Price action basics. Part 1 - Page 90
Page 90 of 91 FirstFirst ... 4080868788899091 LastLast
Results 891 to 900 of 901

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 10:12 AM.

  2. #891
    Trader
    Join Date
    Jun 2016
    Posts
    2,035
    Thumbs Up
    Received: 10
    Given: 5
    Quote Originally Posted by AmitChallenger View Post
    This things we need to learn from experience, why a good trade set up takes the reverse direction. The behavior of big market participants and how it can impact the market. Trading is the art of analysis and not the art of making guesses. The knowledge of analysis is the weapon to make profitable trades. Profit and loss both have in Forex trading.
    We have to understand the uncertain nature of Forex. Sometimes big players can move the prices to give us a false set up, and then the prices moves the opposite. Every great learning starts by learning the basics. Traders have to proceed step by step to the top levels. Forex is a market with unlimited facilities and opportunities but one needs to trade by keeping his account protected.

    Not allowed!

  3. #892
    Trader
    Join Date
    Aug 2014
    Posts
    173
    Thumbs Up
    Received: 2
    Given: 24
    Quote Originally Posted by komalam View Post
    We have to understand the uncertain nature of Forex. Sometimes big players can move the prices to give us a false set up, and then the prices moves the opposite. Every great learning starts by learning the basics. Traders have to proceed step by step to the top levels. Forex is a market with unlimited facilities and opportunities but one needs to trade by keeping his account protected.
    There are ways to identify true or false setups laid by market makers. To avoid big players traps we can always use stop loss or trailing stop. It is really necessary to use stop loss because when big boys trap small fishes like us, then if stop loss is not used then we can face huge losses.

    Not allowed!

  4. #893
    Trader
    Join Date
    Aug 2014
    Posts
    6,453
    Thumbs Up
    Received: 55
    Given: 35
    Quote Originally Posted by komalam View Post
    We have to understand the uncertain nature of Forex. Sometimes big players can move the prices to give us a false set up, and then the prices moves the opposite. Every great learning starts by learning the basics. Traders have to proceed step by step to the top levels. Forex is a market with unlimited facilities and opportunities but one needs to trade by keeping his account protected.
    Big players can move the market to some extent, but even big players cannot meddle with a strong trend in the market. I make use of the price action and on the time frames above H1 and I trade trends as part of my swing trading strategy. There are many people in forex who have developed their specific trading strategies by making use of the candle charts and are getting benefits too.

    Not allowed!

  5. #894
    Trader layigold's Avatar
    Join Date
    Dec 2013
    Posts
    10,145
    Thumbs Up
    Received: 164
    Given: 90
    It still remains a great surprise to me that the level that provides a good support where retail traders feel okay to go long does not interest the big players because of the issue of not having sufficient volumes for their orders at that level. I will appreciate if you can show on a chart the level where big players might consider suitable to execute his orders. I am a price action traders and I follow candlestick patterns to take trade decision and I am happy to announce here that my performance is doing fine.

    Not allowed!

  6. #895
    Trader
    Join Date
    Apr 2016
    Posts
    4,048
    Thumbs Up
    Received: 20
    Given: 9
    Quote Originally Posted by AmitChallenger View Post
    Big players can move the market to some extent, but even big players cannot meddle with a strong trend in the market. I make use of the price action and on the time frames above H1 and I trade trends as part of my swing trading strategy. There are many people in forex who have developed their specific trading strategies by making use of the candle charts and are getting benefits too.
    Moving the market is out of question for retail traders, what they have to do is move with the market that is understand what the market is about to do. Analysis skills play an important part in trading and combining technical and fundamental analysis is the best possible way of market studying. Forex is unpredictable and so with skills, being wise and realistic is important.

    Not allowed!

  7. #896
    Trader layigold's Avatar
    Join Date
    Dec 2013
    Posts
    10,145
    Thumbs Up
    Received: 164
    Given: 90
    It is the imbalance that exists between the bulls and the bears that move the market in forex and in simple economic term , this is being referred to as the forces of demand and supply. Reading through this thread, I have got to discover that what attracted retail traders into taking position is not what attracted the big players who are known to be strong holders because they have the abilities to accumulate positions at various price levels, clear example of this has already been shown on the charts attached by "value trader". It is quite better to know how big players reason, act and behave so that retail traders will be in better position to benefit from that .

    Not allowed!

  8. #897
    Trader ara's Avatar
    Join Date
    Dec 2013
    Posts
    1,834
    Thumbs Up
    Received: 106
    Given: 184
    Quote Originally Posted by Man Utd View Post
    To avoid big players traps we can always use stop loss or trailing stop. It is really necessary to use stop loss because when big boys trap small fishes like us, then if stop loss is not used then we can face huge losses.
    Just follow them in order to avoid their traps. Yes, but it is not easy, we don't know when they enter and when they are exit, especially if we used full technical analysis without approaching the fundamentals. Stop loss is an important part as our shield to protect our deposits. Of course, we can't do anything but always try to follow them and avoid to go against them, but sometimes we get stuck and go against them without us knowing because we are too hopeful that conditions will change according to our analysis..

    Not allowed!

  9. #898
    Trader
    Join Date
    Aug 2018
    Posts
    143
    Thumbs Up
    Received: 2
    Given: 0
    As there is wealth implicated in this market and we all make detestation or have trepidation to be defeated in this money related market. This trepidation binds us to make out proper result from the market or can truly encourage us to analyze the market. Properly to say sometimes however fear won’t let us take adequate risk which is requisite in such market if a trader wants to make sure profit.

    Not allowed!

  10. #899
    Trader J_C_Anderson's Avatar
    Join Date
    Oct 2018
    Posts
    122
    Thumbs Up
    Received: 2
    Given: 1
    It is important for any trader to understand the way the large players execute their trades. In fact, almost all substantial price movements caused by institutionals players opening or closing their positions. While retail trader can open or close the position just in a few seconds, hedge fund needs several days or even weeks for the smae purpose. It happens because their positions are huge so they need to execute their orders partially to avoid the influence on the price (that is why they avoid instruments with the lack of liquidity - it would be difficult for them to find the opposite party on such markets). This is an important advantage of retail traders, proviidng them exceptional flexibility (at the same time, it may turn into huge expences due to high trading fees).
    To be able to benefit from actions of large institutionals player, trader needs to know the way they make trading decisions and execute their trades. For example, they will never open or close positions in a few minutes after the news are released since they need enough time to analyse them and make assumtions on possible impact and outcomes. Then, traders and analytics working in the large company need to get an approval for their plan. Only after the endorsement they will be able to start placing orders. At this stage they would evaluate the liquidity present at the market and compare it to the size they are interested in. They have to find the way to get into the position as close to the average price, defined in their plan, as possible. They can use different moving averages for this purpose. In this situation, retail traders have to look for the signs of large players executing their orders (for example, strong support ot resistance levels) and try to find the entry point somewhere nearby. In such case, large institutional order will protect trader from unexpected price movements and squeezes. Of course, you cannot see such orders because they are hidden and placed for execution partially, but you can find them using price action patterns.

    Not allowed!

  11. #900
    Trader
    Join Date
    Aug 2019
    Posts
    5
    Thumbs Up
    Received: 0
    Given: 0
    I think that is also important to use candles Japanese because it is important in determining the price movement of which you need but also the experience to use it well.This price action to determine how the psychology of the market over the existing market conditions at that time so it seems to me that the price action will be very important for us to find a trade that will help us find a better trade in this business and we will be able to understand how to do trade would be much better if the market psychology to understand how existing

    Not allowed!

Page 90 of 91 FirstFirst ... 4080868788899091 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
  •