Forex Markets, Rhythms And Harmonies

Forex Markets, Rhythms And Harmonies

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The author presents the fruits of his research in the Psychology of the Foreign Exchange Market and how traders look at the markets. He uses different imageries to model these various perspectives. He tells us that the primary metaphors that traders use are machine, bazaars, beast, war, ocean, sports and gambling. Such word usage isn’t inadvertent. Metaphors are a key tool that let people systematize their perceptions as well as consolidate their views of the market.

The chief idea behind the research is that the attitude that is used to grasp the forex indices also affects the way people trade. Those who want to view it as sports may feel that winning are what counts, but they may then suffer an emotional setback when they lose. So too, someone who feels that the forex markets are like oceans will tend to think only in larger time periods. You also have people who see it as a war and they take a strategic approach to gain as much battleground in trading as possible.

Depending on the lives they have led, the traders bring in their own outlooks. Using equations, engineers try to make a market model and use it for the future. Doctors like to try and diagnose the changes in the prices like a fever.

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Those traders who have had familiarity with the martial arts come with discipline and a way of getting a grip on your emotions. What is best? Forex trading can actually equalize all of these viewpoints. To put it in short, it just depends on the person.

One filed exists, however, that can offer invaluable insights in the forex markets. That is music.And this is because markets have their rhythm and harmonies. The English Language dictionaries define harmony as a pleasing arrangement of parts that infer congruity. What is even better is that you don’t have to be trained in music to differentiate between something that is melodious and something that is not.

As traders gain experience on the forex market, they begin to get a hang of the interior rhythm of the market itself. Whereas, the new comers have to face the daunting task of finding the innate harmony amidst all the noise and they often turn to technical analysis for help. Musical metaphors can help you deal with all that information.

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A majority of traders have a signature time period. It can be daily, hourly, or even tick-by-tick. They study the charts and then use different analytic methods to help them structure a trade. Rather than going about this way, you could also sit back and let the best time interval opt for you instead.

Take the case when you want to choose a radio station while in your car. You use the scan button to go through the various stations and hear small bits of each and then finally select one. It’s unnecessary to have knowledge of all the songs that are on the station playlist. In a similar fashion, the forex markets are also continually spitting out patterns.

Simple harmonic patterns might crop up to the engineer’s eye , and he could then estimate the resonating frequency of the sinusoidal motion beneath it. He might then endeavor to employ an equation that can project the path. But, someone who has studied music closely can maybe notice the melody in the patterns and the recurring patterns without any equations. You don’t need to know if the data came from a viola or a guitar or from some trades that took place between forex buyers and sellers to see that the values have clear self-similar characteristics and are definitely not random.

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Once it is apparent that the forex index values depend greatly on the outputs of human behavior and other factors such as emotions, and then the traders can be motivated to think past linear methodologies of trading. The outright result of the widening of your viewpoint of the markets is that you begin to notice the recursive patterns in the data that are nested within each other. The aptitude for attaining a trading edge is strongly determined by the way in which is hunted out by you. Patterns in the market and also its internal rhythms are what you should be looking at.

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