Can someone who properly understands forex clarify

would i be right or wrong to say
the price does not necessarily reflect the fundamentals…
the price is really a reflection of the 'mob’s psychology and thoughts on fundamentals technicals and sentimentals.
therefore lets say for example… fundamentally the euro should rocket and rally bullishly.
but if for whatever reason the ‘mob’ decide that the euro is bearish…they all sell and the euro falls.
so from a good traders point of view…he should be married to the mob…and sell when they sell…
regardless of what the fundamentals or indicators are telling him.

and wait for the fundamentals to sink in with the mob…from where it should rally, in the example above.

if this is the case…
then the retail traders (dumb money) should all be making massive profits …cause when some basic sign arises that the market is going up …they all go long. they are the mob…so why do they lose ?

there is clearly something amiss in my understanding of the market.
could someone please point out what it is ?

The biggest fault with your argument (if I understand it correctly) is that you think the “mob” is us retail traders. The “mob” are the central banks and hedge funds that move the market as they feel.

This is the way i look at it, at the heart of all price movement is one obvious concept, perception, this is a game of speculation, my perception against your perception, the banks perception against investors perceptions, we are all trying to predict where price will go using whatever tools we have, so what moves price? Stupidly enough WE move price, because it IS a game of speculation it is our perception of where we think money will go in price that makes the price move, for instance most people make the mistake of thinking that when a negative news report comes out that the market automatically drops as the currency devalues, but who says it has less value?! WE DO. When a negative news report come out fundamental traders short it, because they are speculating that most people would agree that a negative financial report will reflect negatively in currency price, This is probably the biggest self fulfilling prophecy i can think of

So we know that the people who put money in to the market and speculate where price will go move the markets, so who are the players? There are six major players: commercial and investment banks, central banks, hedge funds, corporations, high net-worth individuals, and small investors. Most forex traders are the ones at the end

Now because these 6 groups are the people who control price, who has the biggest say in moving price? obviously the people with the most money, the banks and hedge funds

So we know that there are 6 major players in moving price, and we know that price only moves depending on who has more money invested in their team, either the bears or bulls

So how do all of these players speculate where price will go? how do they do it and what strategies do they work off of?

Well I cant really type out all my thoughts on that :stuck_out_tongue: but basicly you can imagine it like this, imagine that price is always at an equilibrium, all the economies are absolutely steady and the world is in peace, and then… disaster, a countries most cherished natural resource gets expunged, this is the stone throw in the still waters of the world economy that starts price movement, This is the first step to changing price

News Event > Fundamental Traders > Technical Traders

This is the chain in which price is moved

The second a news announcement comes out there are fundamental traders who speculate against other fundamental traders on where they think the market will go based on the information in the news, These are the big guys, the banks and hedge funds, These people sit around their computers all day watching the news, looking in to economies practices, waiting news announcements and financial releases, and once an announcement comes out they speculate as to where price will go and put billions of dollars on the market within seconds, pulling price to their side that much more, and that’s where the second tier of traders come in, technical traders!

We see the the candles visual representations of where price is being pulled and we interpret it for ourselves, we decide based on a number of different methods where we think price is being moved, whether it is EMA’s, S/R levels, Fibonacci, scalping systems, whatever it is you trade you are trading nothing more then the ripple in the pond

The news event is the stone throw, the fundamental traders are the ripples in price, and although we cannot always see exactly where the ripples originated from and how strong they are, we trade these ripples, we speculate where the speculators think price will go

This is a very basic example but i think it has the basic thought behind it :slight_smile:

Euro has been losing for the last month on the back of Greek/euro problems.

This is reflected in the markets… USD going higher as people are scared and look for a safe haven.

I would say markets clearly reflect fundamentals. Fundamental being fear.

Intraday trading…fundamentals means nothing. Long term trading fundamentals is important. So in trading price is king. The way price rhymes must be understood well. If you know how it rhymes then you will know how to trade it. Its all about probability.

