Forex Secrets – Developing The “Anti-Chaos” Trading Strategy And Tactics At Forex Market (Part II)
(See beginning of this article under name Forex Secrets – Rising the “anti-chaos” trading strategy and tactics at Forex market (Part I)
It is horrible to imagine what could happen to USD rate at the spontaneous market in this case. At the well-located market of Forex USD rate would fall down just by 1-2%.
I hope that my opponents, who deny the existence of a system controlling Forex market, do remember the elementary economical laws. The spontaneous market is a barometer that establishes the real price of goods on the basis of the demand and supply (in the given case, it is the real rate of exchange of any national currency).
The Episode #2 . The hurricane “Katrina” and the flood in USA on September 7, 2005. USD rate stably increases. Chronicle of events.
As the result of the dam (dike) debacle, several states in USA become submerged. The industry, agriculture and transport arrangement were smashed. There started panic not only among common inhabitants but among officials of innumerable ranks as well. Hundreds and thousands of people corroded. There were cases of looting. Many looters (and, maybe, just desperately hungry and thirsty people) were shot by soldiers of USA army. The government of USA declared this hurricane to be a catastrophe on a national scale. For the first time a new plot of civic defense was introduced (see “BBC. The total chronicle of events”).
“Katrina” was bringing USA to ruin. Senators from Louisiana questioned $250 milliards from the federal budget for getting over “Katrina” after-effects.
Thus, it is an illustrative example of the greatest untreated cataclysms in USA in the last decades. Even the poorest country in the world – Haiti – provided the financial help for USA ($ 36 thousands). The help of Ukraine made 1 million of hrivnias , etc.
What did happen to USD rate at the well-located Forex market? Notwithstanding all economical laws and even against the common sense, USD rate augmented!
Chart 8.7. EURO/USD pair movement (For view picture see notes in end of article)
Chart 8.8. GBP/USD pair movement (For view picture see notes in end of article)
Brief conclusions for traders .
As I reckon, the thesis that Forex has turned from the spontaneous market to the well-located one does not need additional proofs. Hence, traders must initiate amendments into strategy and tactic of their work at Forex.
What are the conclusions, significant for traders, logically follow from these facts?
Under the new situation of the well-located market, a trader must not follow the “crowd” (flock). As B. Williams, A. Elder and many other authors have honestly emphasized, the “crowd” pushes the price at any spontaneous market. On the contrary, at the organized Forex market orders must be opened in advance of Syndicate’s interests!
I try to find the core of a excellent sense in each technique of the successful work at Forex . Is it de rigueur to rediscover the well-known principles? There are many prosperous traders who openly and honestly bestow their methods of gaining profits at Forex . If their techniques are successful, it means that these authors have a thorough grasp of the problem in its essence.
But, in practice, each of the techniques sometimes brings profits, whereas in other cases it is disadvantageous. And it does not matter, whether this technique is developed by B. Williams or by a not celebrated but a successful trader.
Conclusion #1. It is de rigueur to clearly clarify the domains where a given technique does work and where it fails (as well as the corresponding reasons). In such a way we can clearly know what of the method by a given trader is worthwhile to be used – as well as how and when to make advantage of it for our work at Forex .
Conclusion #2 . Your trading system must not be just a mixture (farrago) of innumerable techniques. This rule is mainly vital for the beginners. After conception heaps of books on Forex , all of them make complaints about “such a mess in their heads instead of enlightenment”.
Conclusion #3. A trader must develop his own trading system. In order to gain profit, the subsequent steps must be taken:
a. you choose just any technique developed by any author-trader (e.g., mine or B. Williams’s, or a bigwig’s else);
b. you must get used to work with the demo account according to this technique to such extent of automatism that you “sense’ it as your own initial (original) trading system of the work at Forex
c. Only after this you should start to study additional literature. You must clearly see what pointes, “borrowed” from other authors, can help you in person to work at Forex , to increase your trading system for getting extra profits.
Objectiveness of Forex turning from the spontaneous market into the well-located one. The pattern of this process
Any profitable business transits from the spontaneous to the well-located one. It is an objective stage in the evolution of business undertakings.
