Hi traders!

In this article, I’d like to talk about practical application of time parameter in trading. Jim Dalton (author of “Markets in profile”) once had said: “When we put price, time and volume together, we get value”. Though we don’t have reliable information about volumes in Forex trading, we nevertheless can combine price with time and make important conclusions about real trend in the market.

The easiest way to apply time parameter is to observe duration of correctional moves in comparision to duration of impulses. As many traders analyse charts (not market profile), they can measure angle between impulse and correction. The more acute this angle is, the less potential market has to sustain it’s directional move.

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Think about every movement in terms of price and value - if price is not returing to value (say, we have obtuse angle between impulse and correction), we more than likely have price discovery - market is searching for balance. It advertises higher and higher, and this process can continue for a while (several days).

Contrarily, if we have acute angle - we see that market probably has to advertise lower every time to attract buyers (demand is not aggressive enough to step in at higher prices). More often than not, it is indication of mature trend, ready to transform to trading range if not to reverse or correct.

And you can not only analyse existing visual structure of the chart, you can anticipate it’s future structure. For example - if you have trend represented in the sequence of ascending days without any correction or even consolidation, you automatically know that angle between impulse and correction will tend to be acute - so, if you will observe very small correction (and obtuse angle), odds are very high that such correctional low will be violated within a current or a next day.

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Do you try to catch bottoms/tops?

Another important clue for a trader. Many, if not 80-90% of traders do the same thing over and over again. They try to trade a reversal before market is ready to reverse. In other words, it’s much more likely that market will first change it’s direction from descending (for example) to sideways, and only after that it can reverse.

Recent example is shown below. One of students of my educational group had noticed that GBPUSD was possible ready to go up. But considering that sideways action usually lasts 2-3 times longer than trending action, we could avoid placing a long trade in the spot shown on the screenshot, at least before ascending trend is confirmed.

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Important note: If trading range is long enough, and lasts about 2-3 weeks, we can be more aggressive in our directional trading - we might not even wair for confimation and place trades inside of a range. In such circumstances timing will help us to anticipate trending move.