Price action basics part 4 - Page 68
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Thread: Price action basics part 4

  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.

  2. #671
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    Quote Originally Posted by cozard007 View Post
    With the regard of the following of this course from the beginning, i think i am getting abetter clue on the price action trading. And the way he has being taking it is very concise, and i love it very much. It means that price action might be taken as a whole tdaing system that will work during the sudden economic situations as well.
    traders are growing more sophisticated they concentrate more on understanding strategies like price actions instead of canned useless strategies that depend on indicators.the moving average can show us the trend but it can specify entry of any levels.find these strategies in very difficult language that they can not understand well..

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  3. #672
    Trader layigold's Avatar
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    Well, price may not reflect everything but everything I need to be a successful trader is already contained in price actions and for those that know how do proper market analysis on chart patterns, they will find trading more of a fun and come out sufficiently successful. I have been able to pick few things from this thread right from part 1 to this one(part4) but nonetheless, I will not allow myself to be distracted from what I have been doing before and which is working fine for me.

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  4. #673
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    Quote Originally Posted by layigold View Post
    Well, price may not reflect everything but everything I need to be a successful trader is already contained in price actions and for those that know how do proper market analysis on chart patterns, they will find trading more of a fun and come out sufficiently successful. I have been able to pick few things from this thread right from part 1 to this one(part4) but nonetheless, I will not allow myself to be distracted from what I have been doing before and which is working fine for me.
    Price action is really a good means whereby you can understand the market sentiments and know what and when to trade. However you should learn discipline and never be negligent about anything while trading. When you also follow risk management you have a good system for earning money. Positive thinking sets you up on high but never take any trade without proper work done.

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  5. #674
    Trader layigold's Avatar
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    Yes, technical analysis submits that price reflects everything and that is what majority of us ( retail traders) believe but reading through this thread, I have got to change my mind that price does not reflect everything because not every price level is equally important in forex trading . If this is brought down to candlestick pattern trading which is an integral part of price action trading , there are some patterns that will not work out the ways they had worked out in the past and that is why it is always said that there is no sure thing in forex . To come out a successful trader , we need to look beyond the price action just as it been advised here in the thread.

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  6. #675
    Trader ara's Avatar
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    Quote Originally Posted by layigold View Post
    that is why it is always said that there is no sure thing in forex
    Up and down, it is the only sure thing in the forex market.
    Yes agree with you and of course agree with the educator "Valuetrader". Price isn't reflect everything. Price can't reflect everything because not every price level is equally important for the market. I've thinking hard about this but then I get the answer, yes of course "The missing piece is time and volume."
    So it just a matter of time and volume, If the price level isn't important in the High time frame, but it is important in lower time frame. Shadow candle is the missing volume in high time frame, but it show as volume in lower time frame. So..., this is only about time and volume.

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  7. #676
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    Quote Originally Posted by ara View Post
    Up and down, it is the only sure thing in the forex market.
    Yes agree with you and of course agree with the educator "Valuetrader". Price isn't reflect everything. Price can't reflect everything because not every price level is equally important for the market. I've thinking hard about this but then I get the answer, yes of course "The missing piece is time and volume."
    Up and down and the other way to see is that this market can be very uncertain and so in addition to analysis we have to follow the rules. When we work hard for the trading system and also work to correct our own mistakes then we are on the right path to succeed in Forex. Trading with patience is the antidote of risk, it is my dream that i have to become a better trader in future days.

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  8. #677
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    Benefits of forex markets are many. But while we are trying to play in this market we must try to be aware of all the real facts associated with forex market. A forex trader can use price action trading strategy while he can also tries to work with short term trading strategies like scalping, swing, etc. But before a trader can use a strategy he must be careful regarding all ins and out of it.

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  9. #678
    Trader J_C_Anderson's Avatar
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    Strategies based on price action analysis are very efficient and profitable. The principles they are based on proved thier efficiency for many years, so it is important for each trader to know at least basic elements of price action concept to be able to use them during trading process.
    For sure, indicators are important too. For example, they could be used to get additional cofirmation for the signals provided by PA-based trading system. At the same time, it is uch easier to backtest strategies based on indicators with the help of special backtesting software like Forex Tester. As the result, trader will get detailed information on the performance of the strategy including risk-reward ration, maximum drawdawn during the whole testing period and other important data. It would be useful to test how indicators would perform in connection with price action patterns, but keep in mind that it could be a bit difficult, especially for newbie trader, to transform PA-based strategy into trading algorithm that could be used by the machine.

    Another important point the trader should pay attention for is that PA-based strategies could incur changes due to the global changes in the dynamic of the markets. For example, momentum strategie were extremely popular and profitable in the early 90-th, but then the markets changed sufficiently so that even some of their traders lost their work since they were no longer able to make profit. That is why each trader should be open minded and flexible enough to be able to find righ trading solutions in almost any market conditions. Old patterns could cease to exist, but new ones would appear, thus the trader would have to spot them, develop an idea and turn it into profitable strategy. It is also necessary to analyse the performance of the strategies from time to time to be able to make changes necessary to keep the strategy profitable.

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  10. #679
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    I prefer using just simple indicators. I don't like things with complexity, i always want my trading platform to look simple and readable. I think simple strategies are more effective than anything complicated.When you don't have proper correction and don't have a proper pill for your losses and future uncertainties then for sure you can face from so many losses and failure in market.

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  11. #680
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    Price can't reflect everything because not every price level is equally important for the market. The missing piece is time and volumeVery well quoted. Price alone can't always show us what happened at that time. To get a more clear picture we need to have access to volume and time. For how long investors were interested in buying or selling that. Price action is really great but it requires a lot of time and hard work for learning it. Once you make your mind and learn it it pays you back really well.

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