Price action basics. Part 1 - Page 4
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Thread: Price action basics. Part 1

  1. #31
    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.
    It is simple if there is high demand at one level it is not necessarily going to be same on another level - especially on higher price level demand is expected to be be down and supply is expected to increase. That is the reason market goes under corrections after a sharp rise as on higher levels more sellers or profit bookers start closing their long positions.

  2. #32
    Thank you buddy to explain a complicated topic in such a easy way. better understanding about price action is very important to be a successful trader. Better understanding about it may help to make appropriate decision to trade in safe mode. Although trading always contains risk. To minimize risk the understanding of price action is a must.

  3. #33
    We know that Forex trading is a enough complex process .This trade needs various knowledge's and tool's combination .There are also various tools to help the trader . Price action is one of them . It is important because it is related to the psychology of the market . To make a proper plane through a better analysis price action can help trader to predict about the ensuing market .

  4. #34
    Quote Originally Posted by raazsr1 View Post
    We know that Forex trading is a enough complex process .This trade needs various knowledge's and tool's combination .There are also various tools to help the trader . Price action is one of them . It is important because it is related to the psychology of the market . To make a proper plane through a better analysis price action can help trader to predict about the ensuing market .
    yes, forex trading is very complicated and it's not easy at all. But personally i think price action actually is what represents the forex market in here. you will know the sentiment in the market and what the global traders thinks if you traded long enough while keeping an eye to the price changes.

  5. #35
    Quote Originally Posted by topman View Post
    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.

    Let's define - what is a demand area?

    This is an area, where buyers were in contol. So, this area can not be located near one price level - Fibonacci or whatever else. You are talking about excess of correctional trend - yes, excess can fall into one of those levels.

    But real demand (or support) was shown BEFORE that. Of course, elongated candles help us identify those support areas, but not every candle can contain support (or demand area) inside of it.

    Why?

    Because we need to see not only demand, but ONGOING demand - this is very important.
    Elongated candle can be sign of short covering. In this case, some short sellers simply liquidated their positions and market has become more neutral. If you are dealing with short-covering, you will unlikely see continuation.

    So, we should put every strong movement in a context - has it occured inside of the emerging trend to the downside? If yes, I would not buy there, because market will great odds wiil form new low.

    Why am I talking about this example? Because, it's very popular among traders - to catch bottoms.

  6. #36
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    From what you said that, You said; BEHAVIORS OF FOREX TRADERS ARE IRRATIONAL. This means that traders will never have a perfect trading strategy to win the market, right? With this, i want to be sure if i am right of some mentalities that i have about the forex market, i strongly have this believe that no trader can succeed in forex market without using two different strategies together, i means using the price action with a Fibonacci system for sample, if this right?

  7. #37
    Quote Originally Posted by cozard007 View Post
    From what you said that, You said; BEHAVIORS OF FOREX TRADERS ARE IRRATIONAL. This means that traders will never have a perfect trading strategy to win the market, right? With this, i want to be sure if i am right of some mentalities that i have about the forex market, i strongly have this believe that no trader can succeed in forex market without using two different strategies together, i means using the price action with a Fibonacci system for sample, if this right?
    I think, it's not about two strategies.

    We should distinguish strategy and method.

    Strategy includes everything. Methods can differ.

    For every strategy it's useful to have sort of top-down approach. First you identify trend (using method "1"), then you identify possible levels for pulback (method "2"), then you fine-tune your entry (method "3"), after that you monitor and manage your position.

    All levels of this top-down scheme are important, you can't exclude any level. But some traders don't look at "big picture", they simply follow price, but they experience more of "trial-and-error" effect and therefore more psychological pressure.

    If you understand context and big picture, pieces of a puzzle will be combined together better.

  8. #38
    Quote Originally Posted by Value trader View Post
    I think, it's not about two strategies.

    We should distinguish strategy and method.

    Strategy includes everything. Methods can differ.

    For every strategy it's useful to have sort of top-down approach. First you identify trend (using method "1"), then you identify possible levels for pulback (method "2"), then you fine-tune your entry (method "3"), after that you monitor and manage your position.

    All levels of this top-down scheme are important, you can't exclude any level. But some traders don't look at "big picture", they simply follow price, but they experience more of "trial-and-error" effect and therefore more psychological pressure.

    If you understand context and big picture, pieces of a puzzle will be combined together better.
    I once read an article about 3 m in forex, including mindset, methods, and money.
    Strategy is a combination of mindset and methods, logically I can accept this theory. Although I am bit confused. And your explanation of the strategies and methods are reminding me about this theory.

    Is the top-down scheme = overbought-oversold scheme?

  9. #39
    Top-down means that you first are analysing big picture, then go to lower levels of view

  10. #40
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    Quote Originally Posted by Value trader View Post
    Top-down means that you first are analysing big picture, then go to lower levels of view
    If i am not wrong, it means make analysis on big time frame (eg H1) then go to lower time frame (eg. M5) for entry, right sir?. So far i am doing this and it gave me strong analysis then entry earlier because i use smaller time frame there. Price action is good to be employed at this method.

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