Forex Price Movement – The Key is Sentiment – Learn to Read it For Bigger Profits
If you want to learn how to make money at Forex trading, you need to study Forex price movement and have an understanding of market sentiment which is the key to making big Forex profits. Let's take a look at market sentiment in more detail.
Let's take a very simple equation of market movement and look at its significance, here is the equation.
Fundamentals (Supply and Demand Facts) + Traders View of = Price
The key to understand here is the facts are not important it's the traders view of them that is. You cannot trade the news because the facts mean nothing, investors all have the same facts to look at and all draw their own conclusions about what they mean.
Humans are not creatures of logic, they are creatures of emotion and when greed is present, prices get pushed to far to the upside and when fear comes into play, you see prices pushed to far to the downside and you can see this on any Forex chart.
If you use Forex charts you get a view of not just the fundamentals but how the investors perceive them which is a huge advantage and that's why charting is so popular. The one thing a Forex chart won't give you is how bullish or bearish traders are or an indication if a trend has been pushed to far by greed or fear but the tool below will give you this key information.
The report is free and it's called the Net Traders Positions and is realized each week by the CFTC. The report shows the breakdown of traders trading CME futures into 3 groups, large funds small speculators and commercial traders who hedge for a living.
The commercials are hedging and not driven by greed and fear and tend to be long at important market bottoms and short at important market tops. If you see these smart traders, opposing the speculator groups (both who are driven by greed and fear), you can look to trade with the commercials in a contrary fashion against the speculators, as a turning point is coming.
This report gives you advance warning of prices having been pushed to far and if you keep an eye on the commercial traders, you can make a huge amount of money, by tracking their positions.
The report is free and should be a key report for any trader to look at, as you get an insight for free into what some of the world's smartest traders are doing and that's got to be valuable information to have.
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