Understanding price action

[themickey]

Gaps between bars e.g. close of one bar higher than close of the previous bar. Close of one bar higher than high of the previous bar. Or close of one bar higher than the high or close of the previous bar...These sort of gaps have a story to tell.

Bed time story

 

[volpri]

View attachment 225917
Bed time story

 

[maxinger]

Price action develops by how buy and sell orders are filled. We can interpret these orders in the bars on the charts we trade with some simple understanding of what is occurring within the bar. If we have a bar that stops going higher we understand that it hit sell orders at that level. In the same manner if that bar stops going lower then we understand that it hit buy orders. That one bar does not give direction the next bar does. When the next bar opens and heads higher then the previous bar we know we have more buyers then sellers if we did not then we could not have gone above the sellers. We also understand because we have more buyers then sellers when the third bar opens it should not go lower then the bar that just closed. Now in saying this the close of the bar matters. For us to see commitment in the buyers going above those sell orders we want the bar to close above the previous bar. This thread is for the traders interested in reading a chart without using indicators or oscillators.

it is a side way, non trending, non directional market.

I'd avoid such market even if I have nothing else to trade.

 

[.sigma]

here is a 15 min view - once the buyers took over price ran up to the nearest sell orders and presently price is still struggling with this area and has lost their buyers again

Hey Erin, nic3 charts, but is all of this hindsight bias? Or are you executing these in real-time and analyzing the trade afterwards?

 

[Erin]

Gaps between bars e.g. close of one bar higher than close of the previous bar. Close of one bar higher than high of the previous bar. Or close of one bar higher than the high or close of the previous bar...These sort of gaps have a story to tell.

I understand hidden gaps do exist. Ill use the most recent example we saw in the charts this week, Ill also temper it with using hidden gaps with caution in my experience - if there is any price action behind the gap it will not hold as well as a simple crossing below the opposing orders.

 

[Erin]

Hey Erin, nic3 charts, but is all of this hindsight bias? Or are you executing these in real-time and analyzing the trade afterwards?[/If I show historical I also try to show in real time - GbpJpy from the example is falling as I thought - UsdCad retraced a small amount into a level and reversed. The oil chart I posted last night on another thread continued up from the buy entry - the thread is about understanding what the bars are showing and how we can exploit them to our advantage trade wise

 

[themickey]

Hey Erin, nic3 charts, but is all of this hindsight bias? Or are you executing these in real-time and analyzing the trade afterwards?

 

[Erin]

UCad retraced roughly 20 pips into a level it created when it advanced - same idea - our sell orders were over layed with buy orders to be transparent Ill put this chart example follow through up as well

 

[maxinger]

UCad retraced roughly 20 pips into a level it created when it advanced - same idea - our sell orders were over layed with buy orders to be transparent Ill put this chart example follow through up as well

you didn't mention about your reward : risk ratio.
It should be at least 2: 1, and success rate say 60%.

I think you are using RR ratio of 1:1.
if that is the case, your success rate better be > 75%.

 

[Erin]

you didn't mention about your reward : risk ratio.
It should be at least 2: 1, and success rate say 60%.

I think you are using RR ratio of 1:1.
if that is the case, your success rate better be > 75%.

Well it is about understanding how price action develops - I play level to level - and I play the imbalance of orders...Im jumping ahead of myself but we can play orders that are not an imbalance - see how this chart plays out - Ill let you figure out the RR