Forex Secrets – Delusion No1 – Forex Currency Rate And Economic Factors Impact On Exchange Rate

February 15, 2010 · Posted in Currencies · Comments Off 

The delusion conceptually propounds that intraweek and intraday FOREX currency quotes movement is governed by either improvement or by deterioration of the states economic situation. But in reality, even in case the actual Forex news is superior to the estimated one, the FOREX quotes up/down movement is of 50/50 probability.

This statement is thoroughly important. Once the job of Forex trader is gambling on FOREX exchange rates differential (FOREX pairs up/down movement), the following is to be realized to obtain faultless profit:

FOREX pairs pricing mechanism (say at point X where you are completing the market analysis)
Factors imparting growth/decline to FOREX rates (up/down from point X).
Thus, having understood the FOREX rates factors effective at the extra-exchange (book-maker) FOREX market and the given currency motive factors, a trader must possess distinct knowledge of whether to buy or to sell the given currency pair.

So, what are these factors?

FOREX student suggest unambiguous interpretation of factors responsible for the price formation and the fluctuations there of:

Forex rate constitutes a demand-supply balance for a given goods (currency).
Any violation of this balance, (for instance, in case where the estimated news is in disagreement with the issued official one), results in the FOREX rates reciprocation in chase of a new demand-supply balance. Poor demand brings about decline in a certain currency rate, with a high demand leading to the growth of the latter. The situation continues as long as the currency buy/sell demand comes to balance at another level or at another point.
Referring to the B. Williams (Trading Chaos 2 Chapter 1 The market is what you are thinking of it):

Each world market is dedicated to distribute or share limited amount of something among those desirous to obtain it most of all. The market affects it by way of finding out and identifying the exact price? Underlying the buyer/sellers power absolute equilibrium point.

The above point is readily established by stock, futures, bonds, FOREX and options markets, be it either via an open auction or by virtue of a computerized facility. Markets spot this point prior to any misbalance being detectable by you or by me or even by traders at the exchange floor.

With this scenario holding true and it really does we are in position to jump at certain simple yet important conclusions as regards the information being circulated through the market and enjoying doubtless acceptance.

Thomas Demark was more laconic in Technical analysis – an emerging science:

Price movement is governed by demand and supply. Should demand exceed supply, theres a price rally and if visa versa, theres a price decline. All economists do share these underlying principles.

Hence, the role of fundamental analysis for FOREX market is readily apparent.

In scholar fiction one will discover roughly the following explanation, persistently wandering from book to book, from site to site and suggesting attaining successful trading at FOREX market by way of scrutinizing the countrys economic fundamental data, viz. by tracking the factors reflective of the countrys economy condition as below:

State economy condition dynamics indicators (GDP, trade & payments balance, current account, industrial production, etc. It is knowledge, that the higher the above indicators the faster the economic and the currency price growth);

Stock indices, via average arithmetic index of the countrys securities market condition and dynamics. E.g.: 0.3% daily DJI growth in the USA means that this certain day the shares of 30 leading US companies, being pictured by DJU, went 0.3% more expensive. By similarity, DAX30 is the major German index, incorporating the price of shares of the countrys 30 leading companies.

The countrys interest rate, since the higher the rate, the greater number of investors is eager to invest into the countrys economy and hence into national currency strength.

Rate of inflation (the higher the rate, the quicker the National Bank will hike the interest rate). With this assumption, the CPI constitutes a key factor.

Money supply growth in domestic market, which fact brings about the inflation, leading to the interest rate hike.

The countrys gold and currency reserve assets.

Variation dynamics correlation of: balances of payment, trade balance, state budget, gross domestic product (GDP), etc.

Trade and industry dynamics (industrial production, industrial orders, DGO, capacity utilization, retail sales, etc.)

Construction statistics (construction spending, new home sales, housing under construction, building permits, etc.)

Labor statistics (unemployment rate, new jobs, etc.)
Society investigations (consumer confidence, consumer sentiment, purchase managers and service managers sentiment, etc.)

