by FOREXTRADER
FOREX TRADING: Volume and Price: Is it technically pointing
to us winning:
Forex Trading can be as simple or difficult as we choose to
make it. This is something that you can individual choose.
With so many different types of technical analysis from
Japanese candlesticks, MACD, RSI to help guide us when
trading, sometimes this can go from helping us to causing us
headaches. By the time we chart all the different types of
technical analysis the trade has gone. So something to learn
quickly from this is that we should not place too much
emphasis on any form of technical analysis.
So with all the forms of technical analysis available there
should always be one that we do focus on that's volume and
price. With all these tools available it all comes from
these sources in price and volume.
Understand the past it must have come from somewhere We need
to look back at technical indicators that have come about
over the past 30 years, no matter which one they have all
been brought about from a mixture of price and volume. This
tells us one thing if your chart is saying one thing and the
price is saying the other. You guessed it. Price wins. At
the end of the day the prices is never wrong, it is the
price after all. Hence no matter how great or bad the chart
looks, the price is still the key factor we are all after.
This doesn't mean that we through out all of charts and just
look the indicator, but we need to use as many pieces of the
puzzle to give us the real picture. This will assist us in
our future planning and hopefully increase our chances of
becoming a profitable trader.
Understand This:
From time to time indicators will point a change in trend.
Divergence, when the prices is indicating on thing and the
indicator is indicating another. This is a crucial aspect of
technical analysis.
Remember the profit or loss comes from the Money. So price
is never wrong
We make money from prices, not indicators. So focus on
prices and volume - and let indicators give you a second
opinion or simply the confirmation. This is why when trading
I love to remind people of this stop losses. If you're a
trader never put on a trade without a stop loss. If possible
use a platform that offers guaranteed stop losses. Or you
can view who we suggest as a broker.
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With price, this is obviously the defining characteristic of
any share or currency and it determines whether we will make
money with the trade.
Don't confuse yourself thinking this is a highly
mathematical equation, sometimes simple is better.
Important Factors to Consider.
When looking at price, we need to focus on the price action
relative to its past. For example, where the price closes
relative to its open, or the previous close, will tell us
how the market feels about a company.
You MUST consider Volume It too plays a key role When using
volume make sure you look at the levels of price commitment.
See whether the action is from many buyers or sellers or
just a few. If you see a massive move of price on 'low'
volume, you may decide to dismiss this view, but it moves on
'massive' volume and a lot of buyers there is some
commitment to the stock.
Spike in volume generally indicates sudden change in
sentiment of the stock or currency. So in conclusion when we
are using technical analysis, it is very important to
remember that the form of technical analysis you are using
was come from price and volume. They are almost the
grandfather and grandmother of all technical analysis
styles. So you probably don't need to look at much more than
that, otherwise we are just confusing ourselves. Remember
keep it simple, the simpler it is the easy it is. Most
importantly if it is making you money don't change it.
Make sure you continue to educate yourself, remember
knowledge can be power on our homepage we offer a great
third party (http:www.cfdfxreport.com) forex trading course.
This in our opinion is the best in market and it is only a
couple of hundred dollars.
Happy Trading
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