is m/m or Y/Y better indicator to trade in forex
Well, what do you think?
Which figure would be a better indicator of the longer-term strength of a nation’s industrial production?
Which figure would you want to focus on to see if there was a greater change from last month’s production, to potentially capitalize on short term economic strength?
There’s a problem almost every single rookie trader has when it comes to fundamentals.
They think that a positive release MUST be good for a currency, so that means we’d want to buy it.
And, on the flip side, that a negative release MUST be bad for a currency, so that means we’d need to sell it.
This line of thought “works” probably 50% of the time.
Do some research- pull up the last couple months worth of NFP releases, and look @ USD based pairs. Look how each pair reacted- in some instances, the following weeks were bullish for the USD, in others bearish (Regardless of the release).
Over time, I’ve learned that the market works simply on one principle- accumulation and distribution.
It makes the most sense logically to me, which is why I hold it to be true (plus, I’ve read many papers and books on the topic which just solidify the concept intellectually for me).
Regardless of the instrument, the major market participants will either be in a state of accumulation (buying inventory to replenish) or distribution (selling their inventory to the market). The professionals are constantly managing their inventory according to market supply and demand. Professionals will always be selling at retail prices (another term for high prices) and buying at wholesale prices (another term for low prices). These levels are represented on a price chart as the “top” and “bottom” (respectively) of movements in price. These levels occur on M1 timeframes, H1, D1 and monthly- all timeframes.
What it boils down to, is the fact that the “herd” non-professional traders will almost always be selling into market bottoms (regardless of timeframe) and buying into market tops. Google search Daily FX SSI- this is a great tool which illustrates this exact concept. Retailers can be “right” more than 50% of the time on a direction, but, when they’re “wrong” they’re REALLY “wrong” and hold onto losing trades to the tune of 2x longer than profitable trades.
The concepts of Supply and Demand trading alongside VSA + price action (I feel) are the most effective ways to interpret the market and make informed trading decisions.
I only pay attention to 2-3 fundamental releases / month (NFP, Employment figures and some speeches).
Why? Because, spot markets are forward looking, and typically price in any type of expected fundamental release way before the release hits the market. Price will always reflect the market agreed-upon price for a given instrument. Literally nothing else out there (analyst reports, indicators, etc) is more up-to-date or representative of market participant sentiment. Everything else is simply derivative.
The concepts of Supply and Demand u will know it by sentiment?!
it s not always true
and why you interpret m1 how it will help you in trading
you didnt answer my question on trading in forex when i have both results in front og me m/m & y/y and they are difference which of them i use in trading