And the biggest fault with [I]your[/I] argument is that you think the central banks and hedge funds can move the market as they feel. They can’t. You’re right, though, that retail has little influence on exchange rates.

I should have taken out the word “Central”, you are correct on this, late-night error on my part… It’s the market makers and their banks that move the markets. The hedge funds are connected at the hip to the market makers in many cases, so it helps to know where they’re going.

from what you just said rhodytrader…
if it isnt the central banks and hedge funds that have the power to move the market …then who is it that moves the market…
is it the large commercial companies…because surely they put their orders in to exchange their currency through large investment banks …therefore is it the large investment bankers working on behalf of the large commercials ?

could you just clear this bit up for me…please

Hey eblip :slight_smile:

I like the question and it’s one I’ve wondered about for a long time. I’m starting to suspect though, that I ask some of my questions because of my doubts or fears… I squint at others to see what their real motives are but I fail to see I’m just afraid to let go of my old ideas.

After watching some of ICT’s videos, I’m starting to think a little differently. My view of the whole global economy thing is that markets are simply the manifestation of preserved capital. Speculation developed as a secondary effect of the existence of so much liquidity. Little people (like me) are now and have always been paranoid of the motives of the people who possess the power to move that much money. But if I start to understand that underneath it all is a suffocating conservatism, I can see the real market movers are the ones striving to preserve the enormous capital the combined markets represent. They’re not speculating on anything but whatever they hope will keep this money from disappearing. “gasp!”

My role is the same. Not to leech money from Market, but to preserve the capital I create by speculating on price by using iron-willed money management principles.

I am so new to this, that my opinion is likely worth less than the energy running through the wires of my computer. I think retail traders serve the purpose of unlocking some of that crippling conservatism to let money trickle down into the host economies a little more. It doesn’t matter who moves the markets the most if we can’t successfully operate within them. The question seems to be a knock on the door of very secretive, conservative, paranoid people… What difference would it make if the door opened and we meet them face to face? I think the answer to the question is less a who, than a what; and my guess is that what moves the market most is a stifling conservative impulse and not the greed I’ve always thought it was.

I couldn’t have thought so until I started watching ICT’s videos. I look forward to having my eyes opened again and again though… funny how they seem to close of their own accord. :slight_smile:

Mike

A couple of points:

  1. Timeframe. Perhaps, fundamentally the Euro should rise, and this may happen over the next week or so. But on shorter trading timeframes, price may be moved opposite.
  2. Reasons for this “paradoxical behavior” include tricking “the mob” into thinking it’s going down, causing the bulk of the mob to Sell, so large players can Buy from them at low prices and, having done that, move the Euro subsequently in the direction which “fundamentals” would dictate.
    Imagine you were a very large player who could move the market, and you knew that fundamentals would drive the market upwards in the next week. The first thing you would do is to lower the price, since you want to Buy, getting the “mob” to sell to you at lower prices. Only after you had accumulated your position, then you move the market in the up direction which fundamentals would dictate. Not everyone agrees that large entities move the price “at will”, but I believe they do so within a zone of “price elasticity”. These movements are “trading”, as opposed to being reflected by “fundamentals”. But it’s always a question of trading timeframe, short term, medium term or long term. HyperScalper

hi pipowski…
yes i agree …especially with the part about (It doesn’t matter who moves the markets the most if we can’t successfully operate within them) …but im all caught up on understanding who is behind all these things…the next hurdle will be trying to get into THEIR MENTALITY.

a lot of the time what i see with open prices and close prices, are they are very close…like the market didnt really move much…probably just as much as the fundamentals dictate the market should move.
but in between the opens and closes is quite a lot of price action…the mob making money.

i think the banks let the retailers into the forex market to add liquidity and volatility…retailers are probably behind a lot of tiny movement during the day…and carry a fake out much higher…or lower…and possibly sometimes even cause them…without the retailers maybe the big players would not be able to create such a good smoke screen on their actions…their actions would probably be more obvious…so they themselves would have to be more discrete with their actions if the retailers were not there and put in much smaller orders…otherwise another big player would notice and end up cleaning them out.

