As prices are formed in the FOREX market


Wealthy traders like trends for their ability to trade on the basis of <trend is friend> [1]. Even if one of them says he does not believe in technical analysis, while he adds that it is necessary to study price charts in order to know the driving forces <techies>. Perhaps that is why the price curve control points (support or resistance lines, trend, as well as through various technical analysis figures) generally carry greater meaning.

And the last. Trading in the game to some extent, a casino. Casino the players there is only one advantage - zero. Loot zero with a negligible probability of 1/36. However casino has consistently high returns. Therefore, in the case of trading a slight advantage in the understanding of the market and its driving forces can enhance the trader. Consequently, technical analysis and other methods of forecasting the market to be taken seriously, even if you are a supporter of the theory of random walk prices.

What do we have on the calendar?

In favor of a stochastic process of price formation in the market FOREX following facts: the probability distribution of price changes on the volatility of the market is close to normal, made by the author [1], the proof of the theorem that the daily closing price of the market USD / CHF in 1999 committed a Gaussian random walk, the trajectory stochastic processes by a random number generator, sometimes similar to the dynamics of the course of an instrument of this market, etc.

It is clear that the absence of a trend - it's a coincidence graph of the probability of price changes on the market volatility with a normal distribution. Any deviation from this graph of the normal distribution for the entire period of the history of prices is usually associated with certain patterns of dynamics study of the course, that is a non-random process of price formation. I have repeatedly shown that the distribution of price changes on the volatility of the market is a notable difference from the normal, which is usually neglected in the efficient market theory [1-4]. To shed light on this issue can economic calendar. Emerging news published statistics on the study of the economy of the country and its main branches of production gives us good reason to assume the existence of short-term trends in the foreign exchange market, which can then pay off or enhance the action of speculators (according to the theory of reflexivity Soros), and then the fundamental driving forces.

I have already given an example of the 2-minute response rate USD / JPY at an unexpected message of withdrawal R. Rubin, head of the U.S. Treasury in 1995. [2] Immediately after the news the U.S. dollar fell against the yen (with a gap) of about two hundred points, but ten minutes later the price returned to its original level, so that the scans of 10 minutes or more, this event could be perceived as a random fluctuation of the prices (especially those part of traders who do not trade on the news and do not keep track of them).