 Advice to beginners doing first steps on Forex.
Beginner about Forex
The beginning of skill
Time has come to talk about the main thing in work of the trader. The main thing is to see that others do and in time to join that movement which will occur because of their these actions and in time to leave this movement when it weakens.
All it is very easy to tell, and in all books it as a rule is told about trading, but it is very difficult to make. Why, you ask? Yes because movement of the price is equally effective very much many forces, absolutely different strategy and tactics of trade, which adhere (anything thus each other not speaking) different participants of the market.
Very conditionally they can be divided into three basic groups: item traders, scalper and crowd.
Who such Item traders?
Item traders are people who build assumptions of the further behaviour of the market in categories "is underestimated, overestimated" and are guided in the assumptions basically by the general economic and political reasons. Their assumptions look approximately so: "the Near-Eastern conflict inflames, on a nose the cold season, the New York and London futures of 15-th are closed, means to not pass jumping up of the price of oil, and I in advance therefore shall buy actions of the oil company Lukoil! Whether it is necessary to look only are underestimated they in a sufficient measure? If yes, them I shall buy on each dive of the price downwards, and I shall sell approximately in a month when growth will end (at the previous movement of the price it there was a month from a bottom up to top) and it will be visible, that actions of Lukoil are already overestimated."
These reasonings, despite of their sketchiness, contain both strategy and tactics and enough detailed plan of trade. What the most important in these reasonings? With what to begin their analysis? So and to learn most to build such conclusions... First there is an analysis so-called "the fundamental reasons" movements, that is, whether there are in general bases (the base to the assumption) what movement will be?
As we see here the political-economical reasons (the Near East, a cold season) and market (closing of futures on the main platforms) are considered also. Precisely to guess time of the beginning of the actions in the market to it, as a rule, it is added also the indicator of type "... When the new future will open upwards or will punch previous find fault, then I shall start to watch failures and to buy".
The second part - tactics.
Before "to get out of an entrenchment" it is necessary to look round, whether not too dense fire is conducted by enemy machine gunners. It is necessary to orient. Can in fact be so, that someone already has guessed this all before you and has already started to buy, and from it the price has flied up upwards and to buy already late. Then it is necessary to give easy to itself a fist on a head for stupidity and slowness and to not enter the market. As a rule the greatest losses begin with the incorrect beginning when the person does not try to orient in a condition of the market before it to enter for available and quite reasonable fundamental reasons.
How to understand papers fundamentally "are underestimated or overestimated"? Certainly comparison. Well, for example, in March 98-th oil was 14 dollars, and papers of Lukoil 12, and now 33 and the same 12 (the Example certainly slightly suffers).
It turns out, that like are strongly underestimated. I purposely now distract that for this time in Russia the political system has in essence changed and so now to compare it is impossible. I tell to you the scheme of reflections and estimations. - amendments to this scheme, that is all reasonings it is necessary to understand the rest, how speak in a science, ".. To within the two".
And so, having seen, that like the price decent, we start to watch closely the market and to wait for the moments when there is such greater sale, that it reduces the price. It is possible, certainly and at once to start to suffice, when has made a decision, but, first, it is not sports, and secondly, what for actually to buy more dearly if it is possible to suffer a little and to buy more cheaply. But this business certainly of individual nerves. How much they are strong.
I now tell tactics of work "on a maximum". In general the greater position is built only on "against a course", that is when there are people actively trying to drive the market downwards sales, and you already see, that their force will run low just about. Then start to buy, buy, buy towards to them. In the most successful case their sale will run low during that moment when you have typed the position completely... A pause... And the market as air a ball, all over again it is silent, and then all being dispersed and being dispersed leaves upwards! And already everyone who it see try to jump in last car of a train in which you already very long time ago sit! It is similar to magic but so happens, precisely to you I speak!
The third and the most important, that our item trader has thought, - it in advance has approximately planned, when it will leave the market. How? Besides by analogy. It has looked on the schedule of historical data how many the previous growth in approximately similar conditions proceeded and has left, that about one month. Always plan when you will leave the market before into it to enter. This moralizing phrase too it is possible prohonour almost in any book, but it is not told anywhere as it to follow.
And business idle time. First, if you have taken a position (have spent money) take the trouble to watch day and night that with it occurs! Pay as much as possible steadfast attention to the market while you have a position! As will close - there and will have a rest, and now there is a work!
Secondly, it is necessary to plan approximately a level which as you consider the price will reach necessarily. Here it is necessary to be more likely the pessimist. And so, as soon as it will reach this level (in the put terms) start to be closed. Closely watch, that occurs in the market because of these your actions. If it starts ' to fall ' it is time to run, it is necessary ' to rise a wall ' at a level below assumed and all to hand over immediately. If ' eat ' and ask still, and the price does not fall, then movement is still far enough from end and then easy feed the position as to small fishes a forage, all road while the market will run upwards. And closely watch result of feeding! As soon as there will be attributes ' satiation ' - that is the price at sales will start to fall, go down hardly below this falling and sell more intensively.