To be considered additionally are the countrys political stability and tranquility (clearly, any political, natural and other cataclysms are sure to turn investors nervous making them withdraw the investments from the country, thus weakening its national currency). And with the currency being the national economy derivative, changes in economic data will inevitably result in the above currency rate movement.
Conclusions:

Progress in economy results in the currency exchange rate rally.

Decrease in economic indicators leads to the national currency rate decline.
To sum it up, critical economic and political news (whose calendar is issued in advance and is familiar to any trader) constitute a standing factor giving rise to misbalance and causing the currency rate fluctuations.

In anticipation of important economic and political news FOREX pair crawl to the rates as inspired by the estimates (rumored trade), whereas upon actual news there occurs a pulse motion of FOREX pairs in accordance with the scheme below;

Forex rate grows if actual news are better than the estimated one;
Forex rate declines if actual news are worse than the estimated one.
ARE YOU FAMILIAR WITH THESE ABC BASICS OF STUDYING FOREX?

Do you accept that one can earn money by way of using these basics, known to every trader?

Then why, having absorbed these economic axioms, 90% of Forex traders in the world are losers rather than winners.

Where is the delusion of the above ABC truth, nudging traders towards losses? Let us perform sort of point-by-point analysis.

The currency exchange FOREX market is a book-makers one. It is gambling on rates difference without direct money delivery to the exchange market, except for hedging of traders funds by Forex brokers, via buy-sell difference especially during strong trends). Then, http://www.forexite.com reads: Trading is performed without actual currencies supply, which fact cuts overheads and enables Forexite to go long and short on the currency http://www.forexite.com/forexite_advantages/forex_advantages.html.

Comment: Have you ever met any book-makers;

- whose logics was coincident with that of THEIR clients (traders),

- whose stakes were being made in accordance with THEIR technical analysts forecasts, economic laws and common sense?

And what extent of doubt and skepticism should be attached to THEIR free recommendations, advice, surveys and forecasts, laid out at THEIR sites through THEIR analysts?

As a regular result, over 90% of the world traders are still loosing their deposits at FOREX each time they follow Thomas Demark stereotype that All the economists share these underlying principles.

Comment No.1. In as much as the above underlying principles are 90% contradictory to practice, it gives rise to the following question. Might these underlying principles, shared by all economists including Thomas Demark have possibly turned into dogma, alien to life and practice?

Comment No.2. What should a trader lean on: practice or dogma even if supported by great names, provided that the trader is purported at earning money?

FOREX analysts issuing their daily bulky market reviews are not FOREX traders in the overwhelming majority (see detailed discussion below). And on bringing together pairs 1, 2 and 3 there appears certain regularity.

Please, think over A. Elder words, that: FOREX rates and the fundamental analysis are tied together with a mile-long rope. The fundamental analysis is ultimately decisive. But anything is likely to happen prior to this eventuality. Another, yet no less renowned trader and analyst, Bill Williams underlines the same mental regularity of an experienced professional trader (level 3 of his traders skill rating as per Trading Chaos 2): On attaining level 3 you emerge as a self-provided pro trader. You are always familiar with the markets basic, usually invisible structure. You no longer need to refer to others opinions. You neednt read Wall Street Journal, watch market-oriented TV programs, and subscribe to information bulletins, waste money on information channels.

Comment: Logically, there is a counter-implication, that if You are eager to become a successful trader, You are to restrict the influence of various surveys and recommendations on yourself even in case they originate from the world famous Wall Street Journal, to say nothing of crude gurus in analyst skins who use to know ahead of time where currencies will go.

Forex news is a scheduled issue of fundamental data, which as a rule impairs FOREX rates a sharp pulse of motion. But then, why the currency rates movement vector is only 50% coincident with the ABC truism logics as to where the rate should rush in case of actual news being much better or worse than the estimate. And, please, make an attempt to answer the following question, stirring for every trader: why with the new being worse than expected (say, on US economy), the USD currency would initially fall by 40 pips (news work-off) but in 5 to 10 minutes it would swivel back and would display a 200-point rally, with no account to either the issued news or to common sense.

