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Forex Secrets


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Forex Tips & Resources

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Forex Secrets

  1. 1. It is horrible to imagine what could happen to USD rate at the spontaneous market in this case. Atthe controllable 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, doremember the elementary economical laws. The spontaneous market is a barometer thatestablishes the real price of goods on the basis of the demand and supply (in the given case, it isthe real rate of exchange of any national currency).The Episode #2 . The hurricane "Katrina" and the flood in USA on September 7, 2005. USD ratestably increases. Chronicle of events.As the result of the dam (dike) debacle, several states in USA become submerged. The industry,agriculture and transport network were destroyed. There started panic not only among commoninhabitants but among officials of various ranks as well. Hundreds and thousands of peopleperished. There were cases of looting. Many looters (and, maybe, just desperately hungry andthirsty people) were shot by soldiers of USA army. The government of USA declared thishurricane to be a disaster on a national scale. For the first time a new plan of civic defense wasintroduced (see "BBC. The total chronicle of events")."Katrina" was bringing USA to ruin. Senators from Louisiana asked $250 milliards from the federalbudget for getting over "Katrina" after-effects.Thus, it is an illustrative example of the greatest natural cataclysms in USA in the last decades.Even the poorest country in the world - Haiti - provided the financial help for USA ($ 36thousands). The help of Ukraine made 1 million of hrivnias , etc.What did happen to USD rate at the controllable Forex market? Notwithstanding all economicallaws and even against the common sense, USD rate increased!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 think, the thesis that Forex has turned from the spontaneous market to the controllable onedoes not need further proofs. Hence, traders must introduce amendments into strategy and tacticof their work at Forex.What are the conclusions, significant for traders, logically follow from these facts?Under the new conditions of the controllable market, a trader must not follow the "crowd" (flock).As B. Williams, A. Elder and many other authors have fairly emphasized, the "crowd" pushes theprice at any spontaneous market. On the contrary, at the organized Forex market orders must be
  2. 2. opened in advance of Consortiums interests!I try to find the core of a good sense in each technique of the successful work at Forex . Is itnecessary to rediscover the well-known principles? There are many prosperous traders whoopenly and honestly present their methods of gaining profits at Forex . If their techniques aresuccessful, it means that these authors have a thorough grasp of the problem in its essence.However, in practice, each of the techniques sometimes brings profits, whereas in other cases it isdisadvantageous. And it does not matter, whether this technique is developed by B. Williams or bya not celebrated but a successful trader.Conclusion #1. It is necessary to clearly delineate the domains where a given technique does workand where it fails (as well as the corresponding reasons). In such a way we can clearly understandwhat of the method by a given trader is worthwhile to be used - as well as how and when to makeadvantage of it for our work at Forex .Conclusion #2 . Your trading system must not be just a mixture (farrago) of various techniques.This rule is especially important for the beginners. After reading heaps of books on Forex , all ofthem 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 followingsteps must be taken:a. you choose just any technique developed by any author-trader (e.g., mine or B. Williamss, orsomebodys else);b. you must get used to work with the demo account according to this technique to such extent ofautomatism that you "sense it as your own initial (original) trading system of the work at Forexc. Only after this you should start to study additional literature. You must clearly see what pointes,"borrowed" from other authors, can help you personally to work at Forex , to improve your tradingsystem for getting extra profits.Objectiveness of Forex turning from the spontaneous market into the controllable one. The patternof this processAny profitable business transits from the spontaneous to the controllable one. It is an objectivestage in the evolution of business undertakings.In each branch of a big and super profitable business the initial stage of the chaotic competitivestraggle is already has been passed through (petroleum, gas, ferrous and non-ferrous metallurgy,precious metals, arms traffic, etc.). At present all these areas are definitely divided between theprincipal participants. That is, there exist certain financially-industrial groupings, well-controllableand protected from intrusion of a concurrent.The same concerns the biggest 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 themarket where the turnover exceeds $1 trillion per day? Can the biggest banks and governments
