Does Technical Analysis Work in Commodities and FX?
- Thread starter etfarb
- Start date
Would be hard to impose such laws on FX since it's not any exchange, but fragmented network of liquidity pools all over the world. Insider may trade using some off shore account and not be under jurisdiction of the law. Even play through some crappy spread betting companies registered somewhere on island of Man or like that. Impossible to trace.
ok, I hear ya, I think it's assumed that one side of the trade is always the bankQuote from cornix:
Nope.
Those small moves are mostly banks churning the volume (as their edge is not directional, but rather market-making mostly, they suck overall in directional trades) and algos.
Forget "retail traders" in major FX pairs.
We don't mean anything there, especially considering we all trade differently. And that's great, because liquidity is truly bottomless in the Euro, we can no way affect it so our edge remains.
I thought we were talking about who takes the other side
and still 90% is just me buying or selling from another retail podunk trader, with of course, the bank in the middle making their cut
so it's just as misleading to tell a forex trader he is trading against the bank as it is to tell a stock trader he is trading against Charles Schwab (even though at times that may be the case)
it is not at all uncommon for speculators to be trading more corn than all farmers combined can grow in ten years
you take all the retail traders out of the mix and just watch 10 banks trade amongst themselves, and it wouldn"t be much of a market to watch
it's a myth they sell to small traders that you are trading with the big boys
it's just you and the other guy in Turkey, bickering over a pip
and that is where TA might work
If I was using TA in forex, I would have an editing program in that eliminates big moves when somebody of consequence actually buys or sells
commodities like corn are heavily traded,very liquid,there are institutions with large positions,and those are trackable thru the most traded prices,market profile multi day charts make that obvious, a smaller stock that trades at or less than a million contracts daily is of less interest to a larger money group,the less they are around(biggest acct in the room) the easier it is to manipulate by a smaller trader,big fish in a small pond scenario. The larger the volume, the more likely it is tradeable with ta. Back to fundamentals, the euro/usd is heavily manipulated ignoring TA and the institutions, moving in lockstep with the current currency wars,each country or block of countries(euro) printing away to keep the currency and economy afloat. Up until january maybe the institutions and currencies fed on each others fundamentals and TA. Recently, the methods(printing) haven't been improving the economies,any pause brings up bank runs,unmentionable unresolved debt from 08,and a plethora of doomsayers who haven't a clue anymore than the fed,imf ecb have as we are in uncharted waters. So at this exact moment,no TA is not working except in the very short term timeframes, and neither is fundamental analysis. Best to sit on hands and very nimbly stick toes in water as they are full of crocs for bulls and bears. It will change and go back to normal or a new normal,but for now we are in the middle of a game change,new rules, new game. It will eventually work itself back into the old game,no one makes money if their isnt some predictability,they need the small player to understand it or he wont trade,without the small player the large player has no one to take money from.