Below are some examples:

Fig. 1. GBPUSD chart as of April 1, 2005 after the news, positive for the GBP and negative for the US economy.
See Note below

In March the CIPS manufacturing index amounted to 52.0 (with the previous data revised from 51.8 to 51.6). Oil price in NYC has grown by USD 2.40 up to USD57.70 per bbl (new record of the latest 21 years). Non-farm payrolls in the USA was minimum since last July (previous data revised towards lower values). There has been a decline in the Michigan sentiment index to 92.6 (median estimate was 92.9, with 92.9 previously).

All the US indices faced a fall down. DJI at NYSE has fallen by 99.46 pips (-0.95%) towards closing at 10404.30. NASDAQ declined by 14.42 pips (-0.72%) to 1984.81. S&P500 slipped by 7.67 pips (-0.65%) to 1172.92. 30-yr US Bonds yielded 4.729 (0.037 lower as compared to the previous close). By contrary, FTSE100 has grown by 19.60 pips (+0.40%) to 4914.00.

Now, the question is to certified economists: what will happen to the GBPUSD within one day or even several hours upon publication of these data? You are right, USD should not simply fall down, it should collapse. Powerfully, swiftly. Well, well

And this time, the same question to experienced traders. By FOREX news headlines You might have guessed that the events are taking place at the Friday American session. Correct. Initially, anyway, the GBPUSD chart will go up by 100 pips (news wok-off), followed by a pullback. Then Forex chart starts a new rally.

It is now to be tracked whether the GBP will breach the latest rally high or not. If affirmative, it will rush up by approximately 160 pips (Elliott wave 1 was 100 pips, while EW 3 is 60% longer). But if the high is not breached? The GBP currency quote will in no way come to a standstill, moreover on Friday afternoon. Hence, – down, to the starting point! And, if breached, similar situation takes shape but the counting is performed in a down direction (EW1, being the same 100 pips plus 187 pips from 1.8826 to 1.8759 being EW 3).

The FOREX day trading tactics will be given scrutiny in a separate chapter. A still separate chapter will be dedicated to Friday trade at American session due to its inherent specifics and to strong seemingly inappropriate movement. The movement is, of course, appropriate. To say nothing of Friday. But it will be touched upon later.

Now, getting back to the currency chart. As apparent, the GBPUSD pair movement on Friday, April, 01, 2005 is in no way in conjunction with the US economy fundamental data. Each forex trader can provide from tens to hundreds of similar instances, where the news are of a certain vector, whereas, after a fraudulent rush along the news vector, a currency applies reverse thrust.

Thereafter, the next day, in daily currency surveys, certified economists are sure to explain all to us by way of inventing another undisguised nonsense, like: in spite of certain data, traders decided that the currency has already worked-off this side. But! How could this occur on Apr, 01, 2005, provided that the currency has been staying flat in a narrow range in the course of the whole of the European session?

Otherwise, another explanation may emerge, that forex traders were expecting still more inferior news on the US economy But! By how much more inferior, if according to DJ, the US non-farm payrolls MA was equivalent to 180K, with actual being +110K, estimate being +225K and prior being +243K? And in what manner do these economists count up world traders: by capita, by countries or by the funds, lost by those, who continued staying long in a holy belief in renowned academic scholars postulate of FOREX rates being tied up to countries economy statistics.

I wonder if Ill ever chance to witness legal procedures to be instituted against any of those famous scholars, so that no one would dare claim that fundamental data trigger rate spikes.

The same pertains to economists, writing about the way, hundreds of thousands traders throughout the globe have conspired to conclude that it is time to reverse the trends with absolutely no grounds. Is it really feasible?

Such reading-matter is, but hammering a single question into ones head: is it lie or is it stupidity of those cooking daily reports for taking traders for a ride, fooling them up and keeping them from the truth, which might be of great avail to them in daily trading. Traders are not a decisive factor, thus rates movement is in no way dependent on their will. Practically in no way.