  3. 3. depend on "Chaos" - i.e., be dependable of the "off-floor" traders - such as me and you? Canthese organizations be worried about the direction in which we (traders) could turn the trend of allnational currencies at this or that second? It is ridiculous to imagine!To realize the power of the grouping that has organized the "game" of Forex all over the world, weshould refer to the thesis from the journal "Speculator". In June, 2001 the three biggest dealers atForex market - Citibank, J.P. Morgan Chase и Deutsche Bank - together with ReutersGroup PLC had started up the system Atriax . However, the latter did not meet competition andstopped operations in spring, 2002. The author of the paper just hinted that even the alliance ofthe 3 biggest world banks could not make any serious competition to Organizer of the "game" atForex (to Consortium or somebody else).In this connection, how one can take on trust the principal thesis by B. Williams concerning"Trading chaos" that rules Forex? Whats important, all methods of this author issue from thispostulate. The following conclusion by B. Williamss also raises doubts. He states that trends arecreated by traders, whereas brokers just realize these trends and place traders orders. Accordingto 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. Williamss techniques be correct if their basis is principally erroneous?Let us enumerate the fundamental mistakes made in "Trading Chaos". It is necessary to facilitateunderstanding of the techniques and practical recommendations given by B. Williams concerningthe work at Forex .1. B. Williams sees Forex as a spontaneous market, uncontrollable by anybody. According to thisauthor, 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". However, unconsciously or deliberately, hehas omitted the third participant of this very process. This is banks and the world financial systemin 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. Williamss idea by ourselves. Our aim is to demonstrate absurdity of his"chaos theory" applied to the up-to-date market of Forex.· How brokers and banks market-makers can pay off profits from traders deposits if thetraders total earnings would be bigger than the market-makers profit in this period?· Being in shoes of market-makers, National Banks, governments of leading countries ofthe world, etc., how will you conduct yourself on the eve of the news issue? For instance, after thepublication of Michigan University Index, USD can "go up" by 150-200 points with respect to allnational currencies. That is, in several hours dozens of milliards of USD will be redistributed.Somebody will earn the money, whereas somebody will lose it because of the difference in ratesof exchange (quotations).What will you do in the place of the biggest financial groupings? Would you just be sitting andtaking sedative pills? Would you just be trying to guess what steps will be taken by professors of a
  4. 4. Michigan University? Will 0.3% be added to the index previous value (91.4) or subtracted from it?Whats important, this "difference" makes milliards of USD - for somebody! Possessing suchcapitals, would you just be sitting idly and waiting for God knows what? More probably, you will tryto make this process controllable and predictable. Rather you will do your best to gain profit withthe help of such indices and news. I think 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 (ifthe news are worse than the prognostication), it is necessary 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 crossover, 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 ofthe trend and in the middle of it.This is why the given chapter is named "Anti-trading chaos" - to be more precise, it is the anti-trading system.Further Ill not dwell on absurdity of the chaos theory by B. Williams when applied to Forex . I hopeit is quite clear. Any trader can find a lot of evidences of the fact that Forex is a controllablemarket. There are also many examples that prove fallacy of B. Williamss conclusion that tradersform a trend and "push" it.As I get it, the "game" of Forex and its rules in their essence are the following.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 established byhimself; b). simplicity of the analysis, predictability of the situations and the possibility of earningmoney 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 treatment by Brokers,authors of numerical "classical" works on Forex and analysts via their sites and prognoses. Thatis, 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 machinations developed by Brokers has become alogical continuation of the above-enumerated rules of the given game. Economists from Brokershave quickly grasped that the number 90% of traders-loses is very close to the figure 100%. Whatfor will they send clients transactions to the foreign market (the market-maker bank)? In fact,
  5. 5. traders will lose all the same! Besides, it is possible to slightly "help" traders in their losing by"knocking down" stop-losses - all traders keep their stop-losses approximately at the same place.In addition, the following tricks can be done as well: the "slippage" (opening of transactions at aprice much worse than the price at which the trader wanted to open the deal); computer "pending"at the beginning of the heavy movement in currency pairs. One can give many analogousexamples - up to the undisguised fraudulent nonpayment of earned profits to traders.These centers are also protected from the viewpoint of finances. If in flats the sums of orders ofthe traders who open transactions on "buy" and "sell" are approximately equal, Brokers canalways hedge the difference between "buy" and "sell" with a market-maker under the condition ofa heavy trend.The only thing that cheats from Brokers are afraid of is the unmasking of methods of their work.Really, this will put an end to the afflux of new "victims"!There are several sure signs of a fraudulent Brokers. In my educational course I enumerate someof such indications. However, here I give only one characteristic (traders should think about itwell). If Brokers has one point of spread, you should calculate expenses on the marginal trade, indetail described in all "classical" manuals of Forex . For instance, let it be thought that you openthe order for one lot. Forex Brokers supposedly buys EURO to the sum of $ 100 thousands foryou. When you close the order, Forex Brokers supposedly transfer EURO to USD again. Thus, ifyou open 10 deals with EURO/USD pair during a day, your Forex Brokers is supposed to sendmoney abroad and get it back 10 times, buying EURO for USD and v.v. All these transactionsmust be made exceptionally for you! Is it realistic?In a next-door bank you should ask the conditions for the transfer of $100 thousands abroad andback. You will learn the cost