Observe the market and take care of yourself

Observe the market and take care of yourself

When trading foreign exchange, the market generates a huge amount of information. Price changes tell us about the battle between the long and short sides. Your job is to analyze this information and place bets on the side that dominates the market.

The magic prediction is a marketing gimmick. Those who sell consulting services or raise money know that good news attracts paying customers, while bad news is quickly forgotten. The phone rang while I was writing this chapter. It was a famous guru who had already started going downhill and told me that he had found a "once-in-a-lifetime buying opportunity" at some kind of produce market and asked me to help him raise money and promise to make 100x in 6 months! I don't know how many fools he attracted, but magic predictions tend to work well in deceiving the public.

Use common sense when you analyze the market. When you are confused about something new, compare it to life outside the market. For example, an indicator might give a buy signal in both markets. Would you buy in a market that has fallen a lot before, or would you buy in a market that has fallen only a little before? It's like a person falling. If he just falls down a flight of stairs, Pat Dust will be able to run again soon. If he fell from a third-floor windowsill, it will be difficult to run again in the short term because he needs time to recover. Prices rarely rise sharply immediately after a sharp drop.

Successful trading is based on three pillars. One is the need to analyze the balance of long and short power; the other is the need to implement good capital management; the third is the need to strictly follow their own trading plan to avoid trading in the market.