Wanna check? Negotiate with tens of traders of the trading floor and arrange for a simultaneous entry long on some exotic FOREX pair. In so doing, try to push up either the NZDHKD, or the NZDCAD, or the HKDCAD. No need? I think so. Youll certainly suffer failure with the above, to say nothing of the EUR, GBP, CHF.

Another example:

Fig.2. GBPUSD movement as of May 13, 2005.

See Note below

This is an M15 chart of the American session, where the USD pair has grown by over 100 pips from 1.8583 to 1.8481 against the news, negative for the US economy:

Most indices have dropped down: DJI at NYSE by 49.36 pips (-0.48%) to close at 10140.12; S&P500 by 5.31 pips (-0.46%) to 1154.05. NASDAQ has grown by 12.92 pips (+0.66%) to1976.80. 30yr US Bonds yielded 4.484 (0.047 drop from previous close)

There is a fall in Michigan sentiment index. In May UMich was 85.3 with med est 90.0 and prior 87.7. So it was worse than the estimate, reaching the low since March, 2003. The index decline was being observed for the fifth month.

The April US export price index was +0.6% with prior of +0.7%.

Below are other similar examples of that same day.

Fig. 3. EURUSD chart as of May 13, 2005.

See Note below

Hundreds of examples may be offered, where the Forex news vector is opposite to that of the currency movement. Practically, actual news may happen to be superior or inferior to the estimate. FOREX quotes up/down movement is also of 50/50 probability irrespective of the above.

Why does it happen and what is the way for a trader to pinpoint entries and exits? This is going to be discussed in ensuing chapters of this book.

Note:

Full text of this article and pictures of examples http://www.masterforex-v.su/

If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/

Author: Vyacheslav Vasilevich
Article Source: EzineArticles.com
Provided by: Credit card currency-exchange fees

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Forex Secret – Forex Literature As A 90-95% Of The Traders Loose Their Deposit (Part I)

January 22, 2010 · Posted in Currencies · Comments Off 

This delusion globally entails identical aftermaths: 90-95% of traders turn steady to loose their deposits having studied books by Bill Williams, Alexander Elder, Thomas Demark, J. Schwager, et al.

Following the burn down of their first deposit traders plunge themselves again into scrutinizing Forex scholars, in this manner suffering losses of the second, the third and subsequent deposit. I will hereinafter try to elucidate where from the above regularity grows, so that no trader repeats his forerunners mistakes.

This statistics is common knowledge: 90% of traders constitute Forex losers But the figure has always been giving rise to a leviathan of my doubts. It isnt because of somewhat different 95%-5% loser-to-winner ratio quoted in the Van Tarp and Brian June Intraday trading: secrets of mastership. With 90% quoted universally, there naturally emerges the question, as to whether there is someone capable to check, to specify or to disprove the above figure.
NO ONE IS, besides the directors of largest Western banks providing streamline Forex quotes, but having never raised the issue.

WHY? Because should this statistics be published, there will be sharp and ultimate decline in number of those chasing easy profits from the world Forex market. Otherwise banks would not keep mum in advertising purposes. Neither would they be silent if losers constituted at least by few points less than 90%. In any advertising, customer attraction is ensured by quoting beneficial maxima and non-lucrative minima. This has always been, is being and will always be a universal practice.

As a conclusion, 10% Forex winners is a maximum result among traders. Its them, who have understood Forex market absolutely simple truisms and who attained steady daily earnings in amounts being gained by others within years or even the whole of life.
Certainly, those are to be recollected, who in late 80s were the first in the ex-USSR to grasp laws of commerce and who began accumulating their initial stock. The rules used to be so simple that presently any schoolboy or a first-year student can show the way the capital might have been easily scraped up and augmented on the USSR debris and in the course of market relations being established in the post-Soviet space.

I do exactly allow for the fact that through the years a new generation will be laughing at the way we are now incapable to comprehend the laws, where under currency rates either spike up or fall down, all of a sudden.