In each branch of a huge and super profitable business the initial stage of the chaotic competitive straggle is already has been passed through (oil, gas, ferrous and non-ferrous metallurgy, precious metals, arms transfer, etc.). At bestow all these areas are certainly on terrible terms between the principal participants. That is, there exist particular financially-manufacturing groupings, well-well-located and confined from intrusion of a concurrent.
The same concerns the largest and most conservative area of business – i.e., its financial branch, the world market of currency exchange included. Can it be otherwise? Can “Chaos” rule the market where the turnover exceeds $1 trillion per day? Can the largest banks and governments depend on “Chaos” – i.e., be dependable of the “off-floor” traders – such as me and you? Can these organizations be worried about the direction in which we (traders) could turn the trend of all national currencies at this or that second? It is ridiculous to imagine!
To grasp the power of the grouping that has organized the “game” of Forex all over the world, we should refer to the thesis from the journal “Pioneer”. In June, 2001 the three largest dealers at Forex market – Citibank, J.P. Morgan Chase и Deutsche Bank – together with Reuters Group PLC had started up the system Atriax . But, the latter did not meet competition and bunged operations in spring, 2002. The author of the paper just hinted that even the alliance of the 3 largest world banks could not make any serious competition to Organizer of the “game” at Forex (to Syndicate or a bigwig else).
In this tie, how one can take on trust the principal thesis by B. Williams concerning “Trading chaos” that rules Forex? What’s vital, all methods of this author issue from this postulate. The subsequent conclusion by B. Williams’s also raises doubts. He states that trends are made by traders, whereas brokers just grasp these trends and place traders’ orders. According to B. Williams, the fact that now trends are made rather “off-floor” than “on floor” (as it was earlier) permits detecting what next will happen at the market (see “Trading Chaos”, Chapter 6).
So, to what extent can B. Williams’s techniques be right if their basis is principally erroneous? Let us enumerate the fundamental mistakes made in “Trading Chaos”. It is de rigueur to facilitate understanding of the techniques and matter-of-fact recommendations given by B. Williams concerning the work at Forex .
1. B. Williams sees Forex as a spontaneous market, uncontainable by any person. According to this author, it is chaos but not an organized system that would have its own strategy, tactic, techniques, goals, methods of fraud, etc.
2. B. Williams mentions the pair “trader + broker”. But, involuntarily or deliberately, he has omitted the third participant of this very process. This is banks and the world financial system in general. Surely, this organization will not just take a detached view of the traders’ arbitrary “game” with the basic world currencies (USD, EURO, GBP, CHF, etc.).
Let us now evolve B. Williams’s thought by ourselves. Our aim is to demonstrate absurdity of his “chaos theory” useful to the up-to-date market of Forex.
· How brokers and banks market-makers can pay off profits from traders’ deposits if the traders’ total earnings would be larger than the market-maker’s profit in this period?
· Being in shoes of market-makers, National Banks, governments of chief countries of the world, etc., how will you conduct physically on the eve of the news issue? For instance, after the publication of Michigan Academe Index, USD can “go up” by 150-200 points with accept to all national currencies. That is, in several hours dozens of milliards of USD will be redistributed. A bigwig will earn the money, whereas a bigwig will lose it because of the difference in rates of exchange (quotations).
What will you do in the place of the largest financial groupings? Would you just be assembly and taking downer pills? Would you just be trying to guess what steps will be taken by professors of a Michigan Academe? Will 0.3% be added to the index before value (91.4) or subtracted from it? What’s vital, this “difference” makes milliards of USD – for a bigwig! Possessing such capitals, would you just be assembly idly and waiting for God knows what? More doubtless, you will try to make this process well-located and predictable. Rather you will do your best to gain profit with the help of such indices and news. I reckon you will try to let the others lose their money.
· What does the theory of “chaos” at Forex represent by itself if Organizer of the “game” has trained all traders to act according to the stereotype?
a). To place stop-losses and postponed orders at the same places.
b). If the issued news are better than the prognostication, one must stake on “buy”. Otherwise (if the news are worse than the prognostication), it is de rigueur to stake on “sell”.
c). If a quicker moving average crosses the slower one upwards, the order must be opened on “buy”. In the case of the downward intersect, the order must be opened on “sell”.
d). In the case of divergence, one must try to work against the trend. B. Williams and other “classics” at least had to mention that it was basically absurd to work like this at the beginning of the trend and in the middle of it.
