Forex multi-account manager Z-X-N
Accepts global forex account operation, investment, and trading
Assists family office investment and autonomous management
In the highly complex and uncertain field of foreign exchange investment and trading, when prices experience a significant rise or fall, according to the inherent operating rules of the market and the characteristics of price fluctuations, a certain degree of retracement usually occurs.
Many experienced traders are able to perceive this phenomenon based on their long-term accumulated trading experience, deep insights into the market microstructure and macroeconomic environment, and their own keen intuition formed in the long-term trading process. However, the specific extent of price correction or rebound is extremely difficult to accurately predict in actual trading. This dilemma is mainly due to the dynamic changes of two key variables in the foreign exchange market, namely the number of traders who close their positions for profit and the number of traders who hold long-term positions.
From the theoretical perspective of market supply and demand and trading behavior finance, if the number of traders holding long-term positions accounts for a large proportion in the market, then in the adjustment stage after price rises or falls, the trading behavior of long-term position holders is relatively stable, which has a certain buffering effect on the short-term fluctuations of market prices. Under the combined effect of multiple factors such as market supply and demand, investor sentiment transmission and market expectations, the price retracement will be relatively small.
On the contrary, if the price retracement is small, based on the inherent logic of market operation and the regular characteristics of trading behavior, we can reasonably infer that the number of traders holding long-term positions may be large. This perception of market dynamics is usually called market sense in the trading field. In essence, market sense is a highly condensed experience and intuition accumulated by traders in their long-term trading practice through in-depth mining of massive market data, repeated verification of various trading strategies, continuous tracking and analysis of macroeconomic situations and micro market structures, and countless trading decision-making processes. Since its formation process is highly dependent on a person's unique trading experience, knowledge system, and psychological cognitive model, it is highly subjective and individual-specific, so it is difficult to convey it clearly, completely, and accurately to others through standardized language or universal models.
From the dual dimensions of risk management and market ethics, it is actually not recommended that traders share such market sentiments at will. As a dynamic system that is affected by multiple complex factors such as the release of global macroeconomic data, changes in geopolitical situations, adjustments in monetary policies of various countries, and international capital flows, the foreign exchange market has extremely high uncertainty and volatility. If the market situation suddenly reverses in the short term, other traders who accept the market sentiment sharing are likely to suffer unnecessary economic losses due to making investment decisions based solely on the subjective and uncertain market sentiment. Once this happens, the damaged trader is likely to have negative emotions towards the sharer, and even trigger potential legal disputes or reputation risks. In summary, casually sharing market sentiments may not only fail to provide substantial help to others in actual investment decisions, but may also put the sharer himself into a complex legal, moral, and reputational dilemma.
In foreign exchange investment transactions, when the market is in the consolidation range of the big trend, the same-day batch position building strategy contains high risks and is not an ideal choice.
At this time, market volatility is limited, the trend strength is decreasing, and the amplitude and cycle of price fluctuations continue to shrink. From an operational perspective, this market environment almost blocks the feasibility of same-day batch position building, because even the slightest price change may threaten the newly established position.
In the absence of key driving factors such as interest rate policy adjustments and important speeches by central bank governors that are sufficient to trigger major changes in market conditions, the theory of batch position building in day trading lacks practical support. The reason is that only when the market fluctuates violently can the trend amplitude be effectively expanded, thereby providing the necessary operating space for batch position building. Even so, as time goes by, the trend energy will gradually be exhausted and the amplitude will continue to narrow. In this case, if the position is built in batches, the position size should be gradually reduced to reduce the risk exposure.
From a practical point of view, the theory of building positions in batches on the same day lacks effectiveness in practical applications. If there are still people who promote this theory, it is likely that they are theoretical researchers who lack practical experience, and their conclusions are mostly based on theoretical deductions rather than real trading practices. Unless investors take the initiative to bear potential risks and losses, this strategy should not be adopted.