With this provision, those seeking fast money at Forex have a much greater time limit than the ones engaged in capital building in the post-Soviet space (Forex market is incommensurably greater than that in the ex-USSR), but not to the extent thought by many.

By now trends are thoroughly less numerous than they used to be 10-20 years ago. By way of taking a glance the charts history You are in the position to understand the way traders used to earn under 20- 40 pts spread, commission and slippage. A trend was followed by a trend at that epoch.

AND WHATS NOW? Nowadays many of traders are impotent to gain under 3 pts spread without commission and slippage.

Thus, this book is intended for those willing to perceive Forex market laws.
In order to get understanding of the way 5-10% of successful traders obtain profits, lets at the outset analyze the reasons and the way the outstanding 90% of traders suffer losses. The 90%-figure looks scaring, to say nothing of 95% or 98%. It occurs despite the amount of literature on the issue equals to hundreds of fundamental books, written by authors, having gained capitals expressed by means of more than 7-digit figures (G. Soros, B. Williams, A. Elder, T. Demark).

Thus, the above minimum of 90% of smart, well-read, broad-knowledged people:

- scrutinize the really great traders heritage;

- open accounts with Forex Broker’s and banks, start trading and

- loose funds up to complete rout!

AND WHERES THE LOGIC? The answer springs to mind by itself… Theres something wrong in the literature (by the way, recognized throughout the world, where the deposit-killing statistics is as disappointing as it is in our country) so long as its studying yields such oppressive results.

STRANGE? No, rather natural, than strange on account of the following:

1. Being a great trader is not indicative of everyone being a great teacher.

2. Multitude of rules elaborated by scholars 10-40 years ago, has grown obsolete, since the Forex market is changing.

3. The scholars HAVE NOT revealed ALL the secrets even WITHIN THE FRAMEWORK OF THE THEN

FOREX, therefore by now their advice and recommendation turn out either obsolete or nave.

Thus, once ones advice and recommendations bring every 9 of 10 market participants to loose their money in each country, where ones books have used to be published and have enjoyed all sorts of hosanna in the press, THEN ONE IS NONE OF A TEACHER.

Naturally, no trader will reveal his professional secrets to the full. But when studying Forex literature one gets astonished by a negligible extent the above secrets are confided at all, with a book on Forex containing 99% of common truth and 1% only of useful novelties. But should one train up even several thousands perspective traders, one will in no way burden oneself with competitors, due to the Forex market huge sale nature. Beyond a shadow of a doubt the above traders are really great. You may agree or not, but anyone, having earned USD1 bn or more, deserves being named great. So, ones books should be published as memoirs. I am not attaching any irony hereto, since these persons have acquired gains by virtue of their minds and labor, as opposite to Rockfellers, who inherited their fortunes or to Russian oligarchs, who either stole or got their capitals dirt-cheap from state authorities.

Hopefully, understandable is the difference between such editions and manuals for beginners.

G. Kasparov, say, is far from writing manuals for chess beginners, since the job can be better completed by others with this fact not at all undermining Kasparovs being a great chess player. And his advice and recommendation is sure to be of interest rather to a close circle of grand masters, than to those having touched the chess for the first time.

Actually Kasparov is but to be respected for not being tempted by the lust for fast money, by virtue of his name in the chess world and by way of cooking up manuals for beginners.

At Forex, by contrast, and for some reason, everyone deems oneself a teacher, which fact results in millions educated people worldwide leaving stock market being disappointed, angry with an inferiority complex life-time pursuit.

And hence, the unanswered question for them: is that all a fraud or not, since gains are midget, whereas losses are titanic?

I am recalling the book titled The Alchemy of Finance by G. Soros (the one Ive read in early 90-s). I admit, its interesting, instructive, but it is all narrated in so an inarticulate and tangled manner. As indicated in the foreword by an American investor, the theory has hardly been understood by few only.