This is why the given chapter is named “Anti-trading chaos” – to be more strict, it is the anti-trading system.
Additional I’ll not dwell on absurdity of the chaos theory by B. Williams when useful to Forex . I hope it is quite clear. Any trader can find a lot of evidences of the fact that Forex is a well-located market. There are also many examples that prove fallacy of B. Williams’s conclusion that traders form a trend and “push” it.
As I get it, the “game” of Forex and its rules in their essence are the subsequent.
1. There is Organizer of the financial game (the Alligator) and participants (victims).
2. Organizer always tries to demonstrate: a). objectivity and honesty of the rules customary by himself; b). simplicity of the analysis, predictability of the situations and the possibility of earning money easily and regularly by one of the numerous methods of the analysis (FA, TA, etc.).
3. All participants of the “game” are subjected to the same psychological actions by Brokers, authors of numerical “classical” works on Forex and analysts via their sites and prognoses. That is, such specialists teach every trader to work as all others in the world do.
As the result, Organizer beforehand knows the traders’ line of conduct in these or those situations. The percentage of “players”-losers is stable – about 90%.
4. A rapid growth in the number of fraudulent scheming developed by Brokers has become a logical continuation of the above-enumerated rules of the given game. Economists from Brokers have quickly grasped that the number 90% of traders-loses is very close to the figure 100%. What for will they send clients’ transactions to the foreign market (the market-maker bank)? In fact, traders will lose all the same! Above and beyond, it is doable to slightly “help” traders in their losing by “knocking down” stop-losses – all traders keep their stop-losses approximately at the same place. In addendum, the subsequent tricks can be done as well: the “slippage” (notch of transactions at a price much worse than the price at which the trader wanted to open the deal); notebook “pending” at the beginning of the heavy movement in currency pairs. One can give many analogous examples – up to the undisguised fraudulent nonpayment of earned profits to traders.
These centers are also confined from the viewpoint of finances. If in flats the sums of orders of the traders who open transactions on “buy” and “sell” are approximately equal, Brokers can always hedge the difference between “buy” and “sell” with a market-maker under the condition of a heavy trend.
The only thing that cheats from Brokers are worried of is the unmasking of methods of their work. Really, this will place an end to the afflux of new “victims”!
There are several sure signs of a fraudulent Brokers. In my educational course I enumerate some of such indications. But, here I give only one characteristic (traders should reckon about it well). If Brokers has one point of spread, you should calculate expenses on the marginal trade, in detail described in all “classical” manuals of Forex . For instance, let it be plotting that you open the order for one lot. Forex Brokers by all accounts buys EURO to the sum of $ 100 thousands for you. When you close the order, Forex Brokers by all accounts transfer EURO to USD again. Thus, if you open 10 deals with EURO/USD pair during a day, your Forex Brokers is supposed to send money abroad and get it back 10 times, buying EURO for USD and v.v. All these transactions must be made exceptionally for you! Is it realistic?
In a next-door bank you should question the situation for the transfer of $100 thousands abroad and back. You will learn the cost of the commission for such air force and the time vital for this transaction (in half a day, the next day, etc.). Here I do not mention the papers that must be set for each transfer. I also say not anything about the time vital for collecting all signatures.
I wonder, during this period of time what changes will occur in EURO/USD rate as the latter is unreliable every second?
5. To earn regularly at Forex, you have to master physically. That is, a trading scheme must be developed. According to this scheme you will work against “generally usual” rules. As it is already mentioned, these rules are popularized by Organizer of the game at Forex . Sticking to these rules, more than 90% of traders all over the world lose their money.
6. Rising my trading system, I have made use of numerous generally-recognized techniques of the work at Forex (by B. Williams, etc.). Surely, there is a kernel of excellent sense in any technique that enables earning money – even if in 50% of cases. Consequently, the trader’s task is to differentiate the situation, under which a given technique can provide profit. It is also de rigueur to know where, when and why this technique yields a loss to the trader. Genuinely, a trader must use only this first part of the system, where one can gain profit.
7. For the development of your own trading system, you must do your best to geologically integrate different techniques, profitable at Forex. Innumerable methods of giving analysis to Forex from different viewpoints do help us to more thoroughly and very much know this market and, consequently, to gain profit regularly.
