Are Forex prices Predictable? Stock prices move at random, and stock markets are efficient. This is the fact; hence, we can conclude that Forex prices move at random, and Forex markets are efficient. No Forex forecaster can achieve more than 60% winners after 1,000 trades; hence, no Forex trading system can achieve more than 60% winners after 1,000 trades. You can’t beat the market without taking unwarranted risk since risk and reward go hand-in-hand.
“The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.”
- George Soros (LSE alumni, investor, political activist and philanthropist)
In 1900, French mathematician Louis Bachelier wrote a 70 page dissertation to explain why the stock market behaves the way it does. His expressed that contradictory opinions concerning market changes diverge so much that the same instance buyers believe in a price increase and sellers believe in a price decrease. At an instant where you observe a quoted price, there are as many buyers as sellers. As the price goes up, there are more buyers than sellers. The opposite is true when the price goes down, there are more sellers than buyers. Observing the high tech and the housing bubbles, the buyers are willing to pay higher and higher prices because the values could only go up. This is to think that the sellers are ignorance. In the end the buyers lost their shirts and were the ignorant for believing that the value could continue to go up forever.