So whats the use of writing in such a manner? A theory may generally be complicated to any extent, BUT IT MUST BE wrapped in a simple, clear and understandable wording.
You are welcome to attempt to read the above book once You have time to. Shortly, the Soros reflexivity theory of the countries cyclic development may easily bear a couple-sentence confinement:

1. Following liberation from totalitarian yoke, a country is granted credits, then, there is a rapid growth and flourish of economy.

2. As soon as the above credits are to be paid back, a countrys economy faces a natural recession.

Is it as difficult? The question may be addressed to a schoolboy (to say nothing of an American investor): when should those countries companies shares be purchased and when they are to be advantageously sold in order to acquire maximum profit? Whats going to happen in case one is too late to sell the shares, shortly exhibiting an impetuous growth in price?

Propounded long before, the Soros theory has been entirely corroborated in August, 98 by the dismal practice established in Asian and Pacific countries and later in Russia.

There still is another question: how inarticulate should Soros have been to enable his theory to be grasped by few only?

The second part of the book is not worth retelling. Reading its original is sure to be much more instructive with my annotation leaving no conundrums therein.

The theory is permeated by Soross strategy: enter long on whats shortly going to enjoy price growth with a 100% probability and pull out Your money along with profits before the companies enter crisis, thus facilitating bankruptcies thereof.
This is the way I clearly lecture my students on Forex-related complexities, thus conveying my logics to them. Despite its own complexities (news, TA, corrective actions, etc.), Forex is essentially reduced to a very simple truth: at a certain moment one should not be late with going long or short on a currency with tertium non datum.

And when asked if the Williams Alligator needs something to be added thereto, the majority of my students reply Yes!, indicating what exactly is to be added.
Ill present a detailed vivisection of the issue in a separate chapter by way of proving that the Williams Alligator is but 50% effective.

Fig. 4. H1 EUR chart as of April 12, 2005. (See Note below)

The Alligators jaws display upward opening with a fractal formed at 1.3006. According to Williams, one should enter long one point higher, i.e. at 1.3007. Upward motion continues extra 11 points. Then the rate sharply swivels to fall down by 170 pts.
Another example.

Fig. 5. H1 EUR chart as of April 22, 2005. (See Note below)

Please, figure out 1.3094, 16 pts above the previous fractal, following the Alligator upward opening. Thereafter, a sharp down swivel covering 140 pts.
Hundreds of similar examples may be drawn. But what are the implications?

With the Alligators mouth opened, 50% of entries should be pro-Williams while the outstanding 50% – counter-Williams (i.e. vectored opposite to the Alligator mouth opening). When embarking on Forex, You must possess clear knowledge of the difference between either of the above 50%-portions. Otherwise, You are doomed to loose even if You follow Williamss technique, let alone other ones.

Even my students are in the position to advise what is to be added to Alligator in order to realize proper entry vectoring. Least of all would I want this example to be taken as a personal criticism of Bill Williams, whose contribution to the Forex theory is a significant one. And the majority of traders, like me, used to begin earning after studying HIS books. But not to go astray, even without any addenda Williams managed to make a tremendous fortune, since a skilled trader (moreover being the Alligators father) is capable to differentiate between a steady travel and a pullback, or, say, a flat, or, visa versa, a trend low for the entry to be vectored oppositely. It is all fairly understandable for an experienced trader. But what about beginners as regards their interpretation of a flat, a recovery or a trend change?

These folks are sure to require assistance, especially, in information not presented in literature on Forex.

Without this knowledge a trader will never perceive the ABCs of stable daily earnings. But why the Forex scholars do not clear out the issue? This query is to be addressed to them, not to me. While reading these opuses, I am getting horrified at the fact that we are being foisted expensive high-sounding titled books, which are not going to ever teach a trader how to attain profits at the market.

Lets open one of them (E. Naymans Traders Minor Encyclopedia and Master-trading: Secret Files) to get the understanding of the way almost all the books on Forex are written and supposed to have the price of USD20-100.

