Your thinking is incomplete.
Yes, the big banks use news and fundamentals to make their decisions. But they have the best brains, the best computers, the most information, the best quality data and the fastest news flow in the world. So are you really saying all we have to do to make a profit is to reach the same conclusions they do in the same time and we do this by watching TV and buying a cheap laptop?
If it was that easy, don’t you think the big banks’ best brains would have told them this?
The market is much more predictable than most traders realize. Price action follows very specific rules. That combined with market structure and related patterns provides extremely high probability predictions.
If investors are purely rational and pretty fast (instant) in making trading decisions - then there is 0 chance that market price will deviate from theoretical price at any point in time. They basically instantly price in all available important information. Hence next “fair price” will depend only on incoming information and not the price itself, hence past price(s) have no predictive power. This is the essence of efficient market hypothesis which is the biggest obstacle to technical analysis. Personally I think that its premises are too detached from reality (we have many dumb traders and investors which make possible for market price to deviate from theoretical).
For a beginner there is no wrong questions, the biggest failure would be a lack of questioning.
Market awareness is vital to every learner, without knowledge of the market present then likely the focus will be left side - selling every double top or buying every dbl bottom - or worse still - buying or selling because price is ‘overbought’ or ‘oversold’.
It counts as thinking about what is likely to happen up ahead - then look for markers on risk.
There are many algos in the market that can influence price. FA and TA are two branches of the one tree. For example FA caused the recent rise in Eur/Usd, then the retrace which was predictable, then the next leg also predictable.
I talked about this link between FA and TA by calling it the ‘perfect market’ in Falstaff’s thread on where is the EU going with this - before it happened 
Edit: link to discussion re Eur/Usd
One of the above comments in the thread referred to the present - the market focus is neither the past or indeed the present - the present is fleeting and merely sets the scene for the future.
The virus threat to making money is receding - so risk comes back on.
What do IBM, Disney and Microsoft have in common? Apart from being reputable business names with strong brand recognition? . asked a recent business editor.
The answer: they were all started during times of recession
Sometimes learners become daunted with the thought of institutions and their ‘big brains and capital’
But small guys have a distinct advantage - there is no requirement to be in the market every day.
I remember a pro trader once recounting a lesson when he was starting out - his boss came over and looked at the learner’s trading screens - then the boss flipped it.
What was wrong? - was the trader in a huge loss, did he break leverage rules, what had happened?
The learner was not in the market - he had no open trades.
You are correct that they have access to several institutional level tools and especially in the case of algos, they will reach certain decisions a lot faster than the human mind. However, there are now plenty of resources for us to use as retail traders in order to access news and data as quick as the banks. Two tools which I use are LiveSquawk for real time news flow and MetaStock Xenith, which is a retail version of Retuers Eikon. Costs me around 130 GBP per month and allows us to trade like the banks.
I work for a small hedge fund, which uses the same tools and has returned over 100% over the past 12 months. Now I’m not saying those tools will instantly make someone a profitable trader. It takes a long time to understand how to breakdown the analysis and data but it is certainly possible to do, even at a retail level.
Yes, you are correct. I do not completely disregard the technicals in my own trading but I think many traders put a lot more weighting on it than they should and a lot of the time, the fundamentals will be completely disregarded.
The market is not predictable. This statement is 50%fact and 50%fiction as the market sometimes moves according to our strategies and sometimes a major news can make the market upside down.
So that would mean its predictable. Because if you keep out of trading while major news (a very common practice), the rest of the time would be predictable, right?
I think trading its like poker. You can’t predict or control the next card, but you can decide when to get involved, and a winning strategy means do it when odds are in your favor. I talk about winning odds and pot odds (risk reward ratio). We have to get involved only in trading setups with positive Expected Value
I predict price movements on a daily basis, so it’s crazy to me to even see this suggestion. Markets are extremely predictable, people just don’t understand it.
Unfortunately many of us don’t fully realize how it is important to find and trade opportunities with good risk-reward ratio. They are blinded with thoughts about profits only and its very bad, because traders remain unaware how to manage risks.
Ok - first thing when thinking about the right side of the chart is to think about risk - not our risk, rather how does the market feel about risk - right now - this very hour.
I’ve spoken about the USD2000 (small caps) many times and how and why it is a real time risk barometer - most recently a couple of months back ‘in that index lies money and risk’.
Anyways yesterday evening into the US close there was a risk alert using this index.
All charts are hr1 yesterday - FOMC day.
Chart1 is US30 , chart2 S&P, chart3 US2000 and chart4 the Nasdaq.
I checked the S&P etf sectors and sure enough XLK was in positive territory led by the usual tech companies. XLP was the only other green sector - (consumer staples) - a defensive sector (it’s also the least negative sector right now).
Two things stood out with above 4 charts - as I watched I could see that the 2000 was leading the drop and obviously the Nasdaq was on it’s own - reminded me of 20 years ago and we know how that played out.
No need to show what has happened risk today -
One other risk barometer - the US Bond market - there was talk a couple of days ago that the Fed would enact YCC (Yield Curve Control)
Learners - remember that as the US Bond price rises so the Yield falls
US Govt bonds are seen as a safe haven - risk off.
Here is the US10YR (the one I use most often) price hr1 yesterday - the Fed said they’d use all their tools-
Some commentary a couple of days ago:
OK = right now the 2000 has reached Friday’s high - the other 3 have some way to go.
US10yr looks to the open gap.
So it’s decision time - if the US2000 breaks north then the rest will follow and a buy on S&P would be nice - so these 2 - the 10yr and the 2000 will be my indicators.
Edit - 30mins later - still no break - 2000 still holding firm though - let’s see
S&P, Dow all bullish
Theme of the week,
Lockdown Easing (Risk On?)
Riots, 2nd Wave . . . etc all inconsequential
(story for another day)
Human life is like a mustard,
Lives of the poor are cheap,
The boss calls the shot.
And there she blows - all 4 in unison
Edit: so what’s all this to do with FX - check Eur/Usd timing right now
