Price action basics. Part 3
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  1. #1

    Price action basics. Part 3

    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 acceptance - 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.

    pvalue1.jpg


    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.


    pvalue2.jpg


    to be continued...
    Last edited by Value trader; 09-02-2013 at 12:11 PM.

  2. #2
    It's an amazing guide about price action and I also using this method to trade in forex. However I still don't understand about the value. What do you mean about value? Is it the moving average value in your chart? And if you don't mind, may I know the setting of Moving Average in your chart? Thanks. :)

  3. #3
    Quote Originally Posted by thenight View Post
    It's an amazing guide about price action and I also using this method to trade in forex. However I still don't understand about the value. What do you mean about value? Is it the moving average value in your chart? And if you don't mind, may I know the setting of Moving Average in your chart? Thanks. :)
    Value is the moment of acceptance.

    I don't use MAs to identify value. Actually, it's a bracket, or price range where 70% of daily activity occured. It's easier to identify value with market profile, but with conventional chart you can also see it. Just think about the time - where price was trading for the whole day?

    Value also migrates within a day. For example, price can trade within small bracket on european session, then breakout on US session and start building new value area.

    Moving average is another way to see how value migrates. Some people use it - why not?

  4. #4
    Quote Originally Posted by Value trader View Post
    Value is the moment of acceptance.

    I don't use MAs to identify value. Actually, it's a bracket, or price range where 70% of daily activity occured. It's easier to identify value with market profile, but with conventional chart you can also see it. Just think about the time - where price was trading for the whole day?

    Value also migrates within a day. For example, price can trade within small bracket on european session, then breakout on US session and start building new value area.

    Moving average is another way to see how value migrates. Some people use it - why not?
    I personally do not prefer to use this strategy, I see that it is not easy to play using this strategy at all, I think that this strategy need to be a professional person in the forex market so that they can be successful in the use of strategy Albris Action, I do not see that anyone can succeed in use

  5. #5
    Registered user Quid's Avatar
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    Quote Originally Posted by shima View Post
    I personally do not prefer to use this strategy, I see that it is not easy to play using this strategy at all, I think that this strategy need to be a professional person in the forex market so that they can be successful in the use of strategy Albris Action, I do not see that anyone can succeed in use
    You don't use price action for trading,then how you could explain the majority movement which is subjected to the price action,you also need to think like professional when you really see how the market could make you success from the point of view which changes directly.
    Finally successful traders

  6. #6
    Quote Originally Posted by thenight View Post
    It's an amazing guide about price action and I also using this method to trade in forex. However I still don't understand about the value. What do you mean about value? Is it the moving average value in your chart? And if you don't mind, may I know the setting of Moving Average in your chart? Thanks. :)
    Well to be honest i don't use moving average. Ya its a popular tool to find out a lot of things on trading. But i think it wont helps us to find out the trend it just show us the recent price action in a average pattern. Thats what it does. I am a news trader and love to trade with news as i can earn good amount through it.

  7. #7
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    Quote Originally Posted by Shadow View Post
    Well to be honest i don't use moving average. Ya its a popular tool to find out a lot of things on trading. But i think it wont helps us to find out the trend it just show us the recent price action in a average pattern. Thats what it does. I am a news trader and love to trade with news as i can earn good amount through it.
    I have not much good experience by trading with news and i never try too much to trade on news because in my point of view news trading is if profitable but it's too much risky too and i do not want to take too much risks..I use moving averages very well for my trading and it's always gave me good accurate signal about forex market and i suggest you should learn properly about moving averages..

  8. #8
    Quote Originally Posted by thenight View Post
    It's an amazing guide about price action and I also using this method to trade in forex.
    This posts series is very important for learning price actions basics. It gives idea about price action and it's working mechanism. The most important feature of price action is that it shows the trade of institutional traders. Trading volume isn't available for forex trader but it's needed to know what institutional traders are doing. Price action reveals that.

  9. #9
    Quote Originally Posted by tanvir33 View Post
    This posts series is very important for learning price actions basics. It gives idea about price action and it's working mechanism. The most important feature of price action is that it shows the trade of institutional traders. Trading volume isn't available for forex trader but it's needed to know what institutional traders are doing. Price action reveals that.
    I am learning to use indicators form roboforex threads.I currently do not use any indicators but simply trade by watching the news. I have heard about fibonacci and moving averages but it is still time for me to learn these and apply them in trading. After all We will understand anything by spending time to learn them. Without learning nothing is possible and earning would be a distant task for us.

  10. #10
    Registered user Quid's Avatar
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    Quote Originally Posted by SATISHGURU View Post
    I am learning to use indicators form roboforex threads.I currently do not use any indicators but simply trade by watching the news. I have heard about fibonacci and moving averages but it is still time for me to learn these and apply them in trading. After all We will understand anything by spending time to learn them. Without learning nothing is possible and earning would be a distant task for us.
    I will really understand why you read the news to do trading because you can catch more pips from it,i also think so,but i am a little bite lazy to trade the news like that,i usually only read when the volatility will be included in the market after the news release.
    Finally successful traders

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