DeGRAM | Features of the MARKET STRUCTUREPrice action and market structure. Understand. Anticipate. Earn.
As advocates of technical analysis of price, we recognize that price and its traces on a chart are everything. Nothing else is needed.
Only one thing is important for us, we do not need to get away from everything and understand the price action and the structure of the market.
Price is a trace. What buyers and sellers leave behind on the battlefield, we have the right to use this advantage.
Thus, the price is the meeting point for decision-making by all market participants.
It does not matter what traders, speculators use technical analysis , inside information or fundamental analysis .
A careful analysis of price movements reveals areas of imbalance in market forces, which therefore offer interesting opportunities for profit - this is the main reason why we are fond of understanding price action and market structure.
The essence and important points when building a chart of price action and market structure.
The idea behind a chart is primarily to show where price has moved over time.
Supply and demand determine the price of something, and a chart is a graphical representation of historical changes in supply and demand , i.e., historical changes in the overall attitude of buyers and sellers towards the viewed product.
Clean charts:
is a powerful tool that can facilitate this integration and promote the development of intuition.
Focus on where it should be on price candles or bars and the evolving market structure.
Opening price. How important is it?
Annotate your charts with annual, monthly and weekly opening.
Price changes anytime, anywhere, and our charts become volatile because human emotions are influenced by the news.
You should always mark your schedules with annual, monthly, and weekly openings; and if you are an intraday trader, with a daily open.
due to backorders and order flow.
The price moves out of liquidity zones and returns to them.
When the year, month and week come to an end, large speculators seek to cover, change or open new positions.
Thus, there is a lot of "order changes", and at the same time, unfulfilled orders often remain: liquidity remains in the same place.
Thus, "smart money" gradually enters the market and, thus, does not always fully fill its position.
Hence, they have the choice to leave the order unfilled so that the price can raise it when / if the market returns.
This: triggers a reaction at these levels in terms of order flow, partially responsible for price memory.
Price. What is it?
Every player. From retail to institutional money.
But at the same time, who wins in the market: retail or institutions?
If you want to make money in the marketplace, you must stop thinking like a retail trader and start trading like institutions do.
Therefore, a good way to use these levels is to understand them in terms of accumulation / distribution .
The accumulation stage is followed by the expansion stage and the distribution stage.
You need to make sure that you are not a retail money, in other words, the “opposite side of smart money trading”.
Candles. Structure.
Each candlestick tells you a story about the structure of the market.
At this point, the main thing to understand is that candles are a graphical representation of price movement and therefore show the mindset and sentiment of the market, as well as any changes in that thinking and sentiment that may unfold.
This is why price tells you a story: because a candlestick can be broken down into its component parts to determine the direction of movement that it represents for price.
Basic Principles of Psychology Through Price Action
A green real body candlestick is created on the day the market closed higher than where it opened:
In other words, the price moved up during the day.
This means, if we use the basic principles of supply and demand , there were more buyers than sellers. In the market language I will use from now on, the bulls won.
The red real body candle is the result of the day when the market closed below the level at which it opened.
This means that sellers outweighed buyers or there was more supply than demand, causing the price to move lower.
In market conditions, it was a bearish day.
Output
Many people believe that price changes are random and unpredictable.
If this were true, the only logical course of action would be ... not to trade!
A correct reading of price action will enable you to understand and extract market structure from your chart.
Once you get this advantage, you can stay on the right side of the market.
Then you can sit quietly.
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