What is Going on Behind The Candles?
By Casey Stubbs
The candlestick chart is what we watch to see where the price is moving in the forex market. Did you ever stop to think about what is happening behind the candlesticks to think of why a price is moving the way that it is? Many forex traders do not understand the reason that currency pairs move the way that they do and that is one of the biggest keys in becoming a profitable forex trader.
Some traders just rely on indicators instead of knowing what is going on to make the market move. If you just trade indicators without having a greater understanding of the market over a period of time the market will beat those traders because if you understand what is happening you can make more educated trades.
To move the price of a currency takes a large amount of money, for example it takes 35 million dollars just to move the price half a pip. So where does all this money come from? The answer to that is the big time movers in the forex market. These movers are the central banks corporate investors, brokers and investment fund companies. The other smaller players in the market are the retail traders or the dumb money as the big boys call retail traders. The retail traders are the individual investors and do not have enough money to move the price at all. Many times larger players will move the market in opposite direction to stop out retail traders. There are also scalpers, those are the ones that are putting up large amounts of money for very small price movements in off market hours.
So now that we know who is behind the candles, now we need to know what are they doing and how can I profit from this information. The big boys trade at the beginning of the trading session in the U.S the session starts at 8 am Est. They are attempting to get there trades in early in the trading session an make a minimum of 55 pips, but probably more. That is because they are putting large amounts of money at risk and they do not want to make small gains for such a large amount of risk. Now they put up large amounts of money an the market begins to move because they put up enough money to make it start to move. The only way a retail trader will be profitable is to follow the big boys.
So how do you know when the big boys are entering a trade? First thing is they only trade at the market open that is why there is so much movement in the beginning. So that means since the forex players will be in at the open that is when we the retail players should be in the market following there moves. Don”t trade after hours with the scalpers stay in for the larger price movements. Next you will know when you see the candle moving in one direction very quickly when you see a five minute candlestick moving 15 pips you know that billions of dollars are getting into the market. So that automatically tells you who it is the big boys. There is another key that can help you and that is find charting software that gives indicators when large amounts of money comes into the market at one time. There are software services out there that provide these type of indicators which proves invaluable to retail traders.
About The Author
Casey Stubbs is a Forex Trader that publishes a web site dedicated to educating traders for success. He has a daily trding blog, a interactive trading school, trading tutorials, articles and more. His web page is Winners Edge Trading