You may agree or not, but the name looks very beautiful and pretentious: Master-trading: Secret Files, 320 pages of sheer secrets

HOWEVER, I HAVENT FOUND ANY SECRETS THERE! You are welcome to discuss an argue Yourself:

1. The interrelation between fundamental factors and exchange rate dynamics being a detailed story of how a countrys macroeconomic growing, benign rumors trading and political stability promote the exchange rate growth.

A valuable secret to be practically encountered in any Forex edition. But below is a real FA secret (not paid any attention to by Nayman): why does currency use to reverse against its countrys economic news? A whole chapter here will be dedicated to the issue.

2. Construction of two moving averages on a single chart and twin combinations thereof. The author furnishes a wise recommendation: entries should be made in the direction the MAs diverge (adding secretly that the most effective MA combination is 21, 55, 89, etc., as per Fibonacci).

The pseudo-secret nature of the above recommendation underlies the fact that any MA combination (should it be 21+55, as the authors; 10+20 as in many Western trading systems; 5+8+13 as per B. Williams or 1+21 as used by numerous traders) yields the same results.

Ok. It all looks great. However, E. Nayman et al., seem to have circumvented the MA intersection chief secret, through which traders suffer constant losses: a lighter MA has crossed a heavier one, say, upwards, but thereafter there is sharp downturn resulting in the MAs intersection again.

Fig. 6. GBPUSD H1 chart as of April, 21-26, 2005. (See Note below)

A fivefold reciprocating crossing of MA 21 and 55. You are welcome to calculate traders losses.

Now, lets call it a day with examples. The MA intersection technique operates perfectly in certain circumstances, while turning out impotent in others, thus inflicting losses upon traders. No criteria have ever been stipulated by Forex scholars as to entries to be effected pro- or counter-divergence of moving averages.

3. MACD construction and analysis. What sort of secret may one expect from the following statement of Naymans: a subsequent high being lower than the preceding one suggests a bullish trend depletion or even its changing with the same being visa versa under minimum MACD values. Much of a secret, isnt it? I thought it were the MACD operation principle, familiar to any Forex novice. The secret-fancier B. Williams hasnt even taken effort to advise to perform inputs change from 9, 12, 26 into 5, 34, 5 to provide for a lag killer.

Assuming the above, authentic MACD secrets are not paid any attention to by scholar, which fact inflicts losses upon traders. The situation comes into effect, when upon a divergence formation, no trend change is observed with another same-trend wave taking place instead.

Fig. 7. GBPUSD H1 chart as of April, 2005, where MA21 crosses MA55 with slight rise and sharp downturn. (See Note below)

Another example:

Fig. 8. GBPUSD H1 chart as of May, 2005: a divergence with MA10 upward crossing MA21; a brief nudge up to 1.8916 and a sharp downturn. (See Note below)

As different from Nayman and other Forex scholars, well touch in detail upon the ways to detect when MACD is trustworthy as a trend reversal attribute and when it is not.

4. TA classical patterns. One can not help smiling at the author sharing a secret of headnshoulders and double bottom patterns, being studied by beginners at the earliest lectures on Forex.

And here goes a real key secret: in what cases the patterns are indeed indicative of a reversal but in what cases brokers trap TA pattern-fanciers? Is there someone doubting the fact that patterns are known not only to traders, but as well to brokers with their mouths watering to make a rod for the backs of lovers and connoisseurs of the above patterns, just like on the sample chart below:

Fig. 9. GBPUSD H1 chart as of May, 09-11, 2005, a classical inverted H&S (See Note below)

At 1.8871 theres an impetuous upward breakthrough, the Alligator rotating upwards, MACD above zero, MA8 having intersected MA21 upwards, the Williams vaunted Awesome Oscillator signaling long entry, the Accelerator Oscillator pointing up nevertheless, the rate reaches as far as 1.8916 and slips down to 1.8481 by 450 pts.

To be noted: much worth scrutinizing is the phenomenon of Naymans Traders Minor Encyclopedia and Master-trading: secret files purported at understanding why over 90% of traders turn losers after reading the books.

