Price action basics. Part 1 - Page 3
Page 3 of 91 FirstFirst 12345671353 ... LastLast
Results 21 to 30 of 902

Thread: Price action basics. Part 1

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

    Price action basics. Part 1

    Hi, traders.

    In series of posts, I will try to uncover underlying reasons that drive the market.

    Trading the market, you want to see something beyond candlestick charts, and you want to see - guess what? You want to see people, traders with their interests, fears and desires. Like one wise man said, "discover what makes people tick, and you will know what makes market tick"



    1. Where are you trading?



    First of all, there is a significant difference between stock market and markets that trade with leverage. Forex is one on those markets (but not the only one - there are futures, options, OTC derivatives and so on).

    Nature of retail Forex market is that real currency rarely trades here. We trade obligations (for example, we take responsibility to buy some currency after the trade, and deposite some money fot that. If we are mistaken, we give some money to the market, if we are right - we take some money from the market).

    Numerous obligations (traders from retail traders) meet together and form a huge whole position, that liquidity provider must cover using other liquidity provider. That's how it works.


    ! The process of exchanging obligations is somewhat different from exchanging real goods.


    Imagine you're trading a stock. Quantity of stocks is limited, and to go short you must borrow some stocks from its' owner. If you want to close your long position, you expect somebody to sell it (real stock). And that's why we have "short interest" on the stock market, it usually doesn't exceed 5% of the whole volume.

    Attachment 766

    Things are different on Forex and futures. You can sell almost unlimited number of contracts, so you don't need to borrow something from somebody. That circumstance makes analysis of supply and demand on Forex pretty different than on stock market.

    We can see big supply, but suddenly market reverses and all those short sellers start covering. Why? Because they need to do it - they have small pockets and should exit quickly otherwise they can blow up their accounts.

    The same is with long positions - there are lots of weak holders, that have very close "pain point" - they go long, place very close stop and if they have no defense from "strong holders", market will probaly go after their stops, because there is always strong counterparty that can hold the level and prevent price from further rising (remember - they can place as many "sell limit" orders as they want)

    Attachment 767



    ! Trading on Forex market is really the Art of analysing underlying inventory.



    To start successfully find good trades, we should answer these questions from small check-list:



    1. Who is responsible for price action? Strong holders or weak holders? (price will go in the favor of strong holder)

    2. Is market oversold or overbought on the way up? (in the first case we have weak short sellers, in the second - weak long bueyrs)

    3. Is market oversold or overbought on the way down? (in the first case we have weak short sellers, in the second - weak long buyers)



    Remember, there are not only situations when we have "win-lose" situation and "strong-weak" market configuration, we can also have "strong-strong" market configuration, when market is careless about retail traders and their positions (this is when we have elongated trends).

    As a trader, you should know how to read inventory and to play on the strong side.


    to be continued....

    Not allowed!
    Last edited by Value trader; 08-10-2013 at 11:12 AM.

  2. #21
    Trader
    Join Date
    Aug 2013
    Posts
    106
    Thumbs Up
    Received: 0
    Given: 1
    You said it all. The way you deal with the risk reward is a decisive factor to determine the actual trading results. Of course it is easier to concentrate on losses in wins, and this is the crucial challenge for marketers overcome. The benefit of focusing on opportunities combined with a trading style wise and efficient is desirable for any marketer who wants to produce good results with the market.


    Quote Originally Posted by PROPENSITY100 View Post
    Incurring a big loss in Forex is very annoying and this is why a trader should protect his capital while trading Forex. Many traders risk their entire capital at a time to earn huge profits and when they blow their accounts they find themselves in financial problems.

    Not allowed!

  3. #22
    Trader
    Join Date
    Mar 2013
    Posts
    1,504
    Thumbs Up
    Received: 8
    Given: 1
    Quote Originally Posted by PROPENSITY100 View Post
    Incurring a big loss in Forex is very annoying and this is why a trader should protect his capital while trading Forex. Many traders risk their entire capital at a time to earn huge profits and when they blow their accounts they find themselves in financial problems.
    Yes it's right after blowing their trading account ,then they realized the importance of money management in forex business and why all expert trader always suggest about money management..price action strategies are best trading strategies in forex business which also help us to manage our trading capital very well..

