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Fundamentals + Investor Psychology = Price
It is a fact that the fundamentals in forex trading have an influence on price – all investors have the facts at their disposal but they see them in their own way and this mass of millions of people determines forex prices.
Investor psychology : Human psychology is constant and never changes. |
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Traders in forex trading will always be influenced by emotion and these emotions of greed and fear, will push prices to far away from fair value and these price spikes are easy to see on forex charts.Keep in mind that investor psychology repeats - and so do chart patterns.
Another very important point to keep in mind with technical analysis in forex trading is that it studies the fundamentals.All it does is simply assume that in today’s world of instant communications, they show up straight way in price action. |
Studying forex charts however does something more:It studies how investors perceive the fundamentals.Its is not enough in forex trading to simply look at the facts, as we all draw our own conclusions from what we see and emotions ensure that investors don’t act logically – they push prices to far ( either up or down) based upon their emotions.
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Studying forex charts in forex trading gives you the whole picture - it reflects the fundamentals and more importantly, how investors perceive them.When using forex charts you don’t care how and why prices move, you simply look at the reality of price and try and make profits from the moves.It sounds simple as a concept and it is - but it’s extremely powerful and if you incorporate it in your system in forex trading, you can make big profits by trading when the odds are on your side.
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