A method to understand future price movements
Good evening.
I am a candlestick FX trader.
This time, I would like to write about my own trading thinking.
I have quite a long experience in FX,
and I have made many mistakes as well.
The causes of my failures are various,
but mainly due to misconceptions.
Today I will write about this area.
Since I公開 the “Candlestick FX Logic” this time,
it has given me opportunities to interact with various people.
And I have had many chances to hear about many worries and current situations as well.
From this, I noticed that
many people, like in my past,
are making the same kind of misconceptions.
Even though they study hard and
make efforts, many find it hard to win
as they keep feeling so, so I thought
it might be a good trigger for someone to notice something,
and I would like to write about what I have misunderstood and failed at so far.
First of all, in the past,
I thought that if I studied chart research a lot,
trading would become good.
So I studied many indicators,
and even went back over charts dating back more than 10 years.
I spent hundreds of hours on research,
but I still could not win consistently.
Whether it was because I lacked talent,
or perhaps I simply needed more research,
I didn't know how to make myself win.
But then, at some point, I realized something.
The market is always changing.
It might be obvious, but
how many people actually understand this, I wonder.
If the market is always changing,
even if in the past the market moved according to a certain formula,
there’s no guarantee it will work in the future.
For example, with dice rolling,
there are numbers from 1 to 6,
and each has a probability of 1/6.
I think this is obvious to everyone.
But suppose 6 comes up three times in a row by chance.
Then many people would think that 6 has an edge,
that this die is more likely to show 6 than other numbers,
and start to believe that 6 is more likely to appear.
Furthermore, since 6 appeared three times in a row,
they might think that the next roll would also be 6,
and conclude that the probability of 6 appearing next is 6 to the power of 4, or 1296 to 1,
so it will hardly appear next.
No, even normally,
no matter how many times you roll the dice,
the probability of 6 appearing next remains 1/6.
These are independent events,
so the previous result does not affect
the next dice roll.
In fact, trading is similar,
even if there is an uptrend,
the next direction is still 50-50.
If you ignore fundamental factors and supply-demand considerations
Therefore, during an uptrend,
the idea that the movement will continue rising has a high probability is incorrect.
Whether in an uptrend or not,
the move up or down is 50-50.
Moreover, the definition of an uptrend varies
from person to person..
And since we are not predicting future price moves,
we trade with a 50-50 chance of rise or fall,
and with spreads and taxes, traders are in a
negative-sum game.
A negative-sum game means that the more you trade,
the more your funds decrease, i.e., there is no edge.
So, how can we know future movements?
That is by reading what market participants are thinking at this very moment.
which side is larger, buyers or sellers,
to understand future price movements.
If you know that, you can predict future price movements.
Also, whether prices are rising or falling,
how far prices will move can be understood by reading need and supply.
And to read need and supply,
the most up-to-date information is given by
carefully observing candlesticks,
which provide the most recent information.
Indicators are generally calculated from the closing prices of candlesticks.
Therefore, signals shown by indicators tend to be late.
However,candlesticks provide real-time,
the most current information.
Therefore, in real time,
you can understand how market participants are thinking,
and you can trade without delay.
I have written in detail up to here, but
it took me a long detour before realizing this... sigh
I have interacted with many people so far,
and although they study various things,
many still find it hard to win.
Therefore, first, please realize how the market moves,
and how to read need and supply,
I hope you will notice this first.
And the thing that formalizes this is
the “Candlestick FX Logic.”
This time I discussed something a little difficult, but
the Candlestick FX Logic is designed so that, to read need and supply,
even beginners can trade just by following a simple rule,
so please rest assured about that.