of skills and strategy and the traps are like low high price scheme and volatility of the market.

    Not allowed!

Page 1 of 94 123451151 ... LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •