As prices are formed in the FOREX market


The future in the past

If the past and present of the financial market can be described in the usual way (eg, in the form of trajectories depending price and its derivatives), then the evolution of the market only allows probabilistic, and the same for all markets, which are characterized by the same fractal attractor - regardless of the initial conditions of these markets. [1]

This fundamental difference in the description of the past and the future of the market is objective in the sense that it is not associated with any level of information support or virtuoso technical analysis.

That implies that every trader in financial markets, which is characteristic of certain depth investment horizon gives crucial to any restrictions caused by imperfect mastery of the principles of a technical or fundamental analysis.

In theory, the efficient market price of the random walk we see our normal distribution statistically self-similar curves probability of price changes on the volatility of the market for different investment horizons. Any other <abnormal> distribution of the curves refers to the non-random movement of prices. In reality we have a statistically self-similar curves, which are at best approximate a normal distribution (the stock and foreign exchange markets in small intraday investment horizons), or far from it (as in the case of money market).

To get around these sharp corners of random and non-random process of pricing, and the concept of long-range effects [1, 4].

On the effect of long-range

In the normal probability distribution of price changes on the market volatility The aforementioned probability is almost zero when volatilities over 2 .. Therefore, everything that happens in reality in the market with volatility greater than 2., - Or of the devil (for proponents of random pricing), or it is a non-random walk of prices. Consequently, on the fractal financial market there are many traders who can be divided into two classes: those with a blind faith that the market rate selected asset completely random, and those who believe in the presence of trends and opportunities in the study to predict the evolution of the asset. Such a division of market participants such classification traders depending on the level of understanding of the "truth" of the study exchange rates. In this case, as we know, traders can be divided into bulls (who believe that the currency is undervalued) and bears (they believe that this tool is overrated).

For a trader with a shallow insvestitsionnym horizon is not so important dualism random and non-random price movements. More importantly, an army of millions of traders with similar investment horizons actively using technical analysis. And it is more than sufficient reason to investigate the price chart. If a large group of traders on the asset has similar views for its further evolution, the so-called effective Soros reflexivity law on which the study of the price curve multimillion army of traders generates a self-fulfilling prophecy. In other words, the fragmented nature of the financial market as a clone market that begins to exist in the same time from different points of time. Any fluctuation of the market in one dimension may lead to the emergence of a trend in the other and then the global market changes in all the time slots it. In this case, we say that the fundamentals have failed in accident (or coincidence?) Fluctuation occurred and failed to return the market to its equilibrium state. As a result, a new equilibrium state of the market.