Price action basics. Part 3

[Value trader]

Hello again.

let's contiunue our studies about price action and how to use it.
See previous posts here:

Price action basics. Part 1
Price action basics. Part 2

As you might notice, I'm not suggesting to simply FOLLOW PRICE, but I suggest you to rely on MARKET LOGICS.


Why not to simply follow price action?


Price is simply the advertising mechanism and in most cases it can be misleading.

"Should you accept this breakout", "should you fade this market" and so on and so forth. Price itself will not give you clues for that. You have to analyse fragile equilibrium between price and value to get answers on these questions.


What is Value?


It can be called area of aсceptance - area that market will more likely revisit or stay near that area for some time. Trading markets, you should rely on fundamental market principles.

And of of them claims:

"The goal of the marketplace is to faciliate trading"

If you think about this principle, you will understand that market needs liquidity to facilitate trading. By "liquidity" I don't mean single buyer that steps in and kicks the price.

By liquidity I mean plenty of players with different perspectives, participating near given price level. If you have that pluralism in opinions, you have value area.

If liquidity is not enough, market auctions higher or lower to find it. Guess, how it attracts liquidity? Of course, it offers higher or lower price - nothing is new.
That's how market auction works.



There are 2 basic types of price action if we look at it from "price-value" perspective.

I will use the simpliest way to vizualize value on market - moving average. Of course, it's not that simple in reality, but it would be enough to show you how it works.


1. Value is leading, price is following.

For example, it occurs when value is lower. Market accepts lower prices and rejects higher prices, yet it has scanned higher prices for liquidity.

You might notice that value is going sideways.

In this case market has no reasons to immediately leave this value area. You may expect some rotation before something happens.

Attachment 968


2. Price is leading, value is following

In this case you may notice, that price runs away from value, there's often a gap between price and value, and this is an indication of strong imbalance - sellers are in control and it's better to trade in sync with them.


Attachment 969


to be continued...

[wanahito]

Trading by following their decision to create a good profit opportunities. That means I have to learn to predict why, when and where the strong holder make a decision to enter the market. This is not an easy for me. I should listen and read more and more again from your thread

[raazsr1]

Price action is one of the helpful options of Forex trading . There are a moving average serves it is a very good indicator because it provides the true trend. But it is better to get the better result to shift to price action to .It is helpful to be successful trader.Indicators are also helpful but it is better to make own analysis than depending on indicator.

[Value trader]

Price action is one of the helpful options of Forex trading . There are a moving average serves it is a very good indicator because it provides the true trend. But it is better to get the better result to shift to price action to .It is helpful to be successful trader.Indicators are also helpful but it is better to make own analysis than depending on indicator.

This is just an example - how one can visualize movement of the price. First of all, this is arguable question about true trend.
For me, true trend is one we don't see on the chart before the breakout, and moving averages are derivatives of price. Yet we can recognize that some "smooth power" holds the market.

[rajahentai]

All the explanations, I've got conclusion that a strong holder always choose long term trade. I do not have the ability to plan long term trade, meaning I have analyze price movements in time frame H4 as trend information (follow the trend has been made by strong holder) and then take action signal on the under H4. What do you think?

well, this market never meant for you to use another people's style if it isnt suit your trades and results. you should go for your own method and look for the best results possible, moreover, you might want to invent another theories and put it into some new methods of trading, or you can go and modify even the most common used indicators like moving average, or bollinger, adding another signals into this kind of indicators might helps our trading more.

[sekiryutei]

well, this market never meant for you to use another people's style if it isnt suit your trades and results. you should go for your own method and look for the best results possible, moreover, you might want to invent another theories and put it into some new methods of trading, or you can go and modify even the most common used indicators like moving average, or bollinger, adding another signals into this kind of indicators might helps our trading more.

yes you're perfectly right about that. It's just wrong to follow the other's trading style while you didn't have the same ammount of experience as they are. But actually you can still learn in here and getting better. Who knows that you might found something when you tried their trading style. But if you do it in the real account then it will cost you a lot i quess.

[star27]

This is very good education provide by the forum members , i think that is too good and i learn much from this post , price action is most important thing in forex trading and i learn the basics of price action and how to use price action in forex trading and how to get benefit throught now waiting for next parts,.,.

[amrmorasamir]

Price action basics. Why is called the King of Gambling? Because the principle of work does not use indicators at all. Decision of buy / sell based solely on random calculation. Yeah right! EA is basing itself on the calculation of the dice shaker, so it deserves to be called EA Judi Ki.

I do not know that the price action called King gaming, but I do drawing it at certain times in order to do I take some small dots on Forex only get out of it quickly for fear of loss and already it does not depend on the indicators but this does not mean that King gaming because gambling is trading randomize only

[Value trader]

Guys, probably you have different perspectives than me on the topic.

What is price action? It's just an approach, that allows to analyse simply price and capture signs, clues and observations that reflect some sceranios that occur on the marketplace from time to time.

If you use indicators, you also are a price action trader. All technical traders are price action based traders.

But every trader interprets charts differently basing on his understanding of the process.
Some traders oversimplfy it and say - you should simply follow price.

That's right, but before that you should describe and grade for yourself set of situations WHEN you should follow price and WHY.

[cozard007]

I will like to thank the educator for the third part of this price action and the qualitative taking of the course with simplicity. I think that trading is more of planning and management with this price action of a thing, Please, i will like you to take use on the course of managements, this will help us to manage the trading skills that you have being teaching us with the managerial approaches to get the right results. Thank You.

[wanahito]

I have begun to understand what is meant by bro educator. Knowing through analysis of how prices move as where, when and why, the price actions and market reactions shall show the trader to make any decisions. Traders who have known the condition may use the preferred indicator to help open or closed the position. I will continue to learn about it.