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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 10:08 PM.

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    Registered user lawners1791's Avatar
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    yes i guess here with the mention of to work more by the better on confinesment by the good return on the arrange on following the higher on precise by the good analytics on managing the good fields by the finance of fundamental on receiving the good balance by the decision with the chance on defining the best of the signals on putting by the proper of the options.

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  3. #22
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    Quote Originally Posted by lawners1791 View Post
    yes i guess here with the mention of to work more by the better on confinesment by the good return on the arrange on following the higher on precise by the good analytics on managing the good fields by the finance of fundamental on receiving the good balance by the decision with the chance on defining the best of the signals on putting by the proper of the options.
    We should never make this mistake sir, the price can never reflect everything in the forex market, it is our trading and dealings that will unlock the most out of the market. There are more trading ways in the market, and that is the what will be going the traders the total reflecting if carefully looked into by them.

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  4. #23
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    Knowing how to go about trading of forex is of great importance to the forex traders, but saying that price reflect everything means the market is not what it is, there is no way the price could do this successfully, even if the trader wants it, it will still need good trading verification.

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  5. #24
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    Your price reflects everything regarding forex trading. Profits down for a few hours and have little time to price reflect.market price reflect.trader loss.profit and this time credited or loss, depend on knowledge and learning. So much more convenient what follows takes account of the price of tips to earn money.

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  6. #25
    Registered user taqiniazi's Avatar
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    the industry is live for the activity of cost.this business relies on the cost motions.the profit and loss is fully relied by the cost of his dealing.open a investor reveals a business that time the condition of the business and the balance will be relied available on the industry.

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  7. #26
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    I can not be among the forex traders that says price will reflect everything in the forex market, the price is the way the trading chart patterns are formed, either hidden or the obvious ones, but they still can not be the guaranty of the analysis of the traders per day, if traders rely on that, it will fail.

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  8. #27
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    Quote Originally Posted by cozard007 View Post
    It is what I have noticed long time ago, the price of the market is the one that is keeping the market, it will go up and turns down, but this is never a things to trade with. If the market looks to the upside in real chart price`s ticks, it may be that the real trend is still resting before a vital movement will take shape.
    Yes the liquidity and the price rules the market.I think the price is everything and we should always follow the main trend of the price.If we try to trade against the price then there is more risk and the possibility of happening the loss.So the price reflects everything as all are depending on price.

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  9. #28
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    Forex is the largest market place in the world. We learn and trade forex for a long time in the elderly should be more practice demo. There are many opportunities to build a career. Market analysis and money management properly. Current news updates correctly to earn more money from trading Forex. So we should work hard to trade forex expert.

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  10. #29
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    No my dear friend all currency pair effect from fundamental news, pair too, or it will be better to say that fundamental news are the base of forex market for all currencies pair, so it is not as you are thinking about it pair too reflect fundamental news you can see and check history chart and news and can check how much impact has been on pair with fundamental news.

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  11. #30
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    Indeed traders need to understand market profile more, and how it identifies value areas on the price chart. Since value areas are the points which traders need to identify, i think that trader must focus on indicators and trading tools that help to identify value area.

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