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  1. #1
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    Does price reflect everything?

    Hi traders! Everbody knows one of basic principles of technical analysis – price reflects everything. Let’s think about it for a while. Many traders are caught in the price action and ask – «what in the world does it (price) reflect?».

    If fact, market needs some time to reflect demand and supply in the price action.

    Look at the chart below:

    Attachment 10298

    This is a weekly chart and you see that price action here really reflects activity of all major players who are interested in this market. This is big timeframe and takes 1 week to complete this figure. Strong side of the market (smart money, market movers) is automatically visible after bar (candlestick) is closed. If buyers were dominating the market, we see rising bar (candlestick), if sellers were dominating – we see declining bar (candlestick) e t.c. In this particular situation, we see that buyers were in control

    What if we switch to 1-hour chart?

    Attachment 10299

    We immediately register much more ambiguity, volatility and uncertainty. Price goes back and forth. No one would say with confidence who is in control here.

    So, we come to conclusion that, yes, price reflects everything but it needs some time to do that. On small timeframes price becomes advertising mechanism that fluctuates from high to low prices to attract buyers and sellers for whatever reasons.
    What does it mean that price is an “advertising mechanism»? It simply means that goal of the marketplace – to bring together buyers and sellers, to facilitate trading.

    Market works as an auctioneer. Imagine some auctioneer that tries to sell something to the public. What will he do? He will claim starting price and if no one is interested, he will claim lower price until any buyer is interested. That’s how market operates, nothing new about this.

    If you want to purchase something, will you blindly buy something just for the reason that it is advertised? No, you will not do that. You want to know fair price, in other words, you want to know not only price but also value. You don’t want to buy something overpriced. That’s a main difficulty of technical analysis. It’s been said that price reflects everything, but we see it only in retrospective. In real time we see semi-stochastic process of price action going back and forth.

    Find where the value is

    To avoid being trapped by the price, traders needs to know where the value is. In a nutshell, value is a area of acceptance, area where all timeframes are comfortably trading with each other.

    To find value, you should pay some attention to parameter of time. The more time price spends near certain price level, the more accepted this level is. For example, on a sample below we see that market was holding certain high prices within some period of time, and when price tries to get away from this level, market rejects is:

    Attachment 10300

    However, time also is a double-edged sword. Too much time time spent near price level means that market is preparing for big move (thus, is not going to stay near this level):

    Attachment 10301

    Sometimes it’s hard to identify value. It’s not easy process and sometimes market will rotate waiting for more information.


    Market profile

    The most convenient tool that allows us to see how value migrates, is market profile. It is a tool that organizes data using distribution as a core principle. It shows – how much time price was touching every level within a trading day and builds «value area». Value area is an area that combines 70% of data within one blue rectangle. This is an area of acceptance. When price emerges from this area, it will most likely revisit this area again. But there are times when market builds new value higher of lower without revisiting former value areas. We call it a trend:

    Attachment 10302

    To know more about analysis with market profile, you can attend my webinar on this topic tomorrow.

    Know more

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    Last edited by Value trader; 04-29-2014 at 11:08 PM.

  2. #11
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    Important learning has become well when rolling them some reliable sources, it will come back to her, because even the basics of currency trading must be at the level desired by rolling. Related to the basics thing that may be you've done wrong, or which missed him, or which you have to improve it. It is not necessarily meant to be simple, it is possible to be a Forex Articles advanced, even if they are related to the basics.

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  3. #12
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    [lang=ar]Due to the presence of leverage, it is possible to make big profits in the forex market relative to other markets and is considered high financial leverage double-edged sword, which can be achieved enormous profits, and possible loss of their capital if it did not have the shops a good experience and a good strategy.[/lang]

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    The cycle of Forex technical analysis will teach you how to read the tables, and how to analyze the market using all the high-end technical indicators, and how to predict future moves in the Forex markets. And whether you are a supporter of technical analysis or not, these tools are very important to achieve success in Forex, and it must be taken very seriously.

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  4. #13
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    I think yes price reflects almost everything, whatever you are doing you will see its effect on the price as ultimately everyone's target is the price.So while analyzing the price action you will have to consider so many factors which directly affects the price.If you get the price you get everything.

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  5. #14
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    Reflection of price in the state of Forex business it is totally depend on world financial situation. If financial situation is stay with upper level then our price rate also go to up when it is down then price automatically reflect in down. Economical data and demand of currency also responsible for this term.

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  6. #15
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    Well, this issue of the forex trading is what i have being asking myself about all the time, and the main answer that points to em is how the traders get to know accuracy in the market, and since there is none like that, they the price will not reflect everything in the market, no way.

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  7. #16
    Registered user mohabbat's Avatar
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    Quote Originally Posted by abul69 View Post
    yes price reflect everything about forex business.your profit depend on price reflect.market some time go up some time down it is price reflect.trader this time earn or loss.profit and loss depend on your experience,knowledge,learning.so do practice more and more then you understand price reflect and tricks of earn money.
    Yes dear , profit loss depend all time our experience, but our value trader share us some important thing which so important for every trader. as like value area , and area of rectangle etc.. so we should to realize that , and when we understand theses then we can promote our skill which you explain.any way it is my personal view.

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    Don't loss you hope.

  8. #17
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    Quote Originally Posted by mohabbat View Post
    Yes dear , profit loss depend all time our experience, but our value trader share us some important thing which so important for every trader. as like value area , and area of rectangle etc.. so we should to realize that , and when we understand theses then we can promote our skill which you explain.any way it is my personal view.
    Well, personally i believe that the loss in a trading account won't go out for nothing as well. It's something that is very important that we need to experience as a trader. And the most likely if we can conquare the weakness like getting a down in mental condition when we're in losing condition then we need to have as much losing experience as possble. Surely that we can strengthen our mind as the time passes and we can make some good decision and not hasty at all.

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  9. #18
    Trader ict2014's Avatar
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    dear guys there are more factors to move the market up and down. which we call price action. major factor fundamental cause, supply and receive like other market. some one trader who trade with big big capital which become big factor to move the market.

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  10. #19
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    it was caused by supply and demand. and sometimes at the same time. there will be many transaction in the market between seller and buyer then we can see that the candlestick will show some spikes and even big spike, and we can use it as a guide to see the next direction. for me, i pay attention for body and tail or also long tail or spike and then i can make a decision for open position

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  11. #20
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    Quote Originally Posted by newentry View Post
    it was caused by supply and demand. and sometimes at the same time. there will be many transaction in the market between seller and buyer then we can see that the candlestick will show some spikes and even big spike, and we can use it as a guide to see the next direction. for me, i pay attention for body and tail or also long tail or spike and then i can make a decision for open position
    I agree with it that the move prices in the market due to supply and demand just that need to know is how we as traders should look at it in this trade so will be able to get this trade would be better and I believe in this trade by knowing what factors drive the market then we will be able to make better in doing this trade with more leverage in the trade as part of a market analysis

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