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Big Opportunities in the Forex Market
Filed Under (General) by admin on 13-12-2008
The reason why I start with the weekly chart is because this is where the really big opportunities are in the Forex market. I know that the course is on short term momentum day trading but the one thing that I learned over time, the number one mistake amongst day traders, even day traders with a lot of experience; they forget that the big money players in the market are looking at longer term charts. In fact, most of the guys that I knew in the hedge fund business would probably have a coronary, would have a heart attack, if someone told them they had to look at a five minute chart.Going down these really short term charts, they just wouldn’t want to do it. What they think in their mind is just a bunch of noise and here is why. One of the things that especially rookie traders miss is that the market is driven really by the big money players. The big money players are going to look at a chart like this and back here and I am pointing to February, March and April, 2006. They are going to think to themselves based on fundamental research; based on quant research, based on talking to bankers, based on inside information, based on corporate mergers and acquisitions information, based on money flow that the British pound is going to be significantly higher inside of six to eight months.
That means that they are trading in five hundred million at a whack which probably means their total position is anywhere from five billion to fifteen billion dollars.
So they are looking at this spot back here and they are thinking to themselves that the British pound is going to be much, much higher. Now think about this. If you’re thinking in terms of six months away; five months away, four months away; looking at an hour chart is not going to have any sort of draw for you. You are not even going to want to look at an hour chart. You are going to want to look at a weekly chart. That’s why I look at the weekly chart to begin with.
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Very good blog. I really enjoyed it. All the best, Ryland