The importance of understanding context. Part 2 - Page 3
Page 3 of 121 FirstFirst 12345671353103 ... LastLast
Results 21 to 30 of 1208

Thread: The importance of understanding context. Part 2

  1. #1
    Educator
    Join Date
    Jun 2013
    Posts
    1,103
    Thumbs Up
    Received: 579
    Given: 189

    The importance of understanding context. Part 2

    Hi traders.

    Beginning of this article is here.

    Trading is difficult because we tend to analyse objective outcomes (that have already happened), but when we analyse something that has alerady happened, we tend to look at the past. When we analyse market conditions, we look to the future. To be successful in trading, we have to be ahead of the crowd and we definitely need to look at the future than to the past.

    As I have said in previous article, every pattern on the market is context dependent - somethimes it will work, sometimes it will work with the opposite result, sometimes it will have no impact on further price action.

    Let's look at the popular "engulfing pattern". In classic literature dedicated to candlestick analysis, it is considered as pattern showing strong buyer (seller - for the opposite setup) stepping in the market.

    And in some cases it looks nice:

    Attachment 9337

    Now look at the setup below:

    Attachment 9338

    As you see, nothing really happens after the second setup. Beginner trader would think, that may be length of candlesticks was not enough or he would need to combine it with violation of trend line.

    But let's look at the context. In the first case pattern was preceeded by mature trend that was ready to reverse:

    Attachment 9339

    What do I mean mature trend? It's a trend that already has some history, this trend will attract a lot of weak holders - uninformed players, who are willing to get in the position and to take a risk, but they have relatively close stops that will be located in the same location. Big market players use this liquidity (orders from these weak holders) to build their positions. So, engulfing patter occurs in conditions prepared for falling.

    Now let's look at the context of the second pattern and analyse market conditions associated with this pattern:

    Attachment 9340

    Here we also see mature trend that also was combined with elongated candlestick. Such candlesticks often form vacuum in the market - and market "repairs the structure", statistically such empty levels will not hold for long - possible scenario is rotation inside of this bar (candlestick).

    So, pattern is the lower level in decision making process, the higher level is understanding context. We can't really evaluate our decision if we always operate from lower level of this process. It is only possible to evaluate it when we look at the picture with "eagle's eye"

    Of course, the more level of perception we will have, the more ambiguity we will add to decision making process, and therefore - the more errors we will tend to make. According to my view, every trader should develop some balance between lower (patterns, setups) and higher (context, big picture) levels of perception in decision making process.

    Not allowed!

  2. #21
    Trader
    Join Date
    Feb 2014
    Posts
    728
    Thumbs Up
    Received: 5
    Given: 6
    Quote Originally Posted by Value trader View Post
    To be successful in trading, we have to be ahead of the crowd and we definitely need to look at the future than to the past.
    When we are placing trade then we have a prediction in mind that market will move in a way. We place trade for making profit in future, so we need to have good outlook about future. Past history can help to predict future movement, but present factors need to be calculated so that we don't make mistake.

    Not allowed!

  3. #22
    Registered user Quid's Avatar
    Join Date
    Feb 2014
    Posts
    5,867
    Thumbs Up
    Received: 28
    Given: 12
    Quote Originally Posted by mosharraf View Post
    knowledge is the most important thing to earn from forex market.if you want to be successful in forex market then you must have to know everything about forex.you should know about the situation of forex market.because you have to be ready for any situation.
    Knowledge is important,you look how much the people pay for the knowledge about trading secret,how the professional can really make much money in the market,actually it is not how we make money here because make money here is easy when we know the market then what we ask how we make really good trading.

    Not allowed!
    Finally successful traders

  4. #23
    Trader
    Join Date
    Apr 2014
    Posts
    75
    Thumbs Up
    Received: 0
    Given: 0
    Inside trading currency current market, your current lot you're utilizing can make that you simply spend money on additional size in existence. in case you although great deal of 3, that necessarily mean most pips motions as part of your course are going to be x30, which is cash flow, in case you grabbed 10 pips, then you definately have got $300.

    Not allowed!