Who such "scalper"?
Scalper tear off a scalp on the move. Scalper - the person playing on very short movements of the market or even on fine splashes in the price.
How it looks in practice? We shall assume the price uncertainly gets under way upwards, passes literally some items and stops, that there will be plainly further nobody knows. Then scalpers start to buy or sell roughly papers and the price accordingly gets under way upwards or downwards. Actually nothing has occured, but item traders can be deceived and try "to add" to a position because the price "has gone further" or to start to close the positions because "movement has ended". To Them also give the supershort-term position scalpers. They "have held on" all some items of movement which they also have organized, that is in own way are pure "diceit" and game on nerves of item traders.
What has occured? Let's understand.
In the first case when scalpers were bought, the price has got under way upwards and has forced item traders "to add to a position", they have bought new papers or contracts above that price on which all has stopped, and scalpers all over again have bought on some items below (at the price of on which all has risen), and have then sold to item traders of all on some items above, that is have earned. But the stock exchange is game with the zero sum, that is they have won against item traders, having forced them to buy above the equilibrium price of the market.
The same and on "falling" which was organized scalpers by item traders endow it a part of the prize taken on their position when surrender below the equilibrium price of the market. In the fast and liquid market the volume of money in hands at scalpers same or even exceeds quantity of money at item traders, and full cycles opening-closing for a day they do 3-5 almost irrespective of a condition of the market. Scalpers catch the moments of uncertainty in movements and in these the moment as piranha rush on a horse and during an instant it pick up to bones.
Arithmetics here such: the minimal scalp this movement in length in 2 commissions 1 item, that is with reference to INDX it for 10 the dollar tool - 5 items of movement of the price. Think to be to you scalper or not.
The gipsy amicable crowd...
Time has come to tell about the main phenomenon of the exchange market - about "crowd".
What is such? Crowd it those traders who like to run in the company. About that, it is good or bad - hardly below.
With what occurrence of "crowd" is connected? Yes it is simple that the person in conditions of uncertainty and fear which causes in it unpredictable behaviour of the price starts to look back on the parties and to look narrowly, that do others. It seems to it, that if it does not understand, that will be understand more further working around of it "greater professionals" who run and shout. And, when it hears, that two pros behind the next place exchange words type: "You already were on sale? Yes, and you? I was on sale!" - it is necessary to sell urgently everything, that at it is.
In what here a mistake? Why so it is not necessary to do. And, - in fact both pros have not told lies!
Mistake in that in exchange trade the main thing - time, that moment when you type or reduce a position, depending on that, how much well you feel faltering "breath of the market" you will or lose or win.
In that conversation which the beginner has heard nothing was about time, the pro in general avoid to speak the friend-friend to figure because who differently becomes clear in the market at whom wins, and it and is created that to hide prizes and losses.
But we shall return to this "historical" conversation after which the beginner has sold everything, that at it was. As a rule the pro exchange such retorts when all about what speech has occured already for a long time. During that moment when they prepare and they make operation stick to with the terminals and from them a word will not extend, they tensely choose the moment of operation and verify movements of the market with one it clear fine attributes of the beginning of movement. True it is possible to tell, that during this moment of the pro looks at the market "to an aided eye", armed by knowledge and experience of victories and awful losses as the microbiologist in a microscope observes movements of a colony of bacteria.
Therefore the person adjoined another's opinion whose it was, always is late!
What occurs further? Such delay always lead to trade on the average "in a minus"'. I responsibly declare what to trade on prompted for the concrete moment in others of strategy and tactics is always unprofitable. It should be understood as an axiom: at a stock exchange for you, for you money nobody will win!
And what "crowd"? As a whole it looks from the skilled trader so: the price and volume show what to fall, for example like more and there is no place, but here comes "a message" that there was something, already "absolutely catastrophic". The crowd which keeping teeth for edge of a table a feather melted long falling in purchase, comes to the condition of a panic well transferred in film "the Diamond hand" by an immortal phrase: "the Chief! All was gone! Plaster remove! The client leaves!", - also runs to close on the lowermost point the purchase.
Think of that I have told just! The crowd stood in purchase as soon as it all will sell the purchase to sell there will be already nobody, means will start to buy, and it that is, that there is passed the lowermost point of the market. Certainly actually all is more complex, because the markets are now interconnected also movements of one market (smaller) can be defined completely practically by movements of greater, but it simply means, that the crowd of the small markets runs together with crowd greater and more than anything.
Other example: S&P has raised, we shall put, a rating of Russia. What does this news mean? Yes that "have persuaded" it through the government of the corresponding country is simple to raise a rating under reception of the concrete credit "on gluttons" which differently that government could not give out. And what the crowd does? It runs to buy actions of the "restructured" company - holding which it will be not known to cost how many after such "re-structuring", whether 5 cents, whether 3. And why the crowd has run, you ask? Yes because kind a market makers have begun movement.