    Not allowed!

  4. #23
    Trader rinaji's Avatar
    Join Date
    May 2013
    Posts
    3,839
    Thumbs Up
    Received: 207
    Given: 311
    Quote Originally Posted by mark48 View Post
    Yes it's right after blowing their trading account ,then they realized the importance of money management in forex business and why all expert trader always suggest about money management..price action strategies are best trading strategies in forex business which also help us to manage our trading capital very well..
    Can you explain to me what are the techniques used in the price action?
    I mean, does only candlestick pattern is the only technique on price action, Could we work just look at the price, without looking at the chart? As the name, "price action".

    Not allowed!

  5. #24
    Trader
    Join Date
    Aug 2013
    Posts
    12
    Thumbs Up
    Received: 0
    Given: 0
    Thanks for the explanation I am the first time we touch on this explanation
    I like using price action in the trading, the psychology of the trader in the market

    Not allowed!

  6. #25
    Registered user
    Join Date
    Mar 2013
    Posts
    3,925
    Thumbs Up
    Received: 215
    Given: 113
    Quote Originally Posted by mark48 View Post
    Yes it's right after blowing their trading account ,then they realized the importance of money management in forex business and why all expert trader always suggest about money management..price action strategies are best trading strategies in forex business which also help us to manage our trading capital very well..
    Its never too late too learn. Even if after blowing the account a trader can realize his mistakes and make efforts to correct them, then he can learn the skills and strengthen his knowledge and proceed to recover his losses. But many traders do not leaven even after blowing their accounts.

    Not allowed!

  7. #26
    Trader
    Join Date
    Aug 2013
    Posts
    220
    Thumbs Up
    Received: 2
    Given: 4
    I have been learning the price action, I interested in the price action techniques. But I still do not fully understand. Personally, quite difficult to learn because the price action related to the psychology of the market (psychology of traders). I need a lot of time to be understand. I follow this thread to it is part to part.

    Not allowed!

  8. #27
    Trader
    Join Date
    Aug 2013
    Posts
    6
    Thumbs Up
    Received: 0
    Given: 0
    In my opinion the basic of price action is, of the observations and our knowledge of the candlestick pattern. If we already have the correct understanding and comprehend about the candlestick that, then we can know and recognize the movement as well.

    Not allowed!

  9. #28
    Trader
    Join Date
    Sep 2013
    Posts
    1,458
    Thumbs Up
    Received: 12
    Given: 32
    Sir, after read from the first page till page 3, i am remember about supply and demand. Do you mind if i say price action is strongly correlated with supply and demand?. For example, if the price hit or entered supply area then sellers will try to entry the market, vice versa for demand.

    Not allowed!

  10. #29
    Educator
    Join Date
    Jun 2013
    Posts
    1,103
    Thumbs Up
    Received: 579
    Given: 189
    Quote Originally Posted by topman View Post
    Sir, after read from the first page till page 3, i am remember about supply and demand. Do you mind if i say price action is strongly correlated with supply and demand?. For example, if the price hit or entered supply area then sellers will try to entry the market, vice versa for demand.
    We need to know whether demand or supply was strong. If it is so, probably strong buyers and sellers may protect their positions, in this case things can be as you describe.

    Just one thing - what you mean by supply or demand area?

    Not allowed!

  11. #30
    Trader
    Join Date
    Sep 2013
    Posts
    1,458
    Thumbs Up
    Received: 12
    Given: 32
    Quote Originally Posted by Value trader View Post
    We need to know whether demand or supply was strong. If it is so, probably strong buyers and sellers may protect their positions, in this case things can be as you describe.

    Just one thing - what you mean by supply or demand area?
    Sir, on my strategy i am always using fibonacci golden ratio (38.2 and 61.8, fibonacci expansion 138.2 and 161.8) as demand area and supply area for technical analysis. So, simply i can place pending orders at that area.
    I knew supply and demand is base on left candlesticks and confirmed by a strong candle bank (candle with strong body) breakthrough. Perhaps you can explain better than me about supply and demand, sir.

    Note : Area means the distance between fibo 38.2 and 61.8, or FE 138.2 and FE 161.8.

    Not allowed!

Page 3 of 91 FirstFirst 12345671353 ... 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
  •