• Section: Money Guide - Category: Invest Online
• Written by Harold Hsu

Forex trading is a zero-sum game. For every dollar won by a trader, there is a dollar lost by another trader. It's a sad reality, but it's still nonetheless a reality.

Taking from others is the only way wealth is created in the Forex market. It's not like the stock market where almost all investors can benefit from rising stock prices. The Forex market does not provide a win/win situation, but rather a win/lose situation. You can thus imagine the importance of understanding your competitors

ou should be mindful about. These are the 'sharks' of the market. They prey on retail traders like you and me all the time.

And don't forget everyday retail traders. They're your competitors too! Of course, retail traders will have different tendencies from the big financial institutions.

Understand Your 'Enemies'

The big financial institutions trade at all times of the day, and are experienced and resourceful enough to 'eat' us retail traders alive. Large market movements are usually due to the actions of financial institutions, so it's a good idea to follow their lead rather than to trade against them.

On the other end of the spectrum you have retail traders as your competitors. Understanding their tendencies can also give you a better chance at making money at their expense. For example, many retail traders will place their stop-loss orders at obvious support or resistance levels such as previous swing lows or previous swing highs. Knowing this, you can then exploit this tendency and make money out of it.

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