Forex chart analysis market structure

Октябрь 2, 2012

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forex chart analysis market structure

Read "Technical Analysis: Learn To Analyse The Market Structure And Price Action And Use Them To Make Money With Tactical Trading Strategies" by Matthew G. Does your analysis of market structure, supply and demand indicate the direction Use bar charts of individual stocks to compare with those of the most. The art and science of technical analysis: market structure, price action apply to the currency markets—for instance, in extreme situations accompanied. AWILCO DRILLING VALUE INVESTING SEMINAR

How not to trade candlestick patterns. You don't want to be trading them in isolation because it doesn't give you an edge in the markets. Candlestick patterns by itself is not a trading strategy because it does not go into stuff like the condition of your trading setup, your risk management, your exits, etc.

So, needless to say, we will be discussing… Market structure Market structure is simply support and resistance on your charts, swing highs, and lows. These are levels on your chart attracts the most attention. Because traders all over the world can see them! And this is where they base all of their trading positions. Like looking to enter the breakout, and looking to place their stop loss at this obvious level.

And how you can combine candlestick patterns with market structure is that you are basically looking to enter your trades after strong price rejection. Because this is where traders do get trapped. Let me explain: This chart is soybean oil futures. As you can see, the market is somewhat in a range and it is contained between the area of resistance, support. And then it had a strong price decline coming into the area of There will be traders who look at this and say, "Oh!

I'm going short. But I would say that the bulls are somewhat in control. Why is that? Because price came into the area of support and it got rejected relatively quickly! And earlier if you recall, I mentioned that traders are trapped. Who are these traders that got trapped? They are basically traders who went to short the breakdown!

Most traders are feeling the pinch right now. And most traders, I suppose, they would not use a stop loss. And what happens when the markets go against you? Chances are you would endure until you cannot tolerate the pain anymore and you cut your losses. When you do cut your loss what happens? From a short position and you exit your trade, it will suddenly become a buy order. Because you need to use a buy order to exit your short position, and this would fuel for the price buying pressure.

Centralised Market When we have one seller, be it a bank or a pizza shop, they can set the price to what they think is appropriate, and even manipulate it at their leisure. This type of market is centralised. Obviously, a centralised market is not good for you, unless you are the one calling the shots. The good news is that today, the forex market is a decentralised one, so let us look at the structure of this dynamic market.

Forex Participants — Decentralised Market Structure The Forex market structure was reshaped with the technology revolution and today, it is an even more efficient market. The Spot Forex market is decentralised and this means that no single or centralised participant is controlling the market.

In addition, the many participants impact the price of a currency pair and as such, there is no single price for a given currency at any time. Quotes from different currency dealers vary and so the price you see when trading is the retail price, made by matching your request to buy or sell with the best price offered in the liquidity pool. While this might all sound chaotic, the fact is, the forex market is well structured and can be likened to having layers or ladder rungs where each participant looks for counterparties.

At the top of the ladder, you have the major banks whereas, at the bottom, you have the retail traders. Let us look at what can be found on each rung with the forex market structure. The Interbank Market Banks want to deal with huge volumes of forex and are looking for those who can meet their capacity demands. Of course, this is where other banks come in. This forms the interbank market layer of the forex market structure, right at the top of the ladder.

The participants of this layer trade directly with each other or through electronic or voice brokers, such as Reuters Matching and EBS Electronic Brokering Services. These brokers fiercely compete against each other, looking to bring the best rates that can only be achieved when you are connected to a larger number of interested parties.

More parties mean better liquidity which leads to better rates. Therefore, some currency pairs are more liquid with one broker than with the other.

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