Paradigm Shift

In Forex Market, paradigm shift can determine the direction of the market. The fundamental of a country's economic will give strong impact to the market. However, fundamentalists have their own judgement and argument on the economy. It often conflict each other.
After Lehman Brothers (http://www.lehman.com/) trigged the worst financial crisis in the world, all kind of 'gurus' give their opinions and assumptions on the outlook of the economy. You name it, all type of shapes; (W, V & U).
When the paradigm shift, so do the forex market direction. Speculation on the the economy recovery push up USD/JPY, interest rate become the 'big topics' for the traders. However, when Fed say the economy is still fragile and economy is not in 'inflation' for the near future, the paradigm shift again.
To trade Forex effectively(I mean making money consistently), I prefer taking psychology aspect that affect the paradigm shift. Forex market unlike stock market that allow you to see the company financial statement, but you need to read the country financial statement. Ironically, USA has the worst financial statement in the world but USD is still doing well recently.
When paradigm shift, Big Boys have their own agenda to deter the market direction. If you look at psychology aspect, some big boys who miss the train will 'twist' their previous views and support the current trend! Some who used to support EURO now talking differently. I guess their paradigm have shifted along with their new positions in EURO!!! This is the financial world.

Mr. Market is Always Right! (All The Time)

When you trade FX, don't blame the market (Mr. Market), he is always right! You should blame your judgement and other aspects. You as a trader will never can beat the market all the time, the moment you think you can, you are doom! I repeat, Mr. Market is always right.
As my account size is growing bigger, I tend to blend fundamental and technical analysis(TA) in my trading which can accommodate Mr. Market.  However, sometimes, it is difficult to match the 2 criteria and it need to match with the psychological of Mr. Market. Intuition always conflict with TA and make you stop the execution. Well, to conquer the emotion, I will hedge my position which is limiting me for the huge profit. Anyway, to manage a growing accounts, I will separate it into few categories to fulfill the Mr. Market movement. I know he is always right.
As mentioned earlier in my previous articles, there are few types of traders in the market which initially will 'flight' each other to form 'Mr. Market' which is always right. To fit your own character into Mr. Market's mind isn't an easy task. The conflict of mindset will make you feel like machine.(The sad part is; we are not machine.)
It is 355am (+800 GMT, Monday. 03/22/10), I am setting a game plan which can fit Mr. Market movement for the coming week. I will be heading to the 'Modern & Forbidden City' this coming Wednesday and back to KL on 31 March 2010. The great thing about travelling is you are away from the screen (noises) of the market which will distract your game plan. I will be monitor market only twice a day during my vacation.

The Big Boys Games.

When you step in Forex Market, you are joining billions of participants with different kind of mindset and perception. All of them come in with one mission; making money for themselves or their company. Generally, they are 2 types of players, professional (mostly are winners) and novice (mostly are losers) participants.
The velocity of the market will transfer the 90-95% of losing site to 5-10%  of winning site. Frankly, after trading more then 3 years in FX, I see a lot of participants come out of the market and blaming Forex Market as 'Casino'. Somehow, I agree. But I need to emphasis those loser are players and those winner are house of the casino.
I am a fan of few reputable economist and 'think out of the box' hedge fund managers. I would like to call them 'Big Boys", they have billions of dollars to become house of the casino. Having said that, they are not necessary winners all the time, but annually they show positive return between 12-250% percent. One of the reasons they can win BIG is by having 'good friends' in the circles and see the loop holes in each country/nation economy. They plan carefully during the secret meeting. Once the deal is on, they make the market move very fast. If you are not in circle, you will feel shock to see forex market movement. The speed will 'kill' all participants which do not believe their views. Once damage is done, they collect the chips of all players and move to another country.
As I am still not qualify to join their group, I only use my skills to observe the velocity of the Forex Market. By building up my 'figures', one day I believe I will join the "big boys league".

Friends, 'Bullets' and Skills

In any financial market, it will move up (bull) and down (bear) or sideway. Forex market offers your the both way if compare to stock market. No doubt, stock market offers you short selling but generally it is only apply to certain counters and professional traders.
When you have 2 ways to play around, either you can win or lose consistently (burn your account). When I trade forex, I seldom think of one way instead of thinking 2 ways. I think this prevent me to make huge return on this conservative strategy. For the last few months, if you are a high risk taker, Euro will generate an awesome return just by betting one way. I tend to stay conservative in my trading. I rather build up the portfolio and compounding from it consistently than taking huge risk. Ironically, someone ask me to take high risk and generate high return. If you have the 'big bullets' for me to 'flight' in the market, I might do it. To take high risk in Forex Market, you must have a lot of capital to set up the games plan before entering the market. If you think by having less then USD100K and try to win big in Forex Market, then I must learn from you. Unless you have close friends with 'big bullets' who are willing to share information with you, then chances to hit the 'jackpot' might be there. If you are purely base on skills, it is better to play safe. Generally, I advise those with less then USD20K for investment, stay out of the Forex Market unless you are happy with a very small return.
To stay long in the games, I prefer build up my 'bullets' first, then automatically 'good friends' will come along to flight for the bigger battle. As for the trading skills, each day I try to sharpen it.

Politics, Psychology & Participants In Forex Market

Is politics playing an important role in Forex Market? Yes, it is. Economy policy of a country is controlled by politicians. If the political stability of a country is out of control, then if will affect the country economy and thus its currency.The pound has tumbled to a 10-month low as fears grow the UK will have a hung parliament in the forthcoming election.The currency fell 1.7% to drop below the $1.50 level against the dollar for the first time since May. It has lost 7% against the dollar this year.
Then what, it create a negative sentiment and affect the participants psychology. When you look at the GBP/USD chart, you will notice big boys had been dumped the pound since early of 2010. They know when the time is right, political news can become their agenda to suck the novice traders money. Once news is broken, people start to sell, they start to take profit. Basically this is the games plan that had been set up.
Before cable (GBP) become victim, EURO get the hit. Big Boys rule out the EU possibly break up due to unwillingly German bailout Greece. Participants panic once news break out, and big boys seeing the account become bigger...again, same pattern occur.
My questions to you, which political issues will be raised up by big boys before they dump the news through media? If you know, Forex is a gold mine to make money.