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Who moves the market? forex question

im talking about major traded fx pairs and some minor pair. not directed to exotics or those illiquid pairs. i am not expert in trading, but from what i understood is big institution, hedge fund, central bank, retail banks, etc is the primary reason market moves? does big institution inform each other which direction of market they will trade before entry?

2nd question is what is the purpose of central bank trading the market? do they have same goal like retail traders which is to make money?

3rd, it is understood where hedge fund, trading firm, commercial bank/institutional firm etc their primary interest of getting in the market is to make money. but ironically, if anyone ever ask where is the profit coming from, the answer would be somebody else losses? if this statement holds true. would it be fair to say, to make big profit, institution require to destroy the economy, such as deliberately release fake news, interfering with gov(this weaken country=means weak currency), staging a coup d’etat, overthrowing gov, devaluing currency so third world country getting poor, robbing off pensioner savings, charging high fee, etc u should get the idea

if my third paragraph holds true, would it be fair to say, those big institution can be grouped into 1 large entity or can call them as big organized mafia as their motive is the same? if yes, that means theyre primary mover of market and where to obtain the required info, so that retail trader able to trade the same direction as them

please feel free to correct me if my understanding above is false

That is forbidden and will not work as they have too many entries. But it is much easier if they use the same chart technique, the same fundamental analysis and evaluate it in the same way. So you logically get the same prediction results.
That is the only factor which counts. And it changes from time to time, usually in cycles of 3 months.

No, they have to keep borders to the exchange rates for a certain stability range. Additional they have to control their volume in major currencies to be able to act.

No, if the seller made profit and the buyer will make profit. If you look at the stock market Indices long term, you will see that. What you don’t see is the composition of these indices which was different 10, 20 or 30 years ago and what happened to companies leaving the index in the last 30 years.

An additional aspect is the role of market makers and liquidity providers. They have to take offers against their predictions and will try to compensate them against other trades to keep the results under control.

For trading you will also get different predictions on different time frames.

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The market moves when there is an imbalance in the supply for price at one level and demand of another. This can be seen when price moves very little and price goes sideways, here price is stable and the players agree to the market price.
When price changes and moves in a direction it is because there is a disagreement of how many want to buy or sell it and at what price.

The so called big players all have to trade against such moves because they are, albeit allegedly, in a majority and much larger then the retail traders. That premise must hold true since otherwise there would be no fill for them and hence no market to trade.
Now as to trade as them is not that difficult, simply outline where the market runs in a direction and counter that to where the market is sleeping and going sideways. There you have two differing ideas and you can work with that to understand what your position as a retail trader has to be.
Mind you you’ll figure out that you have to be short when the market is going long and you’ll have to be long when the market is going down.

I hope you understand some of this. I may create an image for you later. GL

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@IlIlIlIlI @alexandertatsumaki

Hi, great post. after i done a bit of reading here and there, apparently there are some trader have conflicting opinions about who moves the market, what do you think?

who moves the market?

  • interbank forex/big banks, global network utilized by financial institutions to trade currencies between themselves
  • trade on behalf of large businesses, corporation
  • Trading systems from Reuters and Bloomberg allow banks to trade billions of dollar at once
  • 4-5 big banks controls over 50% of interbank thus ability to move the market price
  • such as deutsche bank, citi, jp morgan chase, hsbc, possibly some china
  • liquidity actually come from majority of the people’s savings, as each of us/business having a bank account
  • therefore it is assumed the big banks have endless liquidity supply to move market price
  • banks can see where is all trader’s position, such as 70% long, 30% short etc
  • banks also can see where is your buy/sell limit orders, buy/sell stops orders, stop loss and take profit
  • banks will trade the same direction as the minority trader, for eg: if 70% long, and 30% short. bank will go short, so that 70% long trader gets taken out
  • it doesnt make sense for bank follow same direction as 70% of the trader, because bank themselves will be the one need to pay for the winnings of these 70% long trader
  • so price will go against those 70% long trader until they give up and close the losing trade manually or hit their stop loss

by using IG Client sentiment, https://www.dailyfx.com/sentiment#view-more
for eg: if 70% short, and 30% long
bank will trade the same direction as minority, which is long. if you want to win, go long

  • dont ever trade the news, because banks can move the price wherever they want during that time

all the description above is not my opinion, but i gathered from “nononsenseforex.com
complete video here : https://www.youtube.com/watch?v=Lvq0t0eQOG4

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What happens if 50% of the traders read this and follow this advice, and …

… relevant news are coming up nearly daily?

Just to think about this holy grail :wink:

actually you could try it and see what happens. imo if you have the “correct” formula you do not need to worry about amplitude such as news. positions should be plenty either way.

the same way a system should work on any symbol, it should also work on any time-frame also. if not then it’s made to work with one thing only and could probably have some dynamic parameter worked into it.

a real world example is a trading system that only works on Wednesdays, trading futures or going short. if it works then it is good, that’s correct. however my point is that if the system doesn’t work on any day then there probably is something else that could be worked into it to make it better and with better i mean more complete.

again about the news stuff, try it. no offense, just opinions.

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I fully agree with that! And that is the argument why most EAs and systems must fail sooner or later as they cannot meet this criterion.

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its not gonna happen, it just represent a small percentage of the entire picture. so i doesnt matter anymore, someone sell, there are always someone else going to buy, and vice versa.

What most retail traders fail to grasp is the fundamental behind the very existence of FX market, and of commodity markets in general. Purely speculative trades (you, me and bigger guys) account for only 20% of the volume. So when everyone says FX is the biggest market with $6 trillions per day, most of it is not to make money. Also spot FX as we know it is only a small part of it, most trades are done using futures and swaps.

So what’s FX market’s main purpose?

  • Hegding: a company with FX exposure will trade to lock in the exchange rate and mitigate their market risk. Speculation offers liquidity in this case. Remember those fake breakouts? You buy to give someone else a better sell price…
  • Transaction: when I was on the metals floor, if a EU client buys 1000t of copper ($6000/t) and wants to convert into spot euro, that’s gonna be a $6M worth of EURUSD market bid. Same goes when a HF buys 1000 TSLA shares, they’d need to buy USD first.

That’s the reason FX can be pretty random, especially for majors, and in short terms. And also if you win, your counter party may not care because of those motives.

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Well, we can agree that this is quite theoretical, in reality the supply-demand, market profile, auction theory, start from the premise that the market moves freely and there is no agent that manipulates it, and I I think that by spending enough time in trading, the manipulation is evident.

Technical analysis needs the touch-ups of practice, using it to the letter makes you predictable, and you have to assume that there is another entity on the other side that wants to hunt you down.

It is not by chance or paranoia that many people think that their own broker hunts the stop. the broker has nothing to do, its the big players who hunt your stop.

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