What I Trade...

I should start by saying that I'm more about 'people' than 'things'.

It follows, then, that I am happier with the notion that human psychology drives the financial markets than I am with the primacy of the underlying truth, or fundamentals.

I do not subscribe to the theory of 'perfect knowledge' and can there be any disciples of 'perfect market theory' left after the latest melt-down ?

I am not therefore, by nature, inclined to sift through balance sheets and prospectus', on the hunt for perfect knowledge that will give me an 'edge' in the market place. I do not have the time to do so or the bottomless resource to convince others that I am right even if I did. What counts, in my view, is what the market believes is the correct valuation of a given entity, commodity, instrument or currency.

I believe, therefore, in the primacy of price as the manifestation of that market consensus at any given moment.

So whilst I keep a weather eye on fundamentals, I am at heart a technician.

This established, it makes more sense to focus my attention on the most liquid markets, where mass psychology provides the most predictable influence on price, rather than bury myself in an endless quest for an undiscovered gem in one of the vast array of stock markets. I am not a prospector.

So whilst speculation in stock indicies was a viable option, I have settled on the currency markets. This, oft quoted, '3 trillion dollar a day' market place is the perfect vehicle for a psychologically biased trader, looking to find his edge in the technical predictability of highly liquid instruments.

For the same reasons I like the continuity of the foreign exchange market, with a continuum of movement that follows the sun. With no market closure providing an opportunity to withdraw and reflect from Sunday to Friday, Forex seems to provide the most perfect, unbroken, manifestation of group psychology (and the Greed and Fear that drives it) in existence.

Technical traders abound in Forex, the most liquid and volatile market on the planet.

So I know that I'm in the right ball-park, but narrowing the field this far still leaves the trader with 30 potential crosses to trade on my platform - and this is where many lose their way. They assume that a given indicator, approach or strategy can be applied across this vast market place, but the fact is that it cannot. Every currency cross, or pair, has its own distinct 'personality' which must be identified and accommodated if the technical approach to trading is to bear fruit.

It is vital, in my view, to specialize further still, focus on a specific pair and get to know it like an old friend. And there - simply put - is all the 'edge' you're going to need.