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Thread: Value trading

  1. #1
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    Value trading

    Hi traders!

    Recently I’ve made webinar «Value trading» and in this thread I want to summarize ideas and concepts from presentation of this webinar.

    Let’s first think about this: every trader has his idea of value, some traders recognize it, some don’t, but we all have idea of value, if we haven’t had it, we would not be able to make a trade. If you go short, you should think that current prices are unfair and market will return to lower prices, if you go long, you also should be aware that value will be built somewhere higher than current price levels. If you sit on your hands, you should think that value is located somewhere near current prices – in other words, opportunity hasn’t appeared yet.

    Conventional and straightforward way for capturing value is to build moving average and derivative of moving average – Bollinger Bands indicator. Moving average is considered to represent value, borders of Bollinger Bands are considered to represent 1 standard deviation from average:

    Attachment 4077

    One the picture you see note that if we take moving average as a substitute for value, we are risking to get many misleading signals.

    Why?

    It occurs because of what I call «Inequality principle»

    It claims: «Different price levels are not equally important for the market». Do you feel what I’m talking about? Moving average can’t distinguish what price levels are more important for the market – it’s responsibility of a trader. Missing piece is market logic.

    Let me provide an example: if I decided to apply Bollinger Bands on GBPUSD on Monday, I was expected to sell:

    Attachment 4078

    But period in the red circle was a final auction, overall trend was rising and market was no longer able to stay inside of a trading range. When market lacks selling liquidity, when nobody is going to sell, it start advertising higher searching for sellers. We often see that price is leaning to higher extremes and holds on higher prices.

    Attachment 4080

    How do you think – if auction is in place, can we say that this area is equally important for the market as area from previous day? Obviously, it is not – if selling liquidity is not enough, market loses equilibrium and searches for new area where balance can be found. We may pay too much attention to this area, but Bollinger Bands respects is as any other areas – moving average in the center is slowly moving up.

    If we rely on idea of value from Bollinger Bands, we should sell because «value» is located below price. But in fact, proper calculation should like described below: value should not slowly move up, but it should make fast «gap» and it’s location is going to be somewhere in the center of congestion:

    Attachment 4079

    As you see, our scenario completely changes when we look at the chart this way. We now should go long, because value is going up!
    So, there was rationale for long trade there, and I posted it in my journal.

    Good luck!

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  2. #951
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    Quote Originally Posted by Sylvertee View Post
    Yes, if traders are not learning, they will never have the best they desire in the market. It is very good and appropriate for traders to learn, and this will surely keep on making sure that the trader gets the best. But the best will only go to the trader that knows how to handle what they have learned in the market very correctly.
    When you dont learn you dont get the best but you probably get the worst out of this market. To make money you need to understand how to trade and how to think clearly. Markets has punished countless traders for greed and other mistakes. Also a lots of people made millions from forex, but they are very skilled.

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  3. #952
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    Quote Originally Posted by kanoop View Post
    When you dont learn you dont get the best but you probably get the worst out of this market. To make money you need to understand how to trade and how to think clearly. Markets has punished countless traders for greed and other mistakes. Also a lots of people made millions from forex, but they are very skilled.
    That is just the simple fact on how the business works, when you don't learn, then you don't get to have the best out of the business, but when you have learned, you will tend to build up your skills and become successful trader, learning works more better when been done on the demo trading account which holds the position to really make us a successful trader.

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  4. #953
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    Quote Originally Posted by RaptFX View Post
    That is just the simple fact on how the business works, when you don't learn, then you don't get to have the best out of the business, but when you have learned, you will tend to build up your skills and become successful trader, learning works more better when been done on the demo trading account which holds the position to really make us a successful trader.
    The facts should be respected, Forex being a potential business you should know how to trade and earn. Actually everyone does lose in the game of forex, it doesnt matter how experienced you are. so, how the experienced traders survive is by following risk management rules. They are never after fast earnings.

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  5. #954
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    Quote Originally Posted by RaptFX View Post
    That is just the simple fact on how the business works, when you don't learn, then you don't get to have the best out of the business, but when you have learned, you will tend to build up your skills and become successful trader, learning works more better when been done on the demo trading account which holds the position to really make us a successful trader.
    Yes of course learning is the key of success in this business without learning and understanding it is nit good business for us it need work more harder and need plan management with every trade because if we trade after proper management and planning it really works for us in good manner and it will beneficial for us.

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  6. #955
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    Quote Originally Posted by faisal.waheed View Post
    Yes of course learning is the key of success in this business without learning and understanding it is nit good business for us it need work more harder and need plan management with every trade because if we trade after proper management and planning it really works for us in good manner and it will beneficial for us.
    If we can take our time and focus on the learning then one will be able to make successful money from the market, but the problem we have in the business is that we don't learn we keep on looking for a simple easier ways of trading. Apparently what one has learned from the demo account will work for them most of the times.

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  7. #956
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    Quote Originally Posted by sharegistFX View Post
    If we can take our time and focus on the learning then one will be able to make successful money from the market, but the problem we have in the business is that we don't learn we keep on looking for a simple easier ways of trading. Apparently what one has learned from the demo account will work for them most of the times.
    Those who really want to make it in Forex and not to lose their money should take learning utmost seriously. When you learn and try to follow it duirng trading then you will have a chance to succeed in the Forex market. Without the understanding of how to trade, it will be utmost difficult for you to survive in Forex market.

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  8. #957
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    value trading I guess is all about following the trend , following where the value is heading to, that means the trend trading and that is what I have been doing. I have been learning and getting to know on how to trade the trend. The trend is the best means of trading, with that been said, I have to wait for a better trading pin bar in the direction of the trend.

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  9. #958
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    i think we learn much by value trading and value trader is a good teacher and let the traders to benefit much from the informations that he post in the forum and so this helps many traders to know more and better about the market, the trader needs to read these informations many times to get good skills that will help him to make money from the market.

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  10. #959
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    Quote Originally Posted by kanoop View Post
    Those who really want to make it in Forex and not to lose their money should take learning utmost seriously. When you learn and try to follow it duirng trading then you will have a chance to succeed in the Forex market. Without the understanding of how to trade, it will be utmost difficult for you to survive in Forex market.
    Yes without the needed work, nothing is achieved in life and all successful people are the shining example of that, be it Forex or any other profession or business. So those who have been trying to gain easy money here, should open their eyes and start working their best. Clear thinking is the biggest quality of good traders for many traders here think emotionally and greedily.

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  11. #960
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    Quote Originally Posted by sharegistFX View Post
    If we can take our time and focus on the learning then one will be able to make successful money from the market, but the problem we have in the business is that we don't learn we keep on looking for a simple easier ways of trading. Apparently what one has learned from the demo account will work for them most of the times.
    Learning is the main focus of every trader, you must keep learning irrespective of what you already know because forex business is always changing on a regular basis, once you don't update yourself, you may miss out of some very important information that will be helpful in the long term.

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