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Thread: Price action basics part 2

  1. #1
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    Price action basics part 2

    This is continuation of series of post. Read beginning here

    Strong holders vs weak holders


    Ok, now if we have distinguished weak holders from strong holders.

    And what we really have to do - we want to know, at least to assume what professional players are doing. By professional players I mean dealers or institutions that have to consistently deal with big volumes and give their clients at least average good fills.


    Institutional activity


    When we are talking about institutional activity, we are talking about strong holders.
    That guys have almost unlimited buying power at their disposal, but it doesn't mean that they want take money from you, they usually have large order from their clients. It not always means that they want to purchase from weak holder, squeeze them and hunt for their stops.

    They just want to accumulate position not sqeeezing price against themselves.


    First of all, if you look at this chart, how do think, where (on what prices) institutional player was buying (if he was buying at all here)?

    Attachment 800

    Expected answer is that they were buying at lower level.

    But think about their volumes. They are big enough, and they simply would not have enough liquidity to build a position there. They usually have to accumulate - to buy several times, to absorb somebody's sell orders. Otherwize they will not have enough liquidity and make prices grow immediately

    So, their buying will be distributed within whole trading range:

    Attachment 801

    And the first clue of institutional activity is acummulation on moving market (rising or falling market).

    They don't have enough order flow going down to absorb, so they have to squeeze prices a bit, but nevertheless they have good average price, not the worst of the period.

    It's a wave-like process. It ends with a breakout

    Attachment 802

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    I would like to say that if you are a newbie you must learn the basics of the price action to be able to make profits easily. Trading with the price action will be the best way to trade Forex, it is so simple and so effective and also you will make good profits. So keep in mind that if market sometime repeating same movement pattern while going up and going down so we can use price action method.

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  3. #22
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    Quote Originally Posted by Rizwan Aziz View Post
    I would like to say that if you are a newbie you must learn the basics of the price action to be able to make profits easily. Trading with the price action will be the best way to trade Forex, it is so simple and so effective and also you will make good profits. So keep in mind that if market sometime repeating same movement pattern while going up and going down so we can use price action method.
    Is it really easy?

    Consider all misleading signals and conflicting information. Market is a very complex place, so even if you rely on price action, it would never be easy for you. Discretionary trader's decision making process can't be easy.

    It can be simple, but difference between "simple" and "easy" is tremendous. To find simplicity you should put hard work.

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  4. #23
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    Quote Originally Posted by Value trader View Post
    Is it really easy?

    Consider all misleading signals and conflicting information. Market is a very complex place, so even if you rely on price action, it would never be easy for you. Discretionary trader's decision making process can't be easy.

    It can be simple, but difference between "simple" and "easy" is tremendous. To find simplicity you should put hard work.
    Yes, i agree. when i trade using price action, it really not easy for me to make good analysis. I already tried to use trendline, candlestick pattern, 123 pattern, support and resistent and other price action strategy, but no one of them works well for me. It looks like simple trading strategy, but when i use it in my real trading, then it really not easy

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    Quote Originally Posted by Jamuna View Post
    This is indeed a good thread through which I am able to learn a lot. Being a beginner, it brings me much knowledge on price actions. The more I go in depth of forex trading the more I wonder to learn many new aspects of this trading. I take the opportunity to express my heartiest thanks to the thread beginner to invest their much time to teach newbies through such types of learning materials.
    Yes this thread is very good for new traders to learn about price action trading strategies,i also still learner of these strategies,these strategy are best if you first learn them very well and then make some good practice too,because nothing can be achieved without doing good practical work..

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    Quote Originally Posted by mark48 View Post
    Yes this thread is very good for new traders to learn about price action trading strategies,i also still learner of these strategies,these strategy are best if you first learn them very well and then make some good practice too,because nothing can be achieved without doing good practical work..
    the good thing about learning price action strategy that it is something unique and new and different form what we used to do in the market,as it is more interesting and exciting than just attaching an indicator to the chart and wate for buying or selling signals,this is a new level of market analysis we should know about.

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  7. #26
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    Thanks valued trader for trying to teach us through this thread. This is indeed a good topics to learn about price action and I gained much knowledge on it. Side by side of learning we need to ensure the use of this learning through real trading which can give us practical experience on price action.

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  8. #27
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    Quote Originally Posted by uchexxx View Post
    After reading your post I've also learnt that that e

    - - - Updated - - -

    After reading your post I've also learnt that the currency market is very emotionally driven,and also the fact that psychology analysis is very important to be able to have a idea of what market participant are up too.I must say forex is quite complicated especially if you you want to be a long term trader,for me I prefer short term targets.
    well they say that emotions and rumors drive the currency market but it is difficult to determine the sentiment or the current emotion status of the market based on studying a part of it because the psychology of the market is the collective emotional response of millions of its participants which differ from each other.

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    yes, this is totally correct and i'm totally agree with you that 'rapid move is a sign of big money buyer or seller'. we are totally able to understand this by using only the price action analysis. because if we use any indicator to understand this, we might be too late. thats how price action become a best technical tool of forex market.

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  10. #29
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    Quote Originally Posted by Value trader View Post
    Is it really easy?

    Consider all misleading signals and conflicting information. Market is a very complex place, so even if you rely on price action, it would never be easy for you. Discretionary trader's decision making process can't be easy.

    It can be simple, but difference between "simple" and "easy" is tremendous. To find simplicity you should put hard work.
    Yeah market is too complex even if we already learn about price action, there is still a time that we don't know where market will going.

    So I have a simple way to solve this. I will just trade in market pattern that I know. With using this way of trading then I won't trade if I think the market condition is not good or if I don't recognize the pattern. I being a forex trader to getting some money and not to losing it. :)

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  11. #30
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    Quote Originally Posted by thenight View Post
    Yeah market is too complex even if we already learn about price action, there is still a time that we don't know where market will going.

    So I have a simple way to solve this. I will just trade in market pattern that I know. With using this way of trading then I won't trade if I think the market condition is not good or if I don't recognize the pattern. I being a forex trader to getting some money and not to losing it. :)
    sometimes the market does not follow price pattren or any logical technical or fundamental analysis because there sometimes interventions from central banks and big traders who have enough liquidity to alter the course of a cuurency,i noticed this happens few times with the usdchf where the market behave in a strange way due to interventions.

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