Forex Questions

[beerwm]

Hi Everyone,

Just getting into Forex as of late and have an unanswered question, that hopefully those more informed than I might know;

Who 'makes' the prices move [short term]. Judging that the market it so large, is it the traders? Do companies and travellers exchanging currency "effect" the price?

--

Also, is Support/Resistance a good strategy to take into Forex.
-I always understood Sup/Res in stocks as, someone buying at a low price[sup] and someone selling at a high price[res], but if the Forex markets are soo big and liquid as i have heard -- then would traders actually support a price, or resist it?


Thanks,

 

[Wysiwyg]

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and more.

It is free (that dirty word) from SimpleForex.

The windows can be sized and dragged.

Movers and Shakers below.

 

[pilbara]

Who 'makes' the prices move [short term].

spot forex is an Over The Counter (OTC) market. The prices are set by marketmakers in a cartel of largest banks (Tier 1 banks). See this post for a good explanation: http://www.forexfactory.com/showpost.php?p=2623012

 

[beerwm]

spot forex is an Over The Counter (OTC) market. The prices are set by marketmakers in a cartel of largest banks (Tier 1 banks). See this post for a good explanation: http://www.forexfactory.com/showpost.php?p=2623012

Thanks for the link pilbara, interesting stuff

really appreciate the effort,

 

[Stormin_Norman]

Hi Everyone,

Just getting into Forex as of late and have an unanswered question, that hopefully those more informed than I might know;

Who 'makes' the prices move [short term]. Judging that the market it so large, is it the traders? Do companies and travellers exchanging currency "effect" the price?

the forex market isnt a single market like commodities, bonds, stocks or most others. its thousands of individual markets all round the world. arbitrage scalping keeps all these markets essentially at the same price movements.

you are a small fry in the trillions traded weekly. you send an order along with others to your broker along with all the other retail traders. the retail traders aggregate these trades after matching off the long and shorts to their counter parties - which are in effect larger currency 'brokers'.

these then do the same, matching up all the orders received from their clients and passing off the aggregate difference to their counter parties.

this goes around and around the system as all try to negate their risk while profiting slightly on the exchanges.

what makes prices move is supply and demand, like any other market. if the market as a whole wants to sell more then buy then the price will fall to clear the market.

very large transfers will effect the market. qantas paying boeing $400 million for a new aeroplane will spike the AUDUSD down due to the supply and demand thing. big payments by large banks or multinational companies will move the exchange rates in the short term.

also large banks can move the exchange rate too, if they have made a trading decision to move money from one currency to the other, or take a speculative position on a currency cross - simply because theyre so big.

there are also central banks acting to protect or devalue their currencies which can have huge effects on the market.

but really, its supply and demand like all markets. but with such a huge market it takes a huge effort to move the market by one single player.

Also, is Support/Resistance a good strategy to take into Forex.
-I always understood Sup/Res in stocks as, someone buying at a low price[sup] and someone selling at a high price[res], but if the Forex markets are soo big and liquid as i have heard -- then would traders actually support a price, or resist it?

they do exist, but are weaker then in other markets; because of the size of the market they can be smash through with momentum gained.

but trader's psychology also comes into play. if big traders believe the resistance is a good level, then they will trade on it, which will more likely cause it to hold.

but that FF link would have more info on it all.

 

[beerwm]

Thanks for the reply Stormin,
that cleared alot up

 

[beamstas]

Good Thread

Never really thought about Forex like that stormin

Brad

 

[peter2]

Learned something this morning.

"Don't trade JPY pairs during the Tankan report."

Oh, and put your stoploss IN the market.

 

[AbundantIncome]

Learned something this morning.

"Don't trade JPY pairs during the Tankan report."

Oh, and put your stoploss IN the market.

yeah do not want economic news around ... my profit got halved in like few seconds ... great to have the stop loss but stop loss can be annoying too due to market movement ...

i need to get economic data calendar to avoid such trades

 

[peter2]

Apologies for the big pic.
I hadn't realised what a big news item the Tankan report is for the JPY. Obviously the big players take notice of this quarterly Japanese business report and the market can get a bit volatile when this report is released.

As long as we learn it is all good.

 

[Trembling Hand]

Think its got more to do with GM