Any other factors that move a currency other than news? | Currency Futures - futures trading strategies, market news, trading charts and platforms

Currency Futures

This subforum allows you to find traders that trade Currency Futures. You may post about anything to do with trading currency futures in this section


Any other factors that move a currency other than news?

  #14 (permalink)

Posts: 5 since Nov 2014
Thanks: 0 given, 1 received

When I began forex about 2 years ago I read somewhere that banks make up of only 3% of the trading, but are responsible for 95% of the volume. There's your answer - Banks! When these banks enter in a position they usually swallow up everything in their way (i,e, stop losses of all the other trades).

Let's say a you're in a uptrend and price is approaching a major resistance level, the majority of traders always think that the trend is over and when price reaches these major levels, so they're analysis tells them it will go back down, so you go in short at that level with your stop just above it; Bank traders know market psychology pretty well, they know the herd always thinks that buy low and sell high will work. Of course, the price at this level is when a lot of people are getting out from their long position and placing short positions because this level held 2 other times. Recalling back to the beginner days, you should know trading is a zero-sum game, when you win, someone loses. Banks will place a long position once the market is in consolidation and allow people to think the level is actually going to hold, low and behold, they know stops for short positions are parked there so they decide to drive price higher, taking out stops and trapping people. This is what fuels moves the market. Of course I put it in layman terms so everyone can understand.

News announcement also moves market, but I steer clear of these announcement, In fact If i have a position in a pair where I feel will be moved by news, I put my stop loss very close to my entry to reduce my risk, or if I'm in profit I'll put it near a zone where I feel is good given my risk. Markets during major news announcements will usually only go one way. I Doing this reduces risk drastically, and actually some times, works in your favor.

I suck at explanations but I hope I simplified it as much as possible

Reply With Quote