The solution, to my mind, is that the above opuses are but good ABCs OF FOREX thus giving birth to all Naymans merits and demerits.

The guy is primarily awardable for having spared beginners paying USD50-200 to various Forex training courses or academies. Instead, one can download and study Naymans books, whose extracts are, by the way, quoted to trainees during their studies.
Nayman is generally to be expressed gratitude to, because of his having laid out the Forex basic course in a competent, popular and accessible way.

This is the point, I elucidate to every beginner, being introduced to me: first one should scrutinize Naymans books, then only its worth discussing hooks and crooks of earning at Forex instead of loosing.

Nevertheless, there is a chief Naymans self-delusion about his folios really being in no way secret files with no one being able to find anything new to enable oneself to improve ones Forex earnings. These books containing neither unique techniques nor non-standard solutions are famous for the generalization and systematization of what has been the Forex knowledge prior to Nayman.

But this fact is not realized by majority gripped by the Master-trading: Secret Files fascination, who open live accounts and turn losers inevitably.

Shortly upon their pre-mature success on demo accounts these folks hastened to open live accounts and faced losses. But since the Dealers staff managed to convince them in the incidental nature of the above losses, the folks ventured to go live again and did again turn to be deposit killers.

With these facts being proclaimed, I dont hold it appropriate to call any statistics science for help. Any sensible man is to get the understanding of the above losses as not being of an incidental nature.

There could be NO OTHER WAY about it.

The next trader training level comprises books by B. Williams: Trading Chaos and New aspects of exchange trading, where the author propounds his own Forex trading methods along with advertising the other ones, viz. Elliotts.

My book, Secrets Of Craftsmanship Narrated By Professional Trader Or What B. Williams and E. Nayman Have Concealed From Traders is purported at developing of THAT particular school of training traders to practical operation at Forex.

Hardly will anyone object to the fact that B. Williams will disclose his Forex intimacies free of charge. Neither will he furnish their 100% disclosure after being paid to.

In all his splendor, Williams possessed sufficient knowledge to;

- to share A PORTION of his secrets in his Trading Chaos;

- to share A PORTION of his secrets as a paid training;

- not to share A PORTION of his secrets in the least.

My book, Secrets Of Craftsmanship Narrated By Professional Trader Or What B. Williams and E. Nayman Have Concealed From Traders is also dedicated to teaching how the Williams secret methods are to be decoded properly to ensure successful Forex trading capabilities.
Each of my books 20 chapters is permeated with a common logic aimed at finding relevant discrepancies in literature on Forex and at presenting my personal technique of Forex trading.

B. Williams declares being capable of analyzing tens of currency pairs (of 140-bar history each) that within tens of minutes, but in no way does he explain how to, whereas, I explain, that its feasible for any wide-screen trader, provided my computer monitor being 3-currency capable only (see: Ally and adversary currencies).

B. Williams sings about his magic Alligator, while I disclose and eliminate its pitfalls by, say, adding a MA233 thereto. This arrangement visualizes the whole of the 4 potential currency travel options: up/down above MA233; up/down under MA233.

B. Williams lists a stop-loss to be a safety cushion, whereas I disclose and eliminate its shortcomings by way of alternatively using my own pending orders.

B. Williams hold trades volume to be authentic resistance breakthrough criterion, while I quote reasons by which trades volume turns to be deceptive on Metatrader platforms (thanks to the banks Consortium) and I introduce my own levels true/false breach criteria.
Now, regarding trading on news, I demonstrate the way one can turn a loser if trade like all the others and I offer my own on-news trading style.

(See continuation of this article under name Forex Secret. Forex Literature As A 90-95% Of The Traders Loose Their Deposit. (Part II)

Note:

Full text of this article and pictures of examples http://www.masterforex-v.su/

If you wish to be trained on Trading System Masterforex-V – one of new and most effective techniques of trade on Forex in the world visit http://www.masterforex-v.su/

Author: Vyacheslav Vasilevich
Article Source: EzineArticles.com
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