Forex Market is full of sentiments from buyers, sellers, and other players. In order to win from them all, you need to set aside your emotion and execute your trade very rationally.

Are you surprised with the title? That was what I discussed with a friend about the necessary character to be a trader in forex market. He said, to be a good trader, someone must be a cold-blooded killer in the market. It startled me. Sincerely, I am not a cruel person. In case of my friend...well, he does looks like that.

What I want to speak about here is what he meant by 'cold-blooded killer'. Generally there is a war between buyers and sellers in the market.  In forex market, this war is going on ruthlessly.  It means, a loser will lose the funds and have to acquiesce the spoils of war for the winner. When you are involved in the market, you have to be prepared to face this 'cruel' market condition.

 

Anatomy of Forex Market

In economics, people who decides the prices of goods are depend on the type of market where the goods are being traded. There are many types or market : monopoly market, monopsony market, oligopoly market, perfect competition market, and several other kinds. In monopoly market, there's ony one seller and many buyers so the price is determined by the seller. On the other hand, in monopsony market, there are many sellers and only one buyer so the price is determined by the buyer. While oligopoly market, there are a couple of sellers and many buyers, so the price is determined by a group of seller.

buyersIf it is seen from economics theory, forex market can be categorized as perfect competition market. In this type of market, the price is determined by the mechanism of the market, that is the pulls and pushes between sellers and buyers. The uniqe thing in forex market, a trader can be seller and buyer. It depends on in which positions they take at the time, long position or short position. This condition is different with the common market where sellers could only sell and buyers could only buy.

Due to the traders ability to take these varying positions, prices in forex market depends on the perceptions and expectations of the traders involved in regard of the trend. If the majority of traders think that the price will go down, they are going to take seller position. Their act of selling will push prices and trend will really go down. On the opposite, if the reversal happened, then the expectation of rising price will make traders to take buy position and push the price upward.

In short, if you are a trader who has small amount of funds, you should follow market sentiment. Unless you have billions US$ in the market, you won't be able to control the price movement.

 

Be The Killer, Don't Be The Victim

In the war between buyers and sellers, the market always demands sacrifices. My partner said, as a trader, there are only 2 choices in the market : snuff out or be snuffed out. In another word kill or get killed. It sounds horrible, but that's the fact. As a trader, you are indeed required to be ready to fight in the market all the time. If you are hesitant, be pepared to snuffed out by other traders.

Business is a game, played for fantastic stakes,
and you're in competition with experts.
If you want to win, you have to learn to be a master of the game.
(Sidney Sheldon, Master of the Game)

This condition should be understood by every traders. Don't dare to be involved if you want to rely on luck. Prepare your best weapons and strategies (technical and fundamental analysis). Ready your mental, join the market with self-confidence, and be a cold-blooded killer out there.

Hopefully, the things I've discussed above will be useful for your mental preparation. One last advice from me, don't bring this cruel character outside the market. When you are not in it, be a warm and affectionate individual, okay!?