Forex market making is a bit more unique. Simply saying you need to predict the market makers moves is just the surface. The percentage of the market’s moves that are fundamental on a daily basis is less than a single digit, even less for minors and exotics. Move out to a longer time frame they will create a fundamental move.
That said the moves are algorithmic but still very human based. In-fact the fx mkt lags the equity mkts in this respect, but are catching up. The majority of the moves you see in a given session are actually liquidity providers and brokers - whether as separate entities or partners.
It’s a sophisticated process but not too complex. Though not easily explained in short.
There is an aspect that the retail forex world is not privy to. This is an industry that is full of NDA’s and information that the public just does not know. The “system” is complex and certain things are easily masked and chalked up the the nature of the market being the market.
What you as a person trying to learn to trade and I take it ultimately being a professional is that the fx market is no different from a casino…in the grand scheme. If you look carefully some of the largest brokers have conflicts of interests and you need to dig deep or at least have an idea what to look for.
You think that regulators especially in the US are on point in this regard. Reality is they’re a bunch of attorneys with hired interns for foot soldiers. They do their job but it’s more on a dollar basis urgency. The bigger the possible fraud is what they want to exploit. Sounds like a business doesn’t it.
The fact is they need the fx institutions to exist.
Getting back to the market makers…you don’t want to dismiss the brokers in the equation.
I’ve spent too much time, I’ll be as straightforward.
The fx market is about how this consortium can garner the most profit in turn exploiting other parties doing so. Human weakness, fear, greed etc. are the what drives the moves. The moves have very little a large majority of the time to do with fundamentals again. They are moves that are calculated to produce profit.
The answer is manipulation.
Do you ever see total irrational moves that go against what you said is probability…or even the logical? That is what they want you to think. Smart people will say that it’s all “random”. I will tell you that it’s not and the rather the strongest players moving the markets.
Most of the intraday moves are the consortium fighting against each other to take out their kill.
It’s much more complex and theirs a myriad of different hands in the pot all at the same time. It truly is a mishmash of market noise.
There are players that are very powerful and have the best relationships that can and do this while move the entire market at no cost to them. They have the most sophisticated software and hedging capabilities written for them or in most cases in-house and heavily guarded.
You will not believe the length that a party will go to just for a few hundred dollars of even a single account let alone say a group of stop orders.
Take out an entire account or just go day to day making the spread. You are extremely wrong to believe that these parties pay their bills and investors by making a spread.
When you see wicks and fast pivots in the markets you need to understand there are traders trapped. No account is small enough. There is a very sinister side to the fx market that the relentless flow of people new to the fx game wont see coming and never realize exists behind the price action they see.
There are things the retail forex trader would not believe. I have found that it is pointless to even talk about because the strong inherent belief that one can do this and become rich and successful. That is delusional and I tell you the industry feeds of that. Part of this is saddening, but it is the fx market.
I’m an ex industry professional and have been registered with finra and the NFA.
