Price forces

If you were to ask me how to trade in the capital market, the answer to that one to me was:

“This is who is more dominant now, the bears or the bulls and accordingly, acted”.

There are many slogans in the field of trading and technical analysis, one of which is “worked with, since the trend.”

To work with the strongest trend in the market, need to understand how it starts and when it ends.

In this article I will try to explain more simply the forces “behind the scenes”.

First, let’s characterize the two main actors responsible with the shift in price:

  1. Importers / Exporters – forex market is estimated that 10% of daily movements are due to this activity.

These do not work in the capital market in any way for profit but only for the purpose of hedging transactions and payments.

  1. speculators – banks, large investment houses, hedge funds and private traders, the assessment is that 90% of the volume in daily foreign exchange market is a direct result of them speculators.

Speculator trader to earn the purpose of these detect the movement of price and join with the direction.

Having seen who really stands behind the scenes, the next question is “Who sets the price?”

The answer will be “investing public at large.”

All price exists, indicates a balance momentarily between buyers and sellers, as soon as the balance is lost, one side will be more dominant and will tone up again those “tire” (for many reasons: profit-taking, economic data and altered the position, etc.) and transfer the ” attractive “to the other side.

 

Do not be fooled friends, it is customary to compare the capital market trading arena of battle,

No one will give you earn easily.

Even if waives “the bears and the bulls will on the contrary, it will not be smooth, typically accompanied by the objections, to the power of the last run out, remember that when you spacious …

Someone else loses.

In order to better illustrate the power struggles, we will market rising (bullish) in the following example:

Held “Rally” price, the bulls are very strong at the moment.

All the bears (those investors who are in positions “short” against the price) begin to disappear slowly, providing fuel and reinforces the upward trend.

Cease loss of the bears are beginning to be perceived, non-rational actions become involved in commerce, the bears run fast, some are continuing a losing transaction platform (never do that) end that is known ..

After a few days … the bulls are starting to get tired …

Cycles shrink, the dealers “long” begin to take profits, suddenly the price seems expensive … Suddenly, every market becomes bearish …

when is it happening?

Only after all power of bears ran out, the market rolls over towards me down …

It can not go crazy ???

Bearing in mind that the market represents people and price no feelings (he must not “doing rather” …)

We can understand and accept the radical change in the position of a bull and a bear position.

Try not to hold an opinion in trade, as long as follow the rules, you are analyzing the graph without emotion.

If you hold a certain opinion, even if you get the price trend reversal signals, you still act the same … do you think this case is about the emotions of trading, leading eventually to a loss.

In the example I mentioned earlier, the explanation is simple price action:

At the beginning of upward movement, the strength of the bulls was strong.

Msazl power of bulls … back price price declines.

If you throw it on our trade, note that sometimes we see a move burglary in a certain direction that gets “fuel” provisions of the cessation of operations of traders act against the movement, but after the sharp movement, when an Cease loss, the price is reversed to the other side because there is no demand from investors to join the movement , in which case we will get a very quick reversal …

Remember, with potential price reversals profit multi happen especially during extreme points (high or low) are not breached.

Successful trading, 

Nys Trading


Go Back Posted on March, 2017

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