Once there, the market then decides on which magnet it will then test, and the move can be up or down. These are support and resistance levels and act as magnets that draw the market to them. The movements are very precise because all of the algorithms are aware of the key prices. They are constantly crunching numbers and executing trades. What they do not appreciate is that the market is controlled by hundreds of computers that never rest. You sometimes hear traders refer to some movement as noise, as if the market behavior was random. Markets are fractal, which means that the same patterns occur onĪll smaller and larger time frames. Traders look for the same price action setups on every chart. This is another volume chart of the same stock, but based on ticks.įinally, a daily chart of the stock.
This is a 5 minute chart of a popular stock.Īgain, the same stock, but this chart is a volume chart with 300,000 shares per bar. Consequently, traders can see the same price action setups on all of them. This is because they all are just different representations of what is taking place in the market. The charts below show that it does not matter what type of chart a trader uses. (The answer is the chart on the left is a daily chart of GE, the middle chart is a 1 minute chart of the EURUSD foreign exchange market, and the one on the right is a 5 minute chart of gold.) Any type of chart is good for trading Each is simply a representation of rational human behavior.
And, they are using the same techniques for all markets and time frames. Also, one is a stock during the 1987 Stock Market Crash, another is a recent Forex currency market, and the third is gold.Ĭan you tell which is which? Of course not, and the reason is that the same people and computers are trading all of them. One of the charts above is a daily chart, another is a 5 minute chart, and the third is a 1 minute chart. Price action is any representation of price movement of any financial instrument, on any type of chart and on any timeframe. I like the one that I use in the first video in the Brooks Trading Course, and I am basing this article on that video. What is price action? There is no widely accepted definition of price action, but I think a broad one is most helpful for traders. If not candlesticks or indicators, then what is price action?.Price action is a reflection of human behavior.Every tick is an example of price action.
0 kommentar(er)
