Foreign currency exchange rate and market mania by John H. Anderson

Market mania is the proper way to describe the everyday nature of a market that is ruled by a basic denominator called the foreign currency exchange rate. Called the paper trade or the Forex market, it is also a market that has been gaining a tremendous amount of popularity thus far and we can thank the dipping economy because of this.

As more and more investors lose confidence over the traditional stocks and more and more people are looking for secondary revenues to pad up their uncertain jobs, the Forex market has seen membership come at it from all sides and the numbers are steadily rising, comprising of mostly retail investors from all walks of life. Now, market mania is one thing that rules the Forex market, and this is down to its volatile and almost dynamic nature.

Many articles out there actually speak about how the Forex market is liquid and how it is a zero sum game - all how it can be beneficial to you and your trading day. But while a lot of that is fact, to me, it seems they are trying to avert your eyes from the fire by shining pretty little lights over your eyes.

Yes, the Forex market has many qualities about it that make it a winning choice for new and old investors to put their money in and yes, it is a market you should seriously consider in these bearish of times, but this does not mean you should not know what lies under the hood of its market psychology; which at times has been called manic and unpredictable at the very least. Market psychology is ruled by hundreds and thousands of emotions running rampant as the market roams through the many regions in its 24/day 5 day a week cycle and this is because of the sheer amount of factors that can affect price movements.

This is especially true of day traders and swing traders who often become mad with the gamblers gambit and make investments purely on either greed, anger or frustration; throwing out their carefully planned strategies for what seems to be unconventional means to an end. Then add to the fact that there is a ton of technical information and analysis for you to shift through and with every investor out there, they are using different aspects of the market to formulate their moves.

Then add to the fact that you also need to do fundamental analysis and you will understand why market psychology is such a rampantly manic one. Wars, apartheid, new governments, economic crisis, liquidation - even a word that some politician says in passing on broadcast TV can affect the movement of the market. Just think of the stock and equities market and multiply this by ten. Then combine about a million different type of systems and strategies, all attacking the market at the same time as they try to jostle for the positions that would lead them to making some good profits. This is why something as fundamental as the foreign currency exchange rate can create a market that is manic and unpredictable. My advice - get a good system, get a reasonable broker and work hard if you are eve to survive this jungle.