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  1. #1
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    Price action basics part 4

    Beginning of this thread is here


    Technical analysis tells us that "price reflects everything".

    Is it right or not?

    In previous post I've shown moving average indicator as an example of how one can use price-value approach in trading.

    But this is just example, in reality, simple MA can't show you where value is.

    Let's say, MA calculates 35 closing prices (35 parameter). Do you think that every price is equal here? Area located at higher prices is more significant for the market because it attracts more volumes (aggresiveness). So in fact weight of higher prices in calculation formula should be increased if we want to know where value is.


    Attachment 1177

    What am I trying to say?

    Price can't reflect everything because not every price level is equally important for the market.

    The missing piece is time and volume

    (we don't have volumes on Forex - tick volumes is not what we need, so we can make conclusions about volumes from price action - was it aggressive or not?)


    If you will refer to price as to advertising mechanism, it would be much easier to understand what's going on on the market.

    I will quote great trader and coach, Jim Dalton, that teaches his students in approach of auction market principles:

    Price advertises opportunity

    Time regulates this opportunity

    Volume measures success or failure of this opportunity



    Let's now get back to practical things.

    I will attach chart from EURUSD to this thread. How do you think - what leves are significant for the market here?
    I placed simple MA with 35 parameter here ;)

    Attachment 1178

    Share your ideas below.

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    Last edited by Value trader; 09-13-2013 at 02:38 PM.

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    Fundamental theory is the most important things of forex trading as news controls the market. News is a very critical and sensitive subject which can affect the market negatively or positively. I read your previous article also which is good for those who want to learn news trading. Experience which is needed in everywhere and in fundamental it also have a huge role. This step by step tuto is good for us. Keep up the good work...

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    with due respect of your price action's post part 1, part 2 and part 3, i also read the part 4 of it and its really awesomely explained in total. after reading all these part i can place my trades more confidently using price action analysis. i also believe that now i will be able to analysis the market by price action style very well.

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    Quote Originally Posted by Shadow View Post
    Fundamental theory is the most important things of forex trading as news controls the market. News is a very critical and sensitive subject which can affect the market negatively or positively. I read your previous article also which is good for those who want to learn news trading. Experience which is needed in everywhere and in fundamental it also have a huge role. This step by step tuto is good for us. Keep up the good work...
    There is no doubt that mostly forex market is controlled by news which include economic ,political and other kind of news too..Forex market become too much volatile when any important news released,that's why traders must have capability to read the news too while they want to open their trades in forex market or they should trade other than the news time to make some profit of they not like news trading..

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    Quote Originally Posted by Shadow View Post
    Fundamental theory is the most important things of forex trading as news controls the market. News is a very critical and sensitive subject which can affect the market negatively or positively. I read your previous article also which is good for those who want to learn news trading. Experience which is needed in everywhere and in fundamental it also have a huge role. This step by step tuto is good for us. Keep up the good work...
    We are not talking about fundamental here. If you really read the whole thread then it's about price action. As we know, price action is a part of technical analysis and it's different from fundamental analysis. Of course market moving by fundamental things such as economic condition, bank intervention, etc.. But in here we were talking about price action. It's based on market movement history.

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    Quote Originally Posted by thenight View Post
    We are not talking about fundamental here. If you really read the whole thread then it's about price action. As we know, price action is a part of technical analysis and it's different from fundamental analysis. Of course market moving by fundamental things such as economic condition, bank intervention, etc.. But in here we were talking about price action. It's based on market movement history.
    you are correct but we can not also separate fundamental issues from technical issues,i am with you that price actions are technical matter and based on observation of price behavior but if you look at every price action whether trending or ranging you will find a fundamental reason behind it and some news caused it.

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    Bend your view to the charts, not the charts to your view

  7. #26
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    You make it much clear to understand there are many thing that only become possible to understand when trade like you share concepts with the snapshots. I believe that price action is the most easy concept for trader the reason is it easy to get and it always remain same trader only need to find the patterns and levels to take decisions. From the very start of the learning trader need to concentrate on the price action then it will become easy for trader.

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  8. #27
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    Quote Originally Posted by kashifrehman View Post
    I believe that price action is the most easy concept for trader the reason is it easy to get and it always remain same trader only need to find the patterns and levels to take decisions
    Not, it's not just about it. If it could be that easy, it would be immediately programmed in algorythims and edge would disappear overnight.

    Price action trading and price action analysis has no pre-determined answers, in this case you are trading based on your judgement - it can't be easy anyway

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    Quote Originally Posted by Value trader View Post
    Not, it's not just about it. If it could be that easy, it would be immediately programmed in algorythims and edge would disappear overnight.

    Price action trading and price action analysis has no pre-determined answers, in this case you are trading based on your judgement - it can't be easy anyway
    so you mean it needs a lot of practice and experience in order to be bale to read them right,you are right that there is no fixed way to read them otherwise they will be programmed to an expert,i know what you are talking about because everyday my reading for the chart is improving and i notice my analysis is being better day by day,thank you really for these series of threads about price actions.

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    Bend your view to the charts, not the charts to your view

  10. #29
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    Quote Originally Posted by Nizar View Post
    so you mean it needs a lot of practice and experience in order to be bale to read them right,you are right that there is no fixed way to read them otherwise they will be programmed to an expert,i know what you are talking about because everyday my reading for the chart is improving and i notice my analysis is being better day by day,thank you really for these series of threads about price actions.
    Yeah, interpretation is the key, because often there's too much conflicting information.
    It's relatively easy to follow price action, but it's hard to identify trading conditions.

    When we are following price action - it's about trading mechanics. Finding good trade locations, picking right entries, in general - following price action is more about knowing how to do your trade with lowest risk.

    Trading mechanics is what you do almost automatically - you know your market, you know when to enter, when to reduce your risk. It prevents you from buying highs and selling lows.

    But trading mechanics itself is not enough. The toughest question is not "how to execute a trade", but "should you at all accept this trade".

    Some would say, it's about filtering trades. I would say - it's about identifying right market conditions that would be good for particular trade.

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  11. #30
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    Quote Originally Posted by ascay View Post
    Wow Price Action, i love price action, my teacher said the best indicator is price, so if we analysis the price we already use the best indicator, and now i use it as base my technical analysis, i hope i can learn a lot from this thread too. :)
    It's not easy to use price action strategy because there are many different pattern of candlesticks which we must read and it will be different result to know the pattern of certain candlestick if we used different time frame. Usually, high time frame will give better signal as price action because higher time frame would give clear pattern but sometimes higher time frame is not effective too.

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