Who Do You Have to Beat to Make Money in Forex As a Trader and How Do You Beat Them

Have you ever wondered who you are trading against when you trade the Forex market? Have you wondered if it matters?

Most retail traders are more concerned about support or resistance levels, moving averages, or Fibonacci levels than who they are trading against. Their focus is their charts and only their charts.

This is a mistake. We as traders need to know who moves the market so that we can participate on the winning side. Retail traders can move the market but it is the large currency traders who do it most often. We need to know when that is happening or when it is most likely to happen. If we do we will see our profits soar.

Who are these participants?

The largest group of foreign currency participants do not trade to make money each day with their transactions. They are interested in stable market prices in order to run their businesses. These participants must trade in the markets every day to stay in business. If a company needs sugar to run its business they are constantly buying sugar in some capacity. Therefore these purchases affect the foreign currency market each day.

The next largest group would be speculators. Depending on market conditions, speculators move markets and create momentum. Sometimes if conditions are right, these traders begin and help in sustain trends which can last for long periods of time. Speculators are primarily large banks and hedge funds.

The smallest group of traders are retail traders like you and me.

These are the participants in the daily foreign currency market that cause markets to move up or down. The way for small traders to take advantage is to have a trading system that recognizes momentum changes in the market. It is nearly impossible to know what all or any of these large traders are doing and when they plan to do it. But if we learn to see and understand momentum we can be ready for moves and/or be aware of when those moves most likely will take place.

As retail traders we are looking for those moments in time when inefficiencies are most apt to take place. Or, we want to be prepared for the next move by a major bank. Perhaps a bank begins to divest itself of some assets. Those changes can be seen in momentum indicators with the right training.

Take the time to develop this skill. One of the best methods to measure momentum is the RSI, the Relative Strength Index. The RSI creates four trading signals that every trader should know and understand. When they do they will see a marked improvement in their trading skills and knowledge.