Notice, they only have begun, have represented the purchases jumping up, and all invalid command having picked up crutches has run "to be enriched" due to the "proved" movement of the market. But it yet all! This very day there is a newspaper with meter headings: "Rating S&P is raised, all problems are solved!". All! For the next day wait for the second impact upward because people who, as they say, ' not in the market ' learn about its movement from the newspaper, that is are guided a pose by the yesterday's information. And so for the next day after clause they will call to the broker and order to buy! The broker will be happy! I can even tell, that it will make! It will sell to this client an own position which has typed two days ago and will perfectly earn.
Just because I have told above because the crowd opens then when it is necessary to be closed neither earlier nor later.
By the way rule so favourite personally by me is connected with a newspaper cycle of reception of the information: "Two (Three) days of growth, Two (Three) days of falling", it is simple time of pulling up of crowd for the market or it is better to tell.
What at us with by? I have purposely chosen such name because so ask each other the pro when collide at a stock exchange. How the answer of one pro to another sounds? Consider, that to you has carried also you have overheard their conversation (and it infrequently is possible). The answer sounds approximately so: "Since morning have closed GEP, then bulls have incurred upward, have rested in.. ty thirty, there traders inside of day time trade have surrendered, and now the big meditation, in my opinion "a deceit"!".
About what it? And why? It would be desirable to tell: "Translate please from language of the trader on human!" And here about what.
1. "Have closed GEP" is means here that... The Twist of fate "type" Would be desirable to joke the citation of the worn out film "... Every year on 31-st of December we with friends go to a bath..."
That's it such tiresome and tired voice I shall tell to you, brothers, so:... In each market there is a market-makers, which always in arrangement among themselves against crowd. They always hold enough greater positions on movement or against movement, depending on that is more probable, continuation or a turn. When the market opens with another by from yesterday's closing a market-makers how you understand can appear at once in big enough loss, but, do not forget, same not simple players, and a market-makers, conductors of the market who long enough can go in literal sense against the tendency, what they do? Yes it is very simple, lift up (or lower) the price before yesterday's closing and there "overturn" under the tendency - jump out from a train and change in counter. To whom do they give the lost position? As a rule - to people who hold movement against their position. At them (because of keeping) in brains shift, and seems to them, that troubles have ended with all of them and it is time to add to a position then still small jerk and they already will be in plus. Here than dangerously keeping of movements, at such "holder" in a head all movements of the price start to be interpreted from this point of view its positions and losses, than and use dexterous a market-makers closing GEPS.
From this one practical advice follows: if wish to define those people who "draw" the market simply look, who closes GEPS. A rule: in the "alive" liquid market GEPS are closed always.
2. "... bulls have incurred upward" is means, that the crowd of buyers has rushed to buy up escaping turn of applications for sale any more not counting, dearly they buy or is cheap, by all means trying to join movement and not deliberating about, whether long it will be prolonged and up to what limits will proceed. And what the more quickly all of them will be bought is amusing, the earlier movement will stop, because if there is no buyer under following higher price (bulls, I shall remind already were bought) that what for to remove applications for sale above?
3. "... Have rested in... ty thirty" are will mention any well "traded" a level about which all already for a long time know and closely observe of its destiny.
By the way, give here at once and we shall talk that such "a level". You likely already many times noticed, that sometimes the market day after day "is trambled down" literally on the same price or hits about any price and is inexplicable jumps aside from it.
What is such? The Level it here that such: From time to time large enough party of traders decides to enter into the market or to leave it simultaneously. After they have made it arises a situation at which in the market there are very many people at which approximately the identical average price of a position. Naturally they do not wish to sell it more cheaply than have bought or to buy at the price of above price of sale! Therefore, when the price will reach these prices they it "will not pass", will buy or sell towards to movement - easier to increase volume of the position while money or papers suffices. On the schedule of the price it also looks, as leaving from a level.
Let's return to our two traders and their conversation. They just also speak that the crowd of bulls apparently completely has had time to be bought until when there was an intensive sale of "defenders of a level" - those who on it seriously was on sale any time back.
Really here there is a dilemma who from them is stronger? To guess without fight very difficultly, it is possible to estimate only on volumes "traded" at a level and to the volumes typed on movement, but for this purpose it is necessary to know though about a parity of traders working inside of day and item traders in the market, and it is simple so to define it is practically impossible. Is all plugs on water more shortly is written.
4. "... In my opinion" divorce "!" Is means, that apparently all "movement" is organized by any large players of the market, but apparently not a market-makers because they were closed (GEP closed) and only with the purpose to force all bull crowd to be bought. If it so after such thoughtful standing there will be an opening next day essentially below a level of a stop of movement, or still something in this sort, but to bulls in such game will be nothing to catch it precisely.
Well here we a little also have talked in this chapter about the market consists of what traders. Observe more closely and you will find out surprising repeatability in their behaviour. As a rule the professional trader owns all in pair strategy which it alternately productively uses though receptions it thus can know very much.
Watch the market!
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