An Fx Traders' Mindset . . . con't of Part 1

One of the trading principles to follow is to be able to assess the behavior of the active participants in the market place. These are the very same people, contributory banks and financial institutions that drives the market prices regadless of the trading sessions and sets the price and trading parameters every now so often. This means that every session highs and lows are really not the set price ranges simply because such orders are given and taken out easily when price swings are at play by these traders.

The news that everyone receives are all the same and are delivered through these terminals in a swift and speedy fashion. And provides the traders only split second reactions to the breaking news. The only difference is that the interpretations of others differ from one another, but the trading objectives may vary for each individual trader and investor. This results to price swings that could create some confusion and others would call it as misleading signals. The sudden change of hands and market positioning would affect the prices and relatively make wild fluctuations. As a result, making point spreads or some would say pip spreads become wider due to the rapid change in the bid and ask prices. The increase and decrease in volumes would normally affect price momentum as active participants either settle at a loss or simply take their gains from the market.

It is how a trader would view the market behavior through the price fluctuation. Some other technical tools such as the volume and open interest in the futures market may tend to be more useful for some in analyzing the market conditions. The traders perception may be influenced by the conditions of fundamental factors such as economy or some political policy and interest rate differentials. However, such factors can be affected by the majority of the active and influential players who would have a persistent bias that would also spread amongst the traders themselves. These are cases were everything back swings and turns around causing the market to become a roller coaster and make variable wild trading ranges in a rapid fashion. Just a word of caution, everyone should be extra careful in positioning and trading the market when things get out of hand at times.