  5. #24
    Trader
    Join Date
    Nov 2013
    Posts
    188
    Thumbs Up
    Received: 0
    Given: 0
    trader who want to be constant and want to be a pro trader i think that he must have to learn about the truth behind the market and the other thing is that he has to learn about the market and has to develop a strategy that can make a trader gainer.

    Not allowed!

  6. #25
    Trader PetraFX's Avatar
    Join Date
    Dec 2013
    Posts
    123
    Thumbs Up
    Received: 1
    Given: 5
    Really it is very important to know the context of your trading activity. Not only having the knowledge base for opening a position but before opening your position in my opinion a trader sould use a little of time to analyze the context of the the price. Sometimes I make my own question, what is the factor which effect the price move to high or low?

    Not allowed!

  7. #26
    Banned
    Join Date
    Sep 2013
    Posts
    26,777
    Thumbs Up
    Received: 290
    Given: 50
    Quote Originally Posted by gmmasud88 View Post
    trader who want to be constant and want to be a pro trader i think that he must have to learn about the truth behind the market and the other thing is that he has to learn about the market and has to develop a strategy that can make a trader gainer.
    No one can fulfill his perfect desires over the forex trading without looking into the market beyond the way mere traders do, learning is the key really, I have over heard some traders that says they are looking for a trading system that will give them money by copying other traders or robots, will this help you for live? Never.

    Not allowed!

  8. #27
    Registered user
    Join Date
    Aug 2013
    Posts
    2,526
    Thumbs Up
    Received: 15
    Given: 56
    Quote Originally Posted by cozard007 View Post
    No one can fulfill his perfect desires over the forex trading without looking into the market beyond the way mere traders do, learning is the key really, I have over heard some traders that says they are looking for a trading system that will give them money by copying other traders or robots, will this help you for live? Never.
    I agree with what you are saying is that in this trade we have to realize is never easy for us will be perfect and we will never be perfect in this trade because somehow in this trade we must continue to learn in this trade to get trade better in this business by understanding the market and understanding the tools of analysis in this trade that will enable us to be successful in this trade in the future because if you do not have the ability to trade on an understanding of the market then it will be difficult to find success

    Not allowed!

  9. #28
    Trader
    Join Date
    Feb 2013
    Posts
    1,138
    Thumbs Up
    Received: 24
    Given: 13
    The importance of understanding is esencial. This is very big thing wich we need to see clear and true. The first of all we have to look and to see what realy the price is doing. Note this, guys : we have to be able to see by our eyes and understand by our mind the real price situation on the chart. When you see the price on the chart then do not see the news and fondamentals in the same time. This is wrong. You see just the real price on the chart and analise anly price and chart. When you clear understand the price situation on the chart then you can look on news and fondamentals. I know this very well, because I saw many times that the chart tells you one thing and the news are telling you other thing. We have to be able to separate those two different things in our mind.

    Not allowed!

  10. #29
    Registered user
    Join Date
    Sep 2013
    Posts
    2,733
    Thumbs Up
    Received: 45
    Given: 32
    Quote Originally Posted by COMANG View Post
    I agree with what you are saying is that in this trade we have to realize is never easy for us will be perfect and we will never be perfect in this trade because somehow in this trade we must continue to learn in this trade to get trade better in this business by understanding the market and understanding the tools of analysis in this trade that will enable us to be successful in this trade in the future because if you do not have the ability to trade on an understanding of the market then it will be difficult to find success
    Understanding the forex market and taking up the trades accordingly is very much important for the traders such that they can be making some good gains in the forex market with the knowledge they have thus gathered. It is the deciding skills of the forex trader which will determine their trading future. Thus, traders should develop this habit of understanding the market scenario and reacting at our best for positive outcome.

    Not allowed!

  11. #30
    Trader
    Join Date
    Mar 2014
    Posts
    435
    Thumbs Up
    Received: 1
    Given: 0
    It is a mature trend, we have a time frame sufficient numbers are particularly high, it is necessary to understand the context, we are the culmination of a series of steps that a mature trend that can be analyzed and then we canceled before the market is not being, of course, he can understand the meaning of the words stop whether we can help you understand the situation, there are plenty of examples. If you provide an example, of course, is perfect, but a little more work is really helpful to all threads can be

    Not allowed!

Page 3 of 121 FirstFirst 12345671353103 ... LastLast

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •