There are some obvious benefits in learning how to trade in the globe’s largest market and there’s some subtle benefits, which are far less straightforward to identify. We know that due to the huge levels of turnover, estimated at $5 trillion a day according to BIS, we trade in the most liquid market there is. Our FX market is also entirely driven by its constituents’ sentiment, which is derived and entirely based on: fundamental economic events, the shaping of political events and to a much lesser extent technical issues.
When we take into consideration all these factors, it’s safe to proclaim that forex trading is in fact the purest form of trading there is, at it reacts perfectly to the sum of its influences. There may be instances when the market doesn’t strictly obey the laws of supply and demand, for example; during January 2015 when the Swiss central bank took away their loose peg versus the euro, causing their domestic currency to spike down by circa 30% versus the euro inside hours. But as a general rule the FX market can’t be cornered, it can’t be corrupted, it’s not subject to daily bitcoin type swings in value; that would comparatively see a currency, or currency pair rise or fall in value by 10-30% in a day. As an organic, modern, marketplace, FX is (arguably) the most efficient there is.
Novice traders will apportion blame when their trades go bad and they lose, it’s a natural and expected reaction. If you’re relatively new to trading there’s a vast array of new subtle emotions you’ll experience as you come to grips with the complexity of the industry. Therefore blaming: the market, platforms, the internet, brokers, etc for our initial failings is understandable and could be looked upon in a positive light; it demonstrates how seriously we’re taking the occupation, as we get to grips with the vast array of information we have to cope with and the new skills we have to develop.
In some ways it’s a miracle of evolution, perseverance and intelligence, that so many of us progress to becoming successful traders, when you consider the trials we inevitably experience, before ultimately experiencing profitability. There’s just so much to contend with that if you manage to develop a strategy whereby you’re breaking even inside months, whilst only risking a relatively small amount of your account per trade, after creating a trading plan with at its heart an edge with a positive expectancy, then you are, without a doubt, extremely accomplished and should congratulate yourself.
Within all the complexity and as we’re becoming frustrated with losing trades, whilst we develop our method and we’re continually doubting ourselves, there’s one doubt we should park to one side; we shouldn’t doubt the FX market, or the STP/ECN brokers who offer us access to it. The market doesn’t take sides, it isn’t working against us and our brokers should be regarded as simple conduits who are, as efficiently and cheaply as possible, routing our orders to market. The FX market doesn’t care if we win or lose, but your STP/ECN brokers does care.
STP/ECN brokers have an inherent need for you to become successful, as the longer you stay in the market trading and ultimately winning, then the more trades you’ll take with your broker. ECN brokers are not market makers, they can’t profit from your losses, they want you to remain loyal and profitable. Delivering your order into the ECN environment at lightning quick speeds, at the minimum cost, is their principal reason for existing. They only make a small percentage commission on each trade you place, they’re in the business of helping us, during every step of our trader journey.
We have to accept responsibility for our own failings, as retail traders we have to discover our own edge, we have to find our own pathway, which can be as personal as our unique DNA. We can’t apportion blame, when the fault will generally lie with us. The FX market is as clean and true a retail environment as we’ll ever experience, our brokers provide a service which is unrecognisable from the trading options available to us several years back. The market is always right, it’s up to us to figure out a method to get the right side of the market and the right side of price.
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