So exciting that many do it for fun and not for making money. If you want more than fun, you should have a system, though. Very quickly you will arrive at the conclusion that something in this “game” plays against you. Right, and this something is nothing less than the world’s biggest banks. This alone should tell every Forex addict that it will be much harder to only break even than it looks at the first glimpse.
Forex prices behave differently than stock prices. The typical stock day trader will have severe difficulties doing what he used to do in Forex. There is no index that magnetically pulls all stocks with it. And then there is not the big future potential that sets stocks apart from all other investment candidates. The outcome is, Forex is in the middle and long term purely driven by supply and demand.
Shouldn’t that be true for every market? One has to distinguish between real imbalances of supply and demand and short lived speculative ones. The difference to the stock market is that the anticyclical price behavior in Forex caps speculative directional price moves very quickly. In the stock market stocks can become disconnected from reality, so that prices are floating around possibly for years at “wrong” valuations.
This is so, because a stock’s reality is its hope and fear for future prospects, which are often hard to gauge. In Forex it is mostly companies doing business and their need for one or the other currency with some speculative noise on top of that for short and medium time spans. The long term forces of the market balance currency prices with interest levels, monetary policies and economic strength. In all cases there is not much room for exaggerations like those found in the stock market.
Speculative thrusts can emerge by random or even manipulation, but they are counteracted by money doing real business and seeking cheap market entries. Forex prices have a strong tendency to come back, at least for noisy short term moves. That opens the door for a scalping strategy. Of course there are also real shifts in price levels. The crux is to approach the market with a system that can distinguish both types of moves. Typical TA wizardry will not help much. Instead, the experience of seasoned Forex traders is needed.
These Forex methods are already there and extensively used. They just happen to be the other side’s “secret”, in the same manner stock market makers have their tricks. But someone who had been trading long index futures and then expanded to Forex is offering his scalping system and access to his trading room for RT mentoring:
Is it wise to imitate these sharks in the banks and will it work at all? Wise or not wise, you shouldn’t want to be on the other side.