Purely discretionary traders rely on their experience, gut feeling, and reading of the price action to make trading decisions. and for FX traders this means coming to grips with what makes the market tick. Intra-day FX prices are shaped by Haws, and as we know these flows may be the speculative bets of a large hedge fund or they may simply be the hedging activity of an exporter. Either way, supply and demand is what sets short-term prices, which is why we say that in FX there is no such thing as a fair price. Even if the macro backdrop favors a dollar decline, a large buy order will disrupt prices in the short run and drive the dollar higher until the demand is satisfied. For the intra-day trader the thinking behind these flows is not important; price is all that matters. |
Getting a proper "feel" for the market comes down to understanding the price action. Price action is that magical thing that scares traders oU{ of their positions and lures them into traps. Watching the bids and the offers get hit is the equivalent of the old-(jme tape reading made famous by Jesse Livermore and other "punters", who used to read the ticker tape attentively in an effort to gauge short-term price trends according to price and volume. Price action reflects the tug-of-war that is constantly going on between the buyers and the sellers in the market, and to the experienced trader it can also be a window into the market's footing. |