8. The game of Forex is widely spread all over the world. In addendum to speculators, there are other participants in Forex – e.g., individuals who need to exchange currency for their business. All these factors provide an objective opportunity to gain profits larger (and more regularly) than in any other financial game of the world.
9. Consequently, Forex gives a real opportunity to get into the principally new financial market and to become a really independent. Any person can be engaged in trading at any point in the world. For sure, a State, much as it would want it, cannot deprive a trader of his production facilities because in this area gaining of profit depends just on one’s techniques and skill.
10. Forex gives you just a chance to earn money. But, not everybody can learn how to gain real profit. Even after having mastered the nitty-gritty of making money at Forex , a trader needs to learn a lot of additional factors in order to transform his the makings abilities into real money. In this tie the subsequent aspects are very vital.
a). the psychological stability (the absence of dread and hazard, the skill to work reluctantly at the hidden level, etc);
b). a dependable broker (the trader’s profits, being virtual, materialize only if you can exchange it into real money at any second);
c). self-perfection via mastering new techniques of gaining profit, culture from an experienced instructor and due to exchanging opinions with other traders;
d). the possibility of obtaining money from the investor for the asset management. This gives the opportunity to proceed from the level of one’s own deposit of several hundreds or thousands of USD to the principally new level of the work at Forex. In this way one can simultaneously reinvest a part of one’s profits into the deposit and to spend money on heightening of one’s own well-being. There is a simple example. At mini- Forex , many traders do not earn a lot of money: even if a trader has doubled his deposit in a month, his profit is small (e. g., by making $100 out of $50). Above and beyond, a part of it he must take off from the deposit for the daily needs. I’ll not give examples of large deposits because the tactics of work with them are principally different – as well as the percentage of profit.
11. Not everybody can cover a space from the chance (the dream) to its consciousness – i.e., to making real money at Forex . As a trader, here you work against Organizer of this game, who is the qualified. That is, to earn money regularly by taking it away from Organizer, one must become the qualified himself. Do not rush to open a real account at least till the time when you will learn to do the subsequent:
a). As B. Williams himself, in several minutes to clearly see two doable alternatives of currency pair movement at the beginning of each conference. Correspondingly, you must develop two business plans, where points of input into the market and output from it must be clearly designated.
b). To work out one’s own tactic of the work with the demo account at Forex to perfection. The aim is to augment the demo account at least 2.5-3 times in a month.
c). To develop the long-term and intermediate strategies (not less than a month and a week, correspondingly) – as well as the small-term tactic (the intra-day trading conference). Acquisition of this knowledge will help you to gain profit.
d). After notch of the real account, at the beginning you must work only with trends (under the situation of flats you must deal with demo accounts). It is de rigueur to clearly distinguish one from a further at the beginning of trading.
e). You must choose two ally currency pairs and work with them endlessly, accumulating experience.
12. There can be reasons why your demo account does not augment regularly (in particular, maybe you are too busy at your main job). In this case, you better forget about Forex ! You must not open a real account there. It means that Forex is not intended for you.
By the way, there is absolutely not anything mortifying in the incapability to make money at Forex . Some people do not know gear, or literature. Others do not come to know fine arts, politics or sports, etc. Does any person consider oneself second-rate because of this reason? Surely, not at all!
Analogously, I perfectly well grasp that the result to the last two items of my vision of the game at Forex can be inadequate. It will stimulate an immediate tide of slander and lies concerning me and my book. The reason is that I’m not an worker of BROKER but a trader. I try to know recent rules of the game at Forex, its mechanisms and to give reasons for them to others.
Note:
Full text of this article and pictures of examples http://www.masterforex-v.su/
If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/
Vyacheslav Vasilevich (Masterforex-V)
Qualified Trader from 2000 year.
Head of Masterforex-V Trading College.
Author of Books:
1. Trade secrets by a qualified trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders.
2. Technical analyses in Trading System MasterForex-V.
3. Entry and Exit Points at Forex Market
Free Books Website:
http://www.masterforex-v.su
http://www.masterforex-v.org
Author: Vyacheslav Vasilevich
Article Source: EzineArticles.com
