What moves prices?

[pippy longstocking]

Originally Posted by pipso facto

It can be useful, if your aim is to feel smart.

If your aim is to make money, knowing why the price moves up or down is rather useless.

If you believe that, you are in for a world of hurt. What you are really saying is you have no clue how the system works, and you don't really want to find out because you think you know all there is to know to become rich. There's one born every minute.

LOL.

[kockneerebel]

IMHO it depends what type of trader you are. If you are mostly a fundamental trader then what makes the market move would be more important. Whereas a technical trader requires the knowledge of why the market moves

[akeakamai]

Limit orders, Stop orders, and market orders move the market. Traders enter the orders and the wires of the world transmit it fairly uniformly throughout the world which prompt other traders to enter orders and so on and so on.

Why do the traders enter their orders? Sometimes it is easy to tell why, like after a news event, and sometimes it is difficult because everyone has their own method of making (or losing) money.

[TalonD]

Originally Posted by pipso facto

It can be useful, if your aim is to feel smart.

If your aim is to make money, knowing why the price moves up or down is rather useless.

I think if you are going to do something like forex, you should know everthing there is to know about it. The less you know, the greater your chances of being part of the 95%. I haven't graphed it yet, but there is probably a correlation.

I don't want to feel smart, I want to be smart. Feelings are illogical and have nothing to do with it.

I want to make money too.

Those two goals are not mutually exclusive.

Well.. I'm smart already, the degree is evidence of that I suppose but that's irrelevant.

unrelated to 4x but speaking of smart, anyone get bored on long trips? It's fun to try and calculate the length contraction and time dilation of the vehicles around you.

Originally Posted by TalonD

The less you know, the greater your chances of being part of the 95%. I haven't graphed it yet, but there is probably a correlation.

The so-called burn rate, which is the average number of days that a $10,000 trading account will last is down to about 5 days by now. Thanks mostly to colored light services and "know it all" noobies thinking they can take short cuts.

[rhodytrader]

Originally Posted by pippy longstocking

Can you explain this further? Who are these forex market makers and what does it mean they are attempting to find volume?

Primarily they are banks. Clint posted a list of the biggest players in forex. I believe Deutsche Bank was #1 with about 20% of daily volume.

As for finding volume, it's rather like Matt said. Look to the orders and see what the market is looking to do.

[simonjf77]

Theres lots of different reasons why markets move.

The fundamentals range from a bad GDP report, to for example, India deciding to buy 100 billion US dollars.

But at the same time there are banks and traders buying and selling currency to try and profit. If people are buying, price goes up. More people see price going up and so they buy too...

It really doesn't matter why and is impossible to trace each little movment to a certain event that made it happen.

The main thing is to try to work out where the market is heading before it does

[rhodytrader]

Originally Posted by akeakamai

Limit orders, Stop orders, and market orders move the market.

Actually, that's not entirely true. Many times it's the absense of orders that moves the market.

[pipso facto]

Originally Posted by pippy longstocking

If you believe that, you are in for a world of hurt. What you are really saying is you have no clue how the system works, and you don't really want to find out because you think you know all there is to know to become rich. There's one born every minute.

LOL.

Thanks for the tip Pippy.. I've been doing alright though, but thanks for caring.

Perhaps an argument supporting your point of view might be more helpful than simply denying what I'm saying.

Implying that I'm an sucker might also make you feel smart but I wonder how it affects your bank account... we seem to have a pattern here (.. pun intended)

[pippy longstocking]

Originally Posted by pipso facto

Thanks for the tip Pippy.. I've been doing alright though, but thanks for caring.

Perhaps an argument supporting your point of view might be more helpful than simply denying what I'm saying.

Implying that I'm an sucker might also make you feel smart but I wonder how it affects your bank account... we seem to have a pattern here (.. pun intended)

The argument is simple. Know before you jump in, rather than take the view that knowing does no good and is only for making people "feel smart". How can that approach work in anything? Certainly not in the financial world.

A good symbolic analogy would be derivatives and mortgage backed securities. Large institutions, and even some savvy investors, like pension fund managers, got badly burned in this crisis because they didn't really know how those instruments were put together. Their attitude was like yours, not to care how it really worked, only that it did work, and they would make them money. If only they knew how it actually worked, they wouldn't have invested. If only they knew about the role of the ratings agencies, and the role of banks in giving out subprime ARM mortgages they might not have bought those securities knowing just how toxic they were. They knew how to buy them, and how they were supposed to be profitable. But they didn't know how things really worked behind the scenes. For that lack of curiosity they paid dearly.

While forex trading is not shady like that, that is not the point being made. The point is that novice investors should feel they actually understand the behind the scenes mechanism before they invest. The devil is in the details and knowing those details might give a heretofore ignorant investor some insight needed to make the smart move, or no move at all. The best way would be to work for a brokerage, or in some capacity inside the system to see how it really works. The second best thing is to ask and to keep asking until the whole thing starts to make sense. But not knowing, and not wanting to ask, and not caring what the answer is, and deriding anyone who seeks to know, is indefensible.

Warren Buffet famously said recently, "If you don't understand it, don't invest in it."

Before I invest in the forex, I want to understand it as much as possible. Just because I know how to press the Buy button, doesn't mean I know what I'm doing.