[TraderABC]

Originally Posted by tommyfx

Hi ABC,

Look at a Eurodollar chart right now at time of writing 7:53 am (london Time) we have eur/usd at about 1.1939, as you can see price has fallen a long way and stopped here. WHy has it stopped here? Well zoom out to the 4hr and daily charts and you can see we are at a major support line. Because we have stopped and bounced at this level before this tells us the market (whether fixed or not) does not want to go below this point.

Hi tommyfx,
It could be true that graphical methods work. On other hand, if you draw enough lines some of them will be hit just by chance. Another thing that I probably didn't write clear enough. If rates are determined by supply demand,
than WHAT indicator says what people will do at that particular time.

Think about it, you would have to be VERY brave/foolish to place a sell order here because you know the USD is currently very expensive at this level. Other traders know this also so they are unlikely to place sell orders.

Or there could be a lot of sell stop orders below that strong support line and breakage could cause a BIG move down...

Thirdly the majority of the rest of indicators show you over bought/sold levels in a range, this is utterly pointless, get a ruler, draw a trend line and there you will see the true overbought oversold levels.

IF range trading was that easy as buy low and sell high... Sometimes what happens is the damn expanding triangle. You sell at the top, and price just moves up and up.... Think about it: tourist agencies constantly exchange money and banks move huge amounts of money each day... Why would these changes look like perfect ranges or trends (that work often enough) escape me...

But the real key to the market and the way people actually make money is not in the entry system, its in the exit, you could flip a coin, heads buy tails sell SL 10 TP 20 and you will probably make money because you have a 2:1 risk reward with a 50% accurate entry. What most newbies do is run losses and cut winners, so even if you are 90% accurate you will lose over the long run. You should be aiming for a 2:1 risk reward with an average system 50%-60% accurate, above 60% and you can get away with 1:1. The key is calculating what is a relistic TP i.e "am i likely to make 20 pips off this trade and if so does it make trading sense to have a stop 20-40 pips away? " These are the thoughts traders have, not is a 20,5 Ema cross better than my 40,3 Ema cross system and this is why most traders fail and then turn around and blame the market for being unpredictable.

I actually did test random entry... You could end up in pluses after a long time... But the drawdown are huge... Another little thing you forget:
If the markets cannot be predicted better than 50% NO risk/reward ratio will help in the long while. If you risk 1 for 3, then you will be stopped out 3x as much. If you do vice versa, your losess will be 3x as great as wins... Any way you would be lucky to end up with the money you have started in a LONG WHILE>

Yes banks/institutions do step in and stop the currency from falling, but this isnt "fixing the market" or making it unfair,

Market fixing isn't unfair, to the banks...

this is one of the main reasons we have FOREX so people can do this, fixing would just be not publishing offers below a certain price even though supply was there to push it down, this doesnt happen, if a bank wants to risk hundreds of millions of dollars to stop USD dropping thats their problem, they are jumping in the market like the rest of us, hoping their demand for the dollar will prop it it, sometimes it works and sometimes it doent (i.e when a resistance level fails) as a trader we must assess whether the banks demand to prop the dollar up is greater than the supply that wants to see it drop. You cant programme that into a computer, that is skill.

And what holds banks from not posting rates they do not want us to enter at? And finally in your last sentence ARE YOU IMPLYING THAT RATES ARE CALCULATED BY HANDS EVERY SECOND FOR ~100 of pairs?