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Forex Theory. Probability in the foreign exchange market.
Consider what you need to start learning in the first place, to learn Forex trading and whether there is room in the market for probability theory? The review will be presented in the form of a guide for beginners. In addition, try to understand whether the theory of probability on Forex.
Let's start with the fact that the theoretical part for beginners in the foreign exchange market can be divided into two broad categories: the General theory of specialization. In the first case we are talking about issues such as money management (MM), information about the trade systems (TS), market, terminal, currency pairs and so on. The second section is the materials with the trading method, which chooses for himself.
To start in the market is desirable from the theoretical part or to combine the study of theory and practice. If the first thing you start trading, it will be a direct road to loss of your Deposit. No wonder schools and colleges are taught the theory first, and only then go to practice.
To quickly understand General information about the market, its capabilities, and so forth, it is best to start with the tutorial on the Forex. There is consistently presented all the material that will be useful to the beginner in the foreign exchange market.
Do not rush to take up the literature of the following nature:
• technical analysis for advanced traders;
• instructions for use of a particular method on the market;
• the theory of "mastodons" of trading, for example, from the wave theory or fractals;
• the book of modern speculators who do not have a confirmation of its success in the market.
To understand the complex topics of currency market, you must first master the basic concepts and terms, or even not clear what are we talking about in some book.
The theory of probability on Forex
As prices there are only two directions of displacement, namely, up or down, the use of probability theory was only a matter of time. Today, a large number of not only trading systems, but many methods based on the probability of price movement.
If we leave aside the fee and the spread, the trading on Forex can be compared with a coin toss. For example, take orders Take Profit (amount of profit, which closed the deal) and Stop Loss (loss in which the transaction will be closed with minus sign) equal size. When we begin to flip a coin, the probability of getting tails is the probability of the appearance of an eagle.
When you open a position in Forex in an arbitrary way, we get the same situation, because the price is equally likely to reach any of the orders, equidistant from the price of the transaction. For example, each order to equate to 20 points.
Of course, probability theory is formulas, calculations, accurate values, but if you briefly describe the essence of that applies to the currency market, the more often the coin falls in a row on the same side, the higher the probability that the next toss result will be different. In Forex the same principle applies in varying degrees to the following systems:
• martingale;
• trade with coups;
• averaging;
• in some kinds of locking.
After reading these trading methods, You probably will immediately notice the role of probability theory in these varieties of Forex trading. At its core, for example, the martingale system this is the "game" on the probabilities. The same can be said about trading in the market with coups, where the main idea could be developed in the following way: the market can not indefinitely go away.
The whole process of Forex trading is very tightly associated with the likelihood of any forecast, any market analyst, this is just a guess. It is impossible to know exactly the market will go in the near future up or price will go down, and because each situation is evaluated by the trader from the position of probabilities.
It is believed that any financial market it is also a mathematical model, though quite complicated, and therefore, it is possible to apply the laws and rules of mathematics.
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| Category: Forex | Added by: (06.11.2017)
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| Views: 276
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