Trying to understand a couple things, but I am having difficulty conceptualizing what is going on. I’m probably over thinking it and making it more difficult than it is.
I am currently trading on an ONADA MT4 practice account.
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What actually drives the market down? I know all of the discussions of supply and demand, but that doesn’t get to the root of sudden large, consistent reversals other than people panic selling and offloading everything they have in an attempt to minimize losses (or their EAs doing it for them). How are people able to force the market down and how does this benefit them? Buy purchasing lower and waiting for the market to rebound?
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Are profits made on decreasing value?
I was under the understanding that trading against a pair will result in gains when prices drop (possibly a misunderstanding of jargon).
As an example, USD account trading USD/JPY vs EUR/USD. Both make profit on an increase, but the USD/JPY pair has to get converted back to USD. -
If profits are not made on decreasing value, how do the market makers profit by taking the opposite side of our trades (and what exactly does that mean)? Just banking that we will get it wrong?