of the commission for such services and the time required for thistransaction (in half a day, the next day, etc.). Here I do not mention the papers that must beprepared for each transfer. I also say nothing about the time required for collecting all signatures.I wonder, during this period of time what changes will occur in EURO/USD rate as the latter isaltering every second?5. To earn regularly at Forex, you have to master yourself. That is, a trading scheme must bedeveloped. According to this scheme you will work against "generally accepted" rules. As it isalready mentioned, these rules are popularized by Organizer of the game at Forex . Sticking tothese rules, more than 90% of traders all over the world lose their money.6. Developing my trading system, I have made use of numerous generally-recognized techniquesof the work at Forex (by B. Williams, etc.). Surely, there is a kernel of good sense in any techniquethat enables earning money - even if in 50% of cases. Therefore, the traders task is todifferentiate the conditions, under which a given technique can provide profit. It is also necessaryto understand where, when and why this technique yields a loss to the trader. Naturally, a tradermust 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 organicallyintegrate different techniques, profitable at Forex. Various methods of giving analysis to Forexfrom different viewpoints do help us to more thoroughly and profoundly understand this market
  6. 6. and, consequently, to gain profit regularly.8. The game of Forex is widely spread all over the world. In addition to speculators, there areother participants in Forex - e.g., individuals who need to exchange currency for their business. Allthese factors provide an objective opportunity to gain profits bigger (and more regularly) than inany other financial game of the world.9. Therefore, Forex gives a real opportunity to get into the principally new financial market and tobecome a really independent. Anybody can be engaged in trading at any point in the world. Forsure, a State, much as it would want it, cannot deprive a trader of his production facilities becausein this area gaining of profit depends just on ones techniques and skill.10. Forex gives you just a chance to earn money. However, not everybody can learn how to gainreal profit. Even after having mastered the fundamentals of making money at Forex , a traderneeds to learn a lot of additional factors in order to transform his potential abilities into real money.In this connection the following aspects are very important.a). the psychological stability (the absence of fear and hazard, the ability to work automatically atthe subconscious level, etc);b). a reliable broker (the traders profits, being virtual, materialize only if you can convert it into realmoney at any second);c). self-perfection via mastering new techniques of gaining profit, learning from an experiencedinstructor and due to exchanging opinions with other traders;d). the possibility of obtaining money from the investor for the asset management. This gives theopportunity to proceed from the level of ones own deposit of several hundreds or thousands ofUSD to the principally new level of the work at Forex. In this way one can simultaneously reinvesta part of ones profits into the deposit and to spend money on heightening of ones own well-being.There is a simple example. At mini- Forex , many traders do not earn a lot of money: even if atrader has doubled his deposit in a month, his profit is small (e. g., by making $100 out of $50).Besides, a part of it he must take off from the deposit for the daily needs. Ill not give examples oflarge deposits because the tactics of work with them are principally different - as well as thepercentage of profit.11. Not everybody can cover a distance from the chance (the dream) to its realization - i.e., tomaking real money at Forex . As a trader, here you work against Organizer of this game, who isthe professional. That is, to earn money regularly by taking it away from Organizer, one mustbecome the professional himself. Do not hurry to open a real account at least till the time whenyou will learn to do the following:a). As B. Williams himself, in several minutes to clearly see two possible alternatives of currencypair movement at the beginning of each session. Correspondingly, you must develop two businessplans, where points of input into the market and output from it must be clearly designated.b). To work out ones own tactic of the work with the demo account at Forex to perfection. The aimis to augment the demo account at least 2.5-3 times in a month.
  7. 7. c). To develop the long-term and intermediate strategies (not less than a month and a week,respectively) - as well as the short-term tactic (the intra-day trading session). Acquisition of thisknowledge will help you to gain profit.d). After opening of the real account, at the beginning you must work only with trends (under theconditions of flats you must deal with demo accounts). It is necessary to clearly distinguish onefrom another at the beginning of trading.e). You must choose two ally currency pairs and work with them continuously, accumulatingexperience.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 mustnot open a real account there. It means that Forex is not intended for you.By the way, there is completely nothing humiliating in the inability to make money at Forex . Somepeople do not understand technology, or literature. Others do not come to know fine arts, politicsor sports, etc. Does anybody consider oneself inferior because of this reason? Surely, not at all!Analogously, I perfectly well realize that the reaction to the last two items of my vision of the gameat Forex can be inadequate. It will stimulate an immediate tide of slander and lies concerning meand my book. The reason is that Im not an employee of BROKER but a trader. I try to understandrecent rules of the game at Forex, its mechanisms and to explain them to others.==== ====Get More Info ====