I haven’t traded yet, but I’m getting discouraged by what TA is in its nature - predicting the future by looking at the past… I also read many criticisms for the TA which make complete sense to me and it has not yet been proven from empirical data that TA actually works, not more than randomness.
On the other hand I’m thinking that it may not be that bad, for example if I trade the news. Say an American dealer buys huge quantity Japanese cars and pays in USD, after it’s converted to YEN, this will make the YEN jump. This is fundamental analysis, but with the help of TA, I’ll know where to close the position(perhaps).
Does anybody know if there is a chance to know (judging from the past) for what period of time certain events affect the currencies. Say in the above given example, approximately how long will the YEN be moving up, 20 min, 1 hour? And generally when trading the news, is there a prediction for how long will a given event influence a given currency in a particular direction?
What are you thoughts on TA and its effectivness, how exactly can we use it in our favour?
Price action is only way professionals trade. They don’t waste time watching news or trying guesses at job numbers. They see price is going high so they buy. Just follow the trend and you make all the money you need.
Not true. Honestly, I keep telling myself not to bother posting here as it’s really not worth it, but some of the stuff that appears simply beggars belief.
Yes it is. Of course. Sorry if I was unclear. By ‘trading the news’, I meant what Samir was saying about ‘news is gambling’ and ‘guessing at job numbers’. Trying to predict how NFP will shift the market before it happens, for example. That second part of my response was not really appropriate. Sorry again.
You can look in the past, but trading the past is not a good idea. You have to trade what the chart tells you because that chart you are looking at is telling you something. You only have to listen very carefully.
I’m a trend trader and when the trend is up and I see a buy signal well than I buy, so simple is trading. Don’t make it complexe because you would not be the only one. Trading is simple but you make it complex.
I’m not a favourite for trading the news. You could throw your money through the window or even burn your money. But if you really like to gamble then you need to go to the casino, but if you dislike this then please do not trade the news.
If you want to be succesfull than trend trade. When it goes up you buy and when it goes down you sell it. Well that would be to easy. If trend trading use the 200sma line and the MACD. 200sma is for knowing the trend and MACD is giving you signals. Always use stop losses and you’ll be good.
But isn’t it the news that will tell us a particular currency is going up or down for the next let’s few hours because of a given event? If I know that, combined with following the trend, isn’t it a good idea to kind of trade the news?
I’ve looked into the impact of economic data releases on the market a bit. Shocking is an understatement. The majority of news releases have a very, very short term impact, this includes most of the “high impact” releases (which are the only ones I looked at, really).
Things like CPI, housing starts, existing home sales, manufacturing indices, etc. may move the market a relative handful of pips in a given direction (15 to 30) above and beyond the normal range over ten minutes or so before the currency in question continues on in whatever direction it was heading previously. These figures are for when the announcement misses or exceeds expectation by 10 to 20%. If the analysts’ consensus figures are blown away by more than 20% then you can, as rule of thumb that you should in no way rely on because it is only my anecdotal observation, usually double the impact and duration of the moves.
The really, really, really important announcements (Interest rate decisions, GDP, Trade Balances) can provide a fundamental shift in the currencies direction or relative strength. NFP has a big, short term impact as you have no doubt seen and I place in a category of its own.
The one major news release that has little in the way of quantitative data but is a huge market determinant is the release of FOMC minutes.
I am absolutely NOT an expert in fundamentals. Actually, I know nothing about them. I have, however, drawn lines on a chart when the various releases occur just to observe the impact on the charts. Most of them, individually, have little lasting impact at all.
Run of the mill economic releases may be a scalper’s paradise because the markets do move – and they move quickly – but their impact on the markets seem to end just as quickly.
Trading via technical analysis is fine. Look for patterns that the market cannot avoid repeating. For example, low volatility will always be followed by high volatility, for the simple reason that volatility cannot continue falling forever (think about, if volatility fell indefinitely, the market will eventually flatline and find equilibrium permanently, which is ridiculous). It’s best to think of technical analysis on a deeper level and understand how market participants act and react to certain situations.
Yes, eventually, but can TA actually help us predict when exactly it will go up, for how long it will be going when it’s going to reverse back etc.
I was just hoping that for so many years and many traders, there have been something like established standarts that we can follow, something that may bring us at least 0.5% of the deposit amount daily most of the time. Whatever it is, I will adapt to that. And was wondering if TA really works at least 55-60% of the time or not, that’s why I am asking traders here, if they do notice something that is definitely not random when using TA. Do S/R lines,the Trend and all indicators really work? (meaning giving us edge over randomness) or it’s just an illusion? Is there more to the TA except it being a self fulfilling prophecy?
…and also there are situations where analysis may not work like that happened around 4 hours ago. e.g. AUDUSD fall, USD coming strong…etc.!I do not think that it was analyzable that the retrace will come today as it was supposed to go with the trend. Thats why Forex is so unpredictable.
Technical analysis works, just like fundamental analysis works, the two work best together but that’s beside the point.
True technical analysis is understanding that price is a representation of the underlying fundamentals driving the direction of the market and the reason why certain levels hold (resistance / support) is because traders give those levels power, the market believes a certain level is significant, and therefore it is. N.B. its a bit more complicated than this, but whatever.
If you want to win at trading, first you need to understand that just because something works once, twice, ten times straight, it may not work an eleventh time. The best way to win, is have a plan, find an edge, and be consistent in your execution.
Manage your cash and never bet the farm and you may just turn a profit.
I disagree that technical analysis attempts to predict the future by looking at the past
Over the last decade, I’ve increasingly seen that myth promoted on trading forums, but I don’t know the original source of that particular insanity.
I suspect for most traders (or the few I personally know at least) trading has very little to do with prediction.
Most new traders believe success is entirely due to prediction, hence the focus on indicators, artificial intelligence, price action etc etc and they continue down that route until they either give up, or finally start thinking out of the box
Ya, it is about reaction and the percentage of trader buy/sell, will determine the trend (not considering big boys) and I guess this is why people/broker offers free signals so that market goes in their way.
Technical analysis are very important it helps the trader to make right entry and exit so whenever we trade we have to trade with proper plans and strategies to earn good profit from the market.
