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    Understanding the market. Part 1

    Hi everyone!

    Is it possible to understand the market? People have been thinking about it since market has appeared. Just remember Japanese candlesticks, they were applied in early 1800-s in Japan. Later on, attempt to formalize market movements was made by Charles Dow, which has become popular for “technical analysis”. It’s interesting that Louis Bachelier in his “Theory of speculation” had developed absolutely opposite views on the market - he claimed that nature of the market is close to random.

    In 20-s of 20 century, market has accumulated enough history for making conclusions about effectiveness of different theories. It has become clear that “moving with the market line” can’t beat the market, and average investor has to apply something more complicated and smart.

    Richard Wykoff, who also was journalist and trader, has developed technical analysis into VSA (Volume spread analysis) method. Later, in 1934, Benjamin Graham had claimed principles of “value investing”.

    Later on, models for understanding the market were developing, along with new nuances and details. There’s no “right” or “wrong” model, everything depends on current market conditions. But, we can say, that all approaches for understanding the market, can be put in 4 groups:

    1. Market action discounts everything;
    2. “Smart money” vs “Public”;
    3. Random walk hypothesis;
    4. Harmonic analysis.


    First refers to technical analysis in all it’s forms, second is closer to VSA and "auction market theory", third one refers to statistical distributions and probability theory, fourth involves application of Fibonacci retracements/extensions, Gann or Elliot principles.


    Market action discounts everything:

    When we talk about technical analysis, we remember it’s first and basic rule - “Market action discounts everything”. If we take larger timeframes - Weekly or daily chart, it would be good to use conventional technical analysis on them, because relative percentage of market “noise” is low there. Comparing price action on “W1” with that on “H1”, we will find that on “W1” quantity of conflicting information is relatively lesser.
    That’s why professional traders who employ “Head and shouders”, “Flags” or “Pennants” work on larger timeframes. They compensate low quantity of trading signals occuring on their timeframes by analysis more markets and more trading instruments.


    “Smart Money” vs “Publiс”

    When we switch to intraday charts, we will find that there’s a lot of “price probes”, “tests”, “false breakouts” and other irrelevant price movements. So, intraday, or even swing trader (who works on trends of 1-3 days of duration) has to filter information.
    Professional traders, who are working on small timeframes, often analyse 3 parameters - price, time and volume. They combine it together and get the idea of value. Distinction between price and value is the most difficult and important task for intraday trader.

    The goal of this process is to capture activity of “other timeframe trader” (OTF) from intraday chart. If we trade within a day, yet can’t understand big picture, we can easily be caught up in false price moves.

    To be continued...

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    Last edited by Value trader; 03-20-2015 at 11:32 AM.

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    Quote Originally Posted by Value trader View Post
    Random walk hypothesis;
    those as trader creating of the emotional binds with the past history on gaining of the best with the chance on explaining the use with the decision as running of strategy on appealing of the current risks with the market deliverance.
    as trader focusing of the higher on projection as targeting numbers with the return to complete with the excess on finale of qualification.

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    Quote Originally Posted by splash View Post
    To me all strategy are just good and fine, the thing is the one making use of it, if he has got the skills and knowledge where as has learned the strategy.

    If we all should learn and know the strategy that we are making use of, I think we can make money and succeed in the business.
    Never say it again not all strategies are good.. Many traders share their own strategy here in Roboforex forum on the others websites and on youtube videos. I beleive that the success on forex trading is not about a strategy which can be given in some words, it's also a result for the good use of such strategy and the best time of it.

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    Quote Originally Posted by SuccessfulKartik View Post
    Never say it again not all strategies are good.. Many traders share their own strategy here in Roboforex forum on the others websites and on youtube videos. I beleive that the success on forex trading is not about a strategy which can be given in some words, it's also a result for the good use of such strategy and the best time of it.
    Strategy is important though not everything to get success. There is no way one will not accept loses in the forex market since there no one you can hold responsible for your loss. I believe in getting good indicators, I also believe in EAs but I prefer a good strategy to these. Just get good strategy, and that should be ok.

