FAP Turbo Forex Blog

Observe the sequence: 1, 2, 3, 4, 5, 6. What will come after 6? The number 7. In predicting numbers on the forex market, it has to be realized that the fundamental nature of the problem is similar to the example given here. If you have to come up with the right solution, then you must have a tendency to store numbers and remember them accurately. Further your knowledge on foreign exchange at money transfer .

Consider a different case: 1, 2, 3, 5, 8, 13, 21. This time, the right answer is 34, and most of you will have guessed it by now. The underlying logic is that the upcoming number is simply the addition of the last two numbers in the sequence. As a trader, you should remember the above series as the Fibonacci series that is primary to a lot of things in nature including forex price movements.

These cases simply tell you how tough it is for a forex trader to predict the numbers in the price movement of the markets. All of this goes into making up your own Forex Trading Intelligence Quotient  commonly referred to as FX I.Q. In order to assess where your FX I.Q. score stands, you have to evaluate a succession of irregular occurrences, case in point being the hurricanes that Florida was hit by within such a short time only a while ago.

First, no one can tell you when a hurricane is going to strike. Even though scientists have the resources to spot a hurricane on its way, they can’t tell you if there is going to be one next Thursday, seven days from today. This is because of something known as the Lorenz Butterfly Effect, so named after an M.I.T. professor who put it forth and founded the field now known as Chaos Theory. He had been researching on the weather and was trying to predict events such as hurricanes when he found the Butterfly Effect. To read other foreign exchange articles make sure to visit money transfer international.

If there are a large number of variables governing a system, then the butterfly effect states that there will be severe limitations to the level of forecast possible in it. He demonstrated that even an insignificant butterfly could influence the trajectory of a hurricane because its initial conditions were highly sensitive and were in fact controlled by a lot many features. Therefore, it is imperative that you get all the exact values of all the variables of the system if you want to predict a hurricane correctly. Missing one small factor can cause predictions to be so far off that they become useless.

Forex price movements are not that different from hurricanes in terms of forecasting. The toughest thing is to come up with the next number for a particular currency pair (say) as we have no idea of all the variables that give rise to those numbers. Therefore, irrespective of the kind of method that you use, you will always hit a blind wall in terms of accuracy  it doesn’t matter if you’re using computer models or neural nets. The forecasts made by such computer-based algorithms are strictly unpredictable as they have no means of considering all the aspects that are affecting the price movements.

They are prone to the sensitivity of the butterfly effect. The slightest mistake on your behalf will skew the results like anything. Yet, patterns and structures that sometimes crop up in the prices can be utilized to make safer forecasts about the currency pair and their general movements. The main idea is that of pattern recognition and forward analysis, and thus only some algorithms are such that they can give out the right results mostly.

One way of increasing your FX I.Q. is to keep on adding to your memory those patterns that crop up in trades that go well. As we seldom know about the complete system of the forex market, we view the prices as moving around in a chaotic manner or in a random fashion. There are more than $2 trillion worth of opinions that are associated with the forex market, and this makes its prices diffuse about, and a few patterns to repeat.

By understanding the basis of intelligence in forex trading, the recipe for becoming smarter can be developed. If you want to boost your FX I.Q., take note of how your trades have patterns. Then, test yourself if you can come up with a sequence of winning trades. To make it a learning experience, look at the patterns of your trading instead of focusing on the trades.

It is not luck that will make you get winnings in a row of seven or eight or even more. The trader keeps a track of the past behavior and uses his memory to foretell anything about the future  in this s/he is an expert. The winning stretches cease being a theory target after you gain experience and enough practice and training. It is available if you reach for it. All it demands is an augmentation of your FX I.Q.

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