Monday, June 22, 2009

FOREX: Long Term or Short Term?

In Forex market, there are different players with different point of views. One will tell you go for long term, it sounds like this " US Dollar is going doom soon, go long term in EURO, JPY etc..." Other will tell you, " US Dollar is still dominate the market, and the economy is showing sign of recovery, buy long term in USD". In the end of the day, you are confused whether going to buy or sell USD; or going to buy/sell USD for short or long term. My point of views, to buy/sell USD against other currency, you must know the participants of the market in the specific pairs. For example, if you trade USD/JPY, you must know the " big players" in the market and the time frame this players enter/exit the trade. It is tough to identify it, we don't have have the crystal ball like the "big boys" have. Even with the crystal ball, the "big boys" may make big mistakes if they are not careful.
Imagine you are watching "Casino Royale 007", a group of big boys playing poker games try to beat each other. All of them have the sufficient capital to 'earn' a seat on the table, in the end, only one winner. In Forex Market, the game is controlled by the different participants. Each of them with specific objective. Yen trader may be is an exporter or importer within specific time frame, they will enter/exit and follow by another group. The dynamic of the market is driven by supply and demand which will always move the price from one level to another level or back to equilibrium. The so-called fundamental and technical indicators for the investors to enter and exit the market will determine the chances to "win" or "loss". To trade long term or short term (or both) in Forex, it is depend how much "chips/capital" and "skills/strategies" you have to create the winning against losing chances. Of course, before you go in the market, you must willing to face the consequences and learn from it. Just like other games, practice makes perfect.
 
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