Patterns vs Outcomes in Forex Trading

Trading Patterns vs Outcomes in The Forex Market

In the leveraged Forex market, there are at a given point typically a number of different possible outcomes. This applies at the very short term time frame and longer term. At the very short term time frame, patterns still apply, and the pair can move in a directional way or as part of a more complex pattern. This can be seen on the tick chart as much as a longer time frame.

When a strongly directional move is looked at on the shorter term, then patterns can be seen composing it. But what causes patterns. Patterns can be seen as the way a pair can react to market events, including the actions of traders and programs. Patterns which do not look like patterns, can be classed as volatility, that is they do not have a patterns. But they do, as equal and opposite candles can be seen. That is the irregular movements can also be composed as a pattern.

Put together, a move can be seen as consisting of for example, volatility patterns, trend beginning, middle end and more volatility, perhaps more structured though at a trend end. Then range patterns may be entered at some stage. However all kinds of patterns can transpose themselves in this set of patterns, creating a multiple outcome potential. More than this, the directionality can be reversed at any time (i.e. a trend moves in the opposite direction, or a range takes off in either up or down).

So it is not really that a position can go against the desired outcome, it is rather that for the desired outcome to happen, a larger number of alternative outcomes can occur. But over time, the desired outcome may indeed happen. Strongly reactive news events are slightly different as they can indeed be very linear in their reaction, but what happens shortly after may be irregular and express that complexity. And the possibility of that outcome not happening even in the presence of the expected stimulus to that reaction helps preserve that unpredictability.

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