I have just learnt about the SSI: The Speculative Sentiment Index and i’m so confused.
Is this true? I thought the 1st rule of Forex was to trade with the trend. How can the likes of FXCM take the opposite position to the retail traders and go with the trend while all us little guys go the wrong way when all you need to do is zoom out on a higher TF to see the trend?
I guess it’s not that simple. Sure overall more people may be buying in a downwards market but over what time period?
i’f im buying in an upward 1hr chart trend then im doing the right thing yes? Even if I appear as a buyer in an “overall” downwards market over the last 12 months or so. Is it relevant?
One man’s buy is another man’s sell. I think the answer can be found in the variety of investment horizons (time frames). One trader goes short on a bearish day chart, while another goes long on a 30 min. chart. This is how markets mechanics works. If we all used the same horizon and had the same mind set, there would not be any zigzag moves i guess.
FXCM is simply trying to fill the order. They also offer NDD (no dealing desk) where they do not act as market makers.
Well some traders prefer picking tops or bottoms because this could be a good point to catch a reversal and ride a brand new trend. However, this can be a pretty risky strategy since trends usually come with a lot of momentum.
In the example you mentioned, an uptrend in a short-term time frame can be a retracement or correction in a longer-term downtrend. So then your entry and position (long/short) depends on your trading style (scalp/swing/position) and how long you plan to hold on to your trade.
I think I understand now. If there are fractals within fractals within fractals. Up trends within down trends within sideways thingybobs, then saying I will trade with the trend is a useless statement. It does not exist right? Not unless you literally risked say £10,000 and sold on a downtrend on the weekly/monthly chart. I guess that is going with the trend because all other time frames fall within that chart. How then can FXCM say they will take the opposite position to the traders when the traders are going every way at the same time… I guess because they have the expensive tools and software to know if they are in the trend and we can only guess.
Epidot,
You can trade with the trend or against it, you can trade range as well.
Trend- traditional approach(good old Dow theory):
2 higher highs + 2 higher lows - uptrend
2 lower Lows+ 2 lower highs-- downtrend
As you figured that out already uptrend on one time frame can be downtrend or range bound on the other.
Broker does not have to worry much , so stop worrying about the broker get the reputable one and focus on your process .
Based on previous experience, since beginning of trading, we know that that The Market is smarter than average trader. Smarter than 95% of them , or more.
Especially if you act as the market maker , you just let the market do its job. And you enjoy the spoils! Nothing bad or evil about it, this is what the game is all about. And yes the game of markets is not the easy one. but at the end of the day if 95% of traders lose money it is enough to outsmart 95 of them to profit
A lot of retailers, particularly newbies from the posts on here, trade the smaller time frames or scalp. Probably a big reason why so many struggle.
An uptrend in a 1m frame turns into a downtrend 5 mins later, then back into an uptrend, then back to a downtrend. In the longer times these may all show as just one direction
