What is your analogy refer to forex speculation? | Forex Factory

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What is your analogy refer to forex speculation?

  • #1
  • First Post: Aug 6, 2007 11:13pm Aug 6, 2007 11:13pm
I always tried to figure out a best analogy refer to forex speculation, in order to better understand what we are doing and what we should do.

At times, I take the market as a crawling snail on a big board. Another analogy I took was try riding a shark in a vast ocean. These analogies reflect the randomness of the market, and point out the importance of taking stop loss actions when you are wrong.

Now I find a perfect analogy, at least for me. Before I try describing my finding, I would like to open this thread for FF members to openly discuss the various analogies down there.

What is your favorite analogy refer to forex speculation?

P.S.: existing links to FF threads regarding this topic is welcome.
凹凸 only
  • #2
  • Aug 6, 2007 11:20pm Aug 6, 2007 11:20pm
"John Holmes"............always long! JK!

http://www.newsdesigner.com/gallery/...depholmest.jpg
  • #3
  • Aug 6, 2007 11:38pm Aug 6, 2007 11:38pm
Forex is kinda like the weather.
Maybe it will be sunny tomorrow and then again maybe it will be cloudy.
  • #4
  • Edited 1:05am Aug 7, 2007 12:58am | Edited 1:05am
It's like moving to a foreign country and then after living there for several years in a row, you realize that there have been heavy rains in April of each year since you moved there. So a lightbulb goes off in your head. So after looking around and noticing what is going on, you decide that this year toward the middle of March when nobody wants umbrellas, you buy yourself a nice umbrella, but you don't stop there; you go on and buy another ten or twenty, because you'll always be able to sell your extras to the tourists when the rainy season comes. And so when the rains finally come, you enjoy staying dry in the storm while at the same time, you fill your pockets with other people's money by selling those extra umbrellas for ten times what you paid when you bought them just the month before.
Pip my ride.
  • #5
  • Aug 7, 2007 1:21am Aug 7, 2007 1:21am
In some respect, FOREX reminds me a lot of POKER.

Only 5% are winning players (the pros)
Risk/Money management is very important.
Anything can happen.

You can play limit (stop loss) or no limit (no stop loss).
The house has no vested interest in you losing but if it wasn't for the rake (spread) about 35% of the players would be winning instead of 5%.

Now... I'd like to think that there is some service done to the society - in other words - you are doing research, trying to find the real price and correlation between the different currencies. And you get paid for it.

So... our job is to keep the currency conversions in line with what they need to be.

That's it.
  • #6
  • Aug 7, 2007 1:28am Aug 7, 2007 1:28am
Quoting charlinks
In some respect, FOREX reminds me a lot of POKER.

Only 5% are winning players (the pros)
Risk/Money management is very important.
Anything can happen.

You can play limit (stop loss) or no limit (no stop loss).
The house has no vested interest in you losing but if it wasn't for the rake (spread) about 35% of the players would be winning instead of 5%.

Now... I'd like to think that there is some service done to the society - in other words - you are doing research, trying to find the real price and correlation between the different currencies. And you get paid for it.

So... our job is to keep the currency conversions in line with what they need to be.

That's it.
Very nice charlinks. The limit/no limit poker idea fits like a glove.
Pip my ride.
  • #7
  • Aug 7, 2007 1:31am Aug 7, 2007 1:31am
Price movement is like a game of tug of war.

But in Forex, it's not a rope that connects the two teams, but a chain made up of links.

Each link is a pip.

The market maker stands at the exact center between each team, and adds links to the chain or takes links away from the chain when he needs to, not only to keep the game going, but also to make sure that he doesn't get crushed in the process.

The distance in links between the teams is the spread.
Pip my ride.
  • #8
  • Aug 7, 2007 1:31am Aug 7, 2007 1:31am
Forex is like utopia city, where all people have to live in a balance (sheet), all road paved with fibonanci number and golden section, and all of us are "wise"
  • #9
  • Aug 7, 2007 1:46am Aug 7, 2007 1:46am
Quoting Gwan
Forex is like utopia city, where all people have to live in a balance (sheet), all road paved with fibonanci number and golden section, and all of us are "wise"
Beautiful picture Gwan!

And if we are all wise in the picture, I would like to be wise and rich rather than wise and poor. I hope the same for you
Pip my ride.
  • #10
  • Edited 4:03pm Aug 9, 2007 3:05pm | Edited 4:03pm
I can think of different analogies when I look at forex from different angles. Here is one of the analogies that has crossed my mind.
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  • #11
  • Last Post: Aug 9, 2007 3:13pm Aug 9, 2007 3:13pm
Jim Cramer said the same thing, except he was referring to stocks.. and had a slightly different twist on his analogy

Quoting charlinks
In some respect, FOREX reminds me a lot of POKER.

Only 5% are winning players (the pros)
Risk/Money management is very important.
Anything can happen.

You can play limit (stop loss) or no limit (no stop loss).
The house has no vested interest in you losing but if it wasn't for the rake (spread) about 35% of the players would be winning instead of 5%.

Now... I'd like to think that there is some service done to the society - in other words - you are doing research, trying to find the real price and correlation between the different currencies. And you get paid for it.

So... our job is to keep the currency conversions in line with what they need to be.

That's it.
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