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    Registered user Hukam's Avatar
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    Quote Originally Posted by Abhishekwala View Post
    Strategy is important though not everything to get success. There is no way one will not accept loses in the forex market since there no one you can hold responsible for your loss. I believe in getting good indicators, I also believe in EAs but I prefer a good strategy to these. Just get good strategy, and that should be ok.
    There are many good trading strategies are in forex but many trader's add their own rules in it which make their trading strategy a complex or a easy trading strategy for them to make money. Make sure that if you are using other's strategy then we should check its risk and reward, entry and exit point, risk management, stop loss and all other features. There are many good trading strategies in this forum but it mean is not that we have to forget about the use of our risk management, stop loss in those strategy, it could make our trading strategy very complex and hard to gain cash.

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    Quote Originally Posted by Abhishekwala View Post
    Strategy is important though not everything to get success. There is no way one will not accept loses in the forex market since there no one you can hold responsible for your loss. I believe in getting good indicators, I also believe in EAs but I prefer a good strategy to these. Just get good strategy, and that should be ok.
    Of course, the strategy of the trader is the first thing the trader needs to locate in the market, and of course it is not the only thing that would make the success. Traders needs management, good emotion etc. as well. Also if the trader could try very hard to limit the way of risk too, the market would be gotten more often and the level of losses can be reduced at the same time.

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    as appreciating on absence as qualifying of early on phase with the beginning series on customs of the manage on working of the good analytics of signals on working of the order on opening new position; those leaves of the chance as trader to gained of responsibility as qualifying chance with the use on supports with the notice of returns, on challenging further on options on working of the good projection with the decision on ordering commands of execution.

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    Quote Originally Posted by SuccessfulKartik View Post
    Never say it again not all strategies are good.. Many traders share their own strategy here in Roboforex forum on the others websites and on youtube videos. I beleive that the success on forex trading is not about a strategy which can be given in some words, it's also a result for the good use of such strategy and the best time of it.
    I don't get your point here, are you saying that some strategy are wack or something? well, yeah, such like scalping to me does not work for me, I prefer swing method.

    However, the one that would work for us is the one that we have given more time and has learned more about, to me it is all about practicing and putting more efforts to learning.

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    Registered user techboy's Avatar
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    Quote Originally Posted by cozard007 View Post
    Of course, the strategy of the trader is the first thing the trader needs to locate in the market, and of course it is not the only thing that would make the success. Traders needs management, good emotion etc. as well. Also if the trader could try very hard to limit the way of risk too, the market would be gotten more often and the level of losses can be reduced at the same time.
    Right, it is important that a trader is focus in finding the right and effective strategy in his trading, but it is not just about good strategy we also have to develop good practice in risk and money management and good control of our emotions, we must always in control of our self.

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    " Trading is 70% Psychology, 15% Risk Management and 15% Strategy ! "

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    Quote Originally Posted by techboy View Post
    Right, it is important that a trader is focus in finding the right and effective strategy in his trading, but it is not just about good strategy we also have to develop good practice in risk and money management and good control of our emotions, we must always in control of our self.
    Yes strategies and analysis is very important for any earnings to happen in the Forex market. Before you begin to think of success in forex trading you should be able to strive to be a professional because that is when you have learnt very well,then success will as well follow it to come.

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    Quote Originally Posted by shivanandfx View Post
    Yes strategies and analysis is very important for any earnings to happen in the Forex market. Before you begin to think of success in forex trading you should be able to strive to be a professional because that is when you have learnt very well,then success will as well follow it to come.
    To earn with Forex we should learn strategies and to do better analysis. Lazy person can not earn profit in Forex trading. It is a currency exchange trading. So trader has to work everyday and need's analysis market. So trader has to spend time in Forex trading.

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