Price and time - holistic view on markets
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    Price and time - holistic view on markets

    Basic convictions of technical analysis are:


    «Price reflects all, trends will likely continue and history repeats itself.»


    I would say, it’s true in the first part – price reflects it all, what about 2 other? Will trends continue and will history repeat itself? It’s a big question because nobody knows what «trend» is for example.

    Some people draw «trend lines», but more often than not they provide information that is already useless. Trend line shows trend when it is already confirmed, therefore it has lower odds for continuation.

    Traders also use support and resistance, but it works only when strong demand or supply drives the market.
    Those technical methods will not help you indentify strong supply and demand – the fact that price has touched some level twice is not the indication of strong demand.

    But what is that?

    Einstein once said that you can’t solve the problem using mindset that created this problem.
    To combine information that price gives us, we should apply one more parameter, and this parameter is time.

    Of course you are using it in some ways, but traders often don’t use in consciously.

    What time gives us?

    Time is one of components of value. The more time we have, the more value we can create. Simple example is interest rate. If you put some money in the bank, interest rate multiplied by time will increase your capital.

    The same is in trading. The more time market spends near some given level, the more this level is validated.

    In this thread I will share with some tips about «value trading» - how to add parameter of time to your analysis.

    Infinity-Time1.jpg


    To be continued

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    Last edited by Value trader; 08-26-2013 at 11:33 AM.

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    There are some clues when you employ parameter of time compared to parameter of price.


    Trend is likely strong if:


    1. Corrections are not deep enough.


    Usually they don’t exceed 25% of previous move up.

    It means that strong buyers are probably dominating. To make things clear – by strong buyers I mean «buyers with distant stops», not «buyers with unlimited pockets». But more often than not those who can move the market and yet have distant stops are huge enough, be sure about that.

    Why does it work that way? If you see weak buyers involved, they would liquidate quickly and market will go after their stops – you will see rapid «spikes» on the way down.

    On screenshot below you see no spikes on the way down:

    strong.jpg



    2. The bigger angle between impulse and correction the stronger the trend


    Of course, it’s not rule «set in stone», but it’s a clue – we can add this clue to our analysis.
    What does it mean? Instead of correcting rapidly, price sort of stands by in small trading range. If is indication of strength beyond market structure.

    Market goes in wave-like activity. Fast breakout – lagging consolidation, fast breakout - lagging consolidation and so on

    strong2.jpg

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    i have no idea how to really follow the trend. Everytime there are strong trend without correction, never been so much confident in open following it. Then, I always trade againts it

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    Last edited by Value trader; 08-26-2013 at 11:45 AM.

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    following the trends is so most successful way to make profits from Forex and i used this strategy over 6 months till now also it has many advantages one of it is you can trade with it with any time frame if you are a beginner trader i think you can use it simply .so it is the most popular strategy ever and there is many trading system depending on this strategy .

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    Quote Originally Posted by Grandhis View Post
    i have no idea how to really follow the trend. Everytime there are strong trend without correction, never been so much confident in open following it. Then, I always trade againts it
    Actually, you need to know whether market is strong of weak.

    Trend is a RESULT of market conditions that CREATED a trend. You should rely on MARKET CONDITIONS.

    Market is more likely strong when it is driven by large market particpants, but not only that.
    The best trading situations occur when you have not only strong players involved but also weak players opposing them.

    So, you should know how strong player acts and how weak player acts, and when their positions meet in the market, you should play on the strong side.

    Below is small example from previous trading week and my last trade closed with 70 pips profit (we've been discussing this trade on the webinar).


    Market is strong. But some supply was driving market down for a while.
    It created opportuninty, but on the first sight, there's no trend on the market, yet here is REAL support.

    screen.jpg

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    Quote Originally Posted by martyn View Post
    Basic beliefs of technical analysis usually depends on the type of strategy used. for example, if we use a swing strategy, we believe that the best moment to enter the market when the price was the highest or lowest point it. last example we use scalping strategy, the basic belief that is often used is entered when the market is making a new trend and come out when it was getting profit.
    It's absolutely right.

    Different trading styles will require to select different TRADE LOCATIONS.

    While swing trading is often level-based trading (buy low, sell high).
    If you trade momentum, your opportunities will exist on the moving market, so you will be sort of "buying high, selling higher"

    This is an example of typical momentum trade from August 15:

    momentum.jpg

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    Quote Originally Posted by Value trader View Post
    It's absolutely right.

    Different trading styles will require to select different TRADE LOCATIONS.

    While swing trading is often level-based trading (buy low, sell high).
    If you trade momentum, your opportunities will exist on the moving market, so you will be sort of "buying high, selling higher"

    This is an example of typical momentum trade from August 15:

    momentum.jpg
    Market presents us opportunities for trading swing as well as momentum. Sometimes scalping is better in the market. My strategy and time of trading depends upon the market conditions. When there is a major news I avoid scalping and go for swing or momentum trading.

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    Quote Originally Posted by mohamed reda View Post
    following the trends is so most successful way to make profits from Forex and i used this strategy over 6 months till now also it has many advantages one of it is you can trade with it with any time frame if you are a beginner trader i think you can use it simply .so it is the most popular strategy ever and there is many trading system depending on this strategy .
    I would say that any strategy that respects trend and utilise it to make profit is always profitable, that is because market keep trending often. Longer term trend is more reliable than short term one, and so those trade for long term appear to make safe and assured returns in this market.

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    Quote Originally Posted by vylance View Post
    is not very simple to trade by using trendlines. once I trading using trendlines but I still can't catching when the trend will be finish. after couple time I preview the chart, every time frame is not the same. I can see some trader can easily for them to know the trend is going. I really do want to know which time frame will be the best first looking the trend? do I need to every time to preview the chart to check the trend? I'm a short term trader and would be better for me to trade by using trend?
    I would suggest first to use D1, though trades will appear rarely there, but intraday information and all that noise will confuse you. As for me, I don't think that there's noise in the market, but for some approaches, it's better to switch up to higher timeframe.

    Also, I would recommend to use some sort of confirmation. As an example - you seek for trend lines, but wait for price action to confirm your entry - for example you can use daily pin bar or any other signs of reversal.

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    I believe that i need trading i need a strong trending indicator that ca see signal accurately on the 4hours chart before i place a trade on the price action bases, i will let the both say the same thing before i pull the trigger, is this correct educator? I think that if i do this, i will be able to be sure that the trend is right, or this might cause confusion or what? I still like to combine trading strategies.

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