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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. #971
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    Quote Originally Posted by AmitChallenger View Post
    Unless we have confidence in our strategy and a good plan we will have fear, fear of facing loss, fear of losing our floating profits etc. Additionally a trader should be regularly informed and stay updated with information mainly belonging to the news, political and economic events. Everyone talks about consistent profits but it happens with consistency in performance. For new traders they first need to do a lot of work.
    A trader must try to make trade fearless and take aggressive decision because in this market there is no other way that will give us good results we must follow our learning and our way to plan for trade well if we get understand our strategy is perfect we get follow with better trade strategies so we will gain success .

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  3. #972
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    Quote Originally Posted by muhammad khan View Post
    A trader must try to make trade fearless and take aggressive decision because in this market there is no other way that will give us good results we must follow our learning and our way to plan for trade well if we get understand our strategy is perfect we get follow with better trade strategies so we will gain success .
    You don't go far in business when you do things aggressively, because you are meant to take good decisions after making good plans on how to trade. So, to me forex ain't that type of business that welcomes the idea of being so not discipline on the decisions we are making because we will eventually loss our money.

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  4. #973
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    i advice you to learn in forum to know value trading and then open a demo account and see how things going on i insist in the fact of market;try to see the market for many time many hours;take the analogy of chart that may correspond to previous one follow all the rules listed here and try to find you personality in trading and you will be a succesful trader

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  5. #974
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    Quote Originally Posted by laregunung View Post
    i advice you to learn in forum to know value trading and then open a demo account and see how things going on i insist in the fact of market;try to see the market for many time many hours;take the analogy of chart that may correspond to previous one follow all the rules listed here and try to find you personality in trading and you will be a succesful trader
    There are actually some educative content in here, but I think the other best place where to learn is from the demo trading account, traders has to make sure that they are learning from the experience. With that been said, with such mixture it makes learning a solid and quality one that will lead to maximum profits and higher results.

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  6. #975
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    Quote Originally Posted by D'mastermind View Post
    There are actually some educative content in here, but I think the other best place where to learn is from the demo trading account, traders has to make sure that they are learning from the experience. With that been said, with such mixture it makes learning a solid and quality one that will lead to maximum profits and higher results.
    There is lot of educational content in the forum and when we try to apply it practically in demo trading we get more confidence on what we learned. Successful trading is always the result of all the efforts we give in the past and the experience we gain. Our own trading results gives us true picture of what the quality of our trading is.

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  7. #976
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    Quote Originally Posted by ANANDCHENNAI View Post
    There is lot of educational content in the forum and when we try to apply it practically in demo trading we get more confidence on what we learned. Successful trading is always the result of all the efforts we give in the past and the experience we gain. Our own trading results gives us true picture of what the quality of our trading is.
    Lot of educational content exists in the forum and on the internet that helps us to get better understanding of the Forex market, but we have to invest time for it. Without understanding of how to trade, it would not be just difficult but literally impossible to survive in Forex. A strategy and plan must be used with good understanding. Discipline helps in managing risk and also managing our emotions.

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  8. #977
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    Quote Originally Posted by D'mastermind View Post
    There are actually some educative content in here, but I think the other best place where to learn is from the demo trading account, traders has to make sure that they are learning from the experience. With that been said, with such mixture it makes learning a solid and quality one that will lead to maximum profits and higher results.
    This forum provides us the opportunity to learn different strategies in a simple way and when we practice the same on demo, we know better how to use any strategy.The wise trader should concentrate on making successful trades with suitable risk besides focusing on how much he earns. Because taking high risk gives rise to tension, emotions and losses.

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  9. #978
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    Quote Originally Posted by AmitChallenger View Post
    Lot of educational content exists in the forum and on the internet that helps us to get better understanding of the Forex market, but we have to invest time for it. Without understanding of how to trade, it would not be just difficult but literally impossible to survive in Forex. A strategy and plan must be used with good understanding. Discipline helps in managing risk and also managing our emotions.
    Yes when we want to make money from Forex, only money investment will not be enough, we have to invest time too and make good efforts in the right direction. I think everyone will be a loser for certain period, from which he should learn all useful lessons. We all want to move from bad to good or from good to better or from better to best and for that we need to show our efforts.

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  10. #979
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    Quote Originally Posted by AmitChallenger View Post
    Lot of educational content exists in the forum and on the internet that helps us to get better understanding of the Forex market, but we have to invest time for it. Without understanding of how to trade, it would not be just difficult but literally impossible to survive in Forex. A strategy and plan must be used with good understanding. Discipline helps in managing risk and also managing our emotions.
    From those valuabe information we can learn them properly and use it for our real trading later. We must know and realize about idea of trading based on strategy and analysis. It's something we can get through long term and experience many market situations first. Trading can identified with high quality and become more valuable once we know how to trade and react to market.

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    rules made to be followed, not to be broken

  11. #980
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    Quote Originally Posted by ANANDCHENNAI View Post
    Yes when we want to make money from Forex, only money investment will not be enough, we have to invest time too and make good efforts in the right direction. I think everyone will be a loser for certain period, from which he should learn all useful lessons. We all want to move from bad to good or from good to better or from better to best and for that we need to show our efforts.
    I agree with you what you are saying about this because for success capital is not the only thing which give you success , we must hold knowledge and learning properly so we use them and build better trade scenario , when a trade perform in all the field equally so in this way we should able to gain success and will try our best it is beneficial for good profits as well .

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