In the field of foreign exchange investment and trading, a large number of traders show a behavioral pattern that tends to trade against the trend. This phenomenon is mainly attributed to the driving force of human instinct.
From the perspective of behavioral finance, humans have cognitive biases such as loss aversion and overconfidence in the decision-making process. These factors largely affect the decision-making of traders and make them more inclined to trade against the trend. Compared with the trend trading strategy, the counter-trend trading is more acceptable among the trading community. From the logic of market behavior, when prices experience a sharp rise or fall, based on the mean reversion theory, some traders will think that prices have deviated from their intrinsic value, thus generating the motivation to operate in the opposite direction. In the foreign exchange market, most traders tend to adopt counter-trend trading strategies.
However, it should be emphasized that counter-trend trading is usually accompanied by a higher risk exposure. Behaviors such as reverse positions, heavy positions, high-frequency trading, cost averaging, and failure to set stop losses are all strictly prohibited. These behaviors not only violate the basic risk management principles, but may also lead to uncontrollable risk accumulation. Although relevant trading rules and prohibitions have been widely publicized through various channels, in actual operations, these prohibited behaviors are still what many traders try to implement, which makes it a very challenging task to ensure that traders strictly abide by the trading rules.
So, why do most traders choose to trade against the trend in foreign exchange investment transactions? In-depth exploration of its roots mainly involves two key factors: human instinct and capital constraints. From the perspective of human instinct, traders often find it difficult to overcome their own cognitive biases and emotional interference when facing market fluctuations. From the perspective of capital constraints, as the metaphor of "big chickens don't eat broken rice" implies, traders with strong financial strength usually have stronger risk tolerance and wider investment options, so they are more inclined to adopt a stable investment strategy, while traders with relatively limited funds may choose a higher-risk contrarian trading strategy in a hurry to gain returns. However, this strategy is often accompanied by higher risks, and in most cases, the returns and risks do not match.
In foreign exchange investment and trading activities, the large fluctuations in the market seem to be concentrated in regular working hours, but their essence is the result of news releases.
During the London and New York sessions of foreign exchange trading, prices often fluctuate significantly. On the surface, this phenomenon may be attributed to local working hours, but if we explore its internal reasons, it is actually because important economic indexes will be announced during these two periods, or important figures of the central bank will make remarks that affect market trends.
For traders whose native language is not English, it is quite difficult to truly understand the true meaning and impact behind the news.
In the field of foreign exchange investment and trading, creativity is not an ability that can be directly taught by others, but is gradually accumulated in the long-term practice process.
In the technical analysis level, creativity plays an extremely critical role. Foreign exchange investment and trading practitioners generally believe that creativity is difficult to acquire through conventional learning methods, and the creativity of successful technical analysts is definitely not derived from the guidance of others.
Investment and trading managers usually focus their main energy on the actual operation of investment and trading, lack sufficient enthusiasm for technical analysis, and are accustomed to relying on the creative thinking of technical analysts to assist decision-making. It can be seen that from a practical point of view, creativity comes more from the technical analyst group rather than investment and trading managers.
The composition of creativity is 5% inspiration and 95% unremitting efforts. It cannot be achieved simply by learning. In the foreign exchange investment trading community, traders show a clear polarization in creativity, either they are born with creativity or they are not. In the real foreign exchange investment trading environment, traders who lack creativity account for a large proportion. Moreover, creativity has distinct individual attributes, and no one can fully convey their creativity to others.
If multiple technical analysts conduct research on the same analysis target, it is very likely that two completely different trading signals will appear: one signal prompts buying, and the other signal prompts selling. In this case, investors need to rely on their own professional qualities and experience to independently decide how to screen and use these two different signals.
13711580480@139.com
+86 137 1158 0480
+86 137 1158 0480
+86 137 1158 0480
Mr. Zhang
China · Guangzhou
13711580480@139.com
+86 137 1158 0480
+86 137 1158 0480
+86 137 1158 0480
Mr. Zhang
China · Guangzhou