The Hidden Metaphors: A Beginner's Guide To Trading

Based on investigations on the relations between the Foreign Exchange Markets and the traders, the author offers the fruits of his studies. He uses the method of applying different metaphors to clarify these views. The major metaphors that traders often use are bazaars, ocean, machine, beast, sports, war and gambling. It is not pure chance that these words were used. The metaphors function as a means by which the people sort out information and then construct their own sensitivities towards the market.

The main view of his research is that the attitude you use to comprehend the forex markets is itself a factor that influences your trading. A person who want to see it as a sports match might think that winning every time is what counts, but losing might then cause an emotional turmoil. Whereas, anyone who thinks of the forex markets as an ocean will want to think in longer durations of time. You also have people who see it as a war and they take a strategic approach to gain as much battleground in trading as possible.

The traders on the forex markets also bring in different views as per the lives they led. Engineers first model the market using equations, and then they project them into the future. So also, doctors come to forex trading like they would make a diagnosis of trade movements.

Those who have been trained in martial arts bring with them discipline and their art of handling emotional upheavals. Which one's the best? Well, forex trading is the greatest normalize of professions. In short, it depends on the individual.

One filed exists, however, that can offer invaluable insights in the forex markets. It is music.The reason behind this is that the markets have a harmony and a rhythm. The word harmony is defined by the English Language dictionary as an orderly and congruous arrangement of comprising sections. What is even more fascinating is that you don't have to have a background in music to say if a sound composition is harmonic or a cacophonic din.

The experienced forex traders develop a sense for the intrinsic rhythms of the market and they tend to use fewer indicators on the whole. Yet, those new to forex trading face the challenge of trying to find the inner harmony in all the noise and often turn to the large body of technical analysis to help them. Musical metaphors can go a long way in tackling such a load of information.

Many of the traders have one particular time period that is their favorite. It might even be a minute, an hour or a day. They form their trades after seeing the charts and applying analytical toolkits on them for insights. This method of gauging the markets may be good enough but one more way is to allow you to be picked out by the time period.

Consider the process by which you drive and still choose a radio station. You put an ear to all of the station using the scan button and then finally something nice comes up and you choose that station. The stations don't release the list of songs up-next beforehand. So too, the forex market is incessantly churning out a myriad of patterns.

A simple harmonic pattern might emerge for an engineer, and he might estimate the details of the sinusoidal movements and the resonant frequencies. He might then try to even come up an equation for its trajectory. Whereas, an experienced person in music might be able to see that the patterns have melodies with recurrences in tones without the help of equations. Heedless of the source of the data, whether from a guitar or a string or a trading floor on the forex, the patterns in the prices are indisputably self-similar and not random.

The forex trader needs to move past a linear take on trading, and this is achieved only if s/he understands that currency prices are but results of human behavior and expressions which themselves are never linear. By expanding your perspective on the underlying tones of the market, you will likely see nested patterns that are recursive. If you want to get the trading edge that everyone talks about, you have to know that it depends on how you are seeking for it. It would be smart to search for patterns and hear what the market is telling you.

By: chambers francoise

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