Mindblown: a blog about philosophy.
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The Basics Of Technical Analysis
Chart Patterns Much of the body of technical analysis and the study of market action have to do with the study of human psychology. Chart patterns, identified over the past century, reflect bearish or bullish market patterns and are based on traders’ psychological reactions to certain supply/demand fluctuations. Assuming that the innate nature of human…
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Risk Management Techniques
Levels of Drawdown – Discussion of Risk to Reward This is something a new trader may not want to hear, but an important psychological part of trading is to understand that unless a trader has a big enough account to weather adverse market moves, the capital in one’s account should be considered risk capital. This…
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Fundamental Factors
News that has an impact on the economy both directly and indirectly is considered a fundamental factor. These fundamentals are separated into three major categories: economic factors, financial factors and political factors which include crises. Economic and financial factors have the biggest impact on the movement of securities such as currencies. The reason that economic…
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Structuring A Plan For Trading
A very important aspect to the psychology of trading is the ability to create and maintain a trading plan. As a famous saying in the market goes, ‘if you fail to plan, plan to fail.’ Planning is closely linked to the discipline of a trader. Experienced traders know that discipline and a trading methodology are…
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Chart Types
Charts represent the price data fluctuations caused by varying market forces. The information found in these charts enables a chartist skilled in the science of technical analysis to draw trading signals for future price activity. The primary chart types used for the analysis are: The most popular type of chart in use today is the…
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Reaction of the Forex Market to a Fundamental Release
Each month, the United States Department of Labor released a report called the Nonfarm Payroll. This fundamental indicator (the term for a report or release) measures the change in employment in the United States for the previous month, excluding the farming sector. For the release in this example, the figures came in above expectations of…
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Using Exposure Per Trade in Examples
Weathering Noise After opening the trade on based on a certain analysis and technical picture, price breaks in the opposite direction! Traders that use risk management techniques such as exposure per trade, are less likely to close a position at the first instance of the market swinging against them. A trader with a risk management…
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Trends
The trend is the fundamental cornerstone of technical analysis. The trend denotes the overall direction of the market at a given time over a given scope, showing the trader the tendency of change in market prices. More simply put, the trend shows the direction of the market. Thus it follows that all trends fall under…
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Macroeconomic Indicators
When making trading decisions, traders often speculate about the health of countries’ economies – particularly in the Forex market. In order to have an understanding of an economy’s ‘fundamentals’, one needs to look at how productive and vibrant the different sectors of the economy are. This involves looking at data on manufacturing, retail sales, housing…
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Concept of Support and Resistance
In order to clearly see trends a technical analyst must draw trendlines and identify levels of support and resistance. Trends do not move in straight lines; they zigzag in a general direction forming progressively higher (or lower) peaks and lows. At a price peak, or high, buyers that are pushing up the price of an…
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