im starting to think the best thing to do is to treat open and close pricing and support and resistance levels as PRIMARY and maybe to trade longer term…with wide stops…once the trend has been established…that maybe trend following is the key…and everything else is just gambling.

next week i will be saying something else…wow…there is a lot to grasp…

I’m setting up to do that this week. I read ICT divulged his schedule of trading the markets and since I’m on a demo, I want to see if using a (micro?) $ 1,000 lot on a 4H TF and trading the previous day’s highs and lows will let me stay in a trade longer. I’m going to trade the Market opens with the Fiber and I watched it rally on the combined news of the U.S. May Jobs Report and the Irish vote to accept the EU Austerity Treaty - but since the trend has so much downward momentum, I suspect the rally is short-lived. Just a matter of figuring out how high it will go before it resumes the trend.

I’m not in a hurry though because my grasp of trading is more like I’m playing with a money toy. Setting up entry orders that I can walk away from??? - you must be joking; but that’s what I think the confident traders are doing. So, I’m trying to figure out their methodology - (It helps that ICT pulls the curtain back - :slight_smile: )

“I have met the enemy - and it is us.” Pogo

Mike

I’ve spent many years trying to get inside “their” heads. Call me naive, but I simply accept as a fundamental principle that “they” move markets. Doesn’t matter who “they” are, if their intentions can be identified through analysis. In my case, I analyze patterns of Quote Placements on a Live DOM. This requires proprietary coding but, in general, “they” will tend to approach the market as though “they” wanted to “push” the market. On the opposite side, “they” will tend to retreat from the inside market. This is one possible way of getting into “their” heads, without having the burden of discovering “who” “they” are :slight_smile: They shall be known by their behaviors. :slight_smile: HyperScalper

Here is a really good video I watched last week that cuts right to the chase, once the main speaker gets on.

CompassFX Steve Mauro MarketMaker Method Webinar Replay

Skip the first 10 minutes when it’s just the girl talking, then listen to Steve. He’s VERY no-nonsense, which is refreshing sometimes. When he leaves and the girl starts talking again, it’s pretty much over.

thanks for that vicious p …it sheds a little more light on my confusion…
i wont be able to trade properly until i suss this out crystal clearly…and your video helped…
right now its all that really matters to me.

personally i think it should be all that really matters to any trader…to know what is happening behind the scene…understanding what and why the market really moves…not theoretically but in reality.

And it’s never absolute, nothing is in the forex world. MMs can still do their thing, while descending wedges can still break out bullish more times than not, trend lines can still matter, etc. I do think people overvalue S/R, especially on low time frames, I’m glad he said what he said on that.

But if you know not to put your order in during the Asian session, and know that the first breakout after the Asian session is likely forming the high/low of the day (or at least the session) you’re so far ahead of most traders, you should feel safe putting your money up.

I didn’t say the banks (central or otherwise) and hedge funds don’t move the markets. I said they don’t move them “as they feel”. They can cause movement in very short-term time frames depending on the liquidity at the time. One big order at a low liquidity period and certainly impact prices. If you’re talking about more intermediate to longer-term price moves, though, no one player has the ability to directly influence price action because it would take sustained action requiring more funds than anyone can muster. This is why even central banks don’t try to turn markets in full trend mode, but only attempt to constrain things a bit by jawboning or small interventions. Their stronger influence is more indirect through monetary policy.

What drives sustained moves is trade and capital flows, the majority of which passes through the market making commercial banks.

thank you for that rhodytrader …very educational…makes a lot of sense.

Attached is an image of trying to get “inside their heads” by observing size placement in EUR/USD. A dramatic pop doesn’t usually happen as nicely as this one, but just an example. White predicts uplift. Yellows would have predicted down push (not shown). Time is Eastern time today. HyperScalper.


wow chart looks to have lots of divergence…what chart is that hyper and where did you get it…
cheers.