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Exploring Auction Market Theory in Forex TradingAuction Market Theory (AMT) is a conceptual framework used to understand the dynamics of financial markets, viewing them as auctions where buyers and sellers interact to determine prices. Although the AMT was initially developed to understand & analyse price action movements in the stock market, some of its core concepts can also be applied to any market, including forex. Within the forex market, currency pairs are traded 24/5, with price driven by a multitude of factors such as economic data releases, geopolitical events, and market sentiment. Despite this complexity, AMT provides a framework for understanding market dynamics through the concepts of value, balance, and imbalances . Value represents the equilibrium price at which buyers and sellers agree on the fair value of an asset. Market balance occurs when supply and demand are roughly equal, resulting in stable price ranges, while imbalances arise from deviations from this equilibrium due to shifts in market sentiment or unexpected events. These imbalances can create trading opportunities for astute traders who can identify them and act accordingly. Lets now take a look into how this can be visually identified on a line chart using only price action. Example 1 On the left, we can see an area of market balance. This is usually evident when the market is range bound as we can see in this case. The midpoint of the range is the point of equilibrium. Value can be interpreted as the equilibrium price at which buyers and sellers agree on the fair value of a currency pair. This equilibrium is constantly shifting as new information becomes available and market participants reassess their expectations. When these expectations shift as a result of either economic data releases, geopolitical events, and/or market sentiment, price shifts away from the balanced price range and creates an imbalance within the market. Identifying value areas are important because these can act as an area of future support/resistance for price. Notice how in this example, after price displaces from the balanced range, it later came back and found support near the fair value within that range. Practical Application One practical application of AMT in forex trading is through the analysis of price action and market profile. By observing how price behaves at different levels and how volume interacts with price movements, you can gain insights into market sentiment and potential areas of support and resistance. For example, if a currency pair consistently fails to break above a certain resistance level despite multiple attempts, it may indicate strong selling pressure at that level, presenting an opportunity for short trades. Conversely, if a currency pair finds strong support at a particular price level, traders may look for buying opportunities as the market reverts to equilibrium. To conclude, Auction Market Theory offers a valuable framework for understanding the dynamics of the forex market. By analysing price action, volume, and market profile through the lens of AMT, you can gain a deeper understanding of market sentiment and identify potential trading opportunities. While no theory can guarantee success in trading, incorporating Auction Market Theory into your analysis can help you make more informed trading decisions. Please leave a comment if you've found this post helpful or if you have any questions. Happy Trading
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FXOPEN:XAUUSDEducation
by Pips4Breakfastx
6
🎲 Elliott Wave Pattern: Combination 🌊●● Combination ( CMB ): "Double Three" ❗❗ Rules: ● A “double three” combination comprise two corrective patterns separated by one corrective patternin the opposite direction, labeled Ⓧ . The first corrective pattern is labeled Ⓦ , the second Ⓨ . ● A "double three" combination comprises (in order) a single zigzag and a flat, a flat and a single zigzag , a flat and a flat, a single zigzag and a triangle or a flat and a triangle . ● Wave Ⓧ appears as a zigzag or flat. (TWEWA) ● Wave Ⓧ always retraces at least 90 percent of wave Ⓦ . ● Combinations have a sideways look. With respect to waves Ⓦ and Ⓨ in a double three, only one of those waves in each type of combination appears as a single zigzag . ● Combinations can occur in the same wave positions as flats and triangles (except for the triangle subwave) but cannot occur in waves Ⓦ and Ⓨ . ❗ Guidelines: ● Wave Ⓧ is often 123.6-138.2% the Ⓦ wavelength, less often wave Ⓧ retraces 161.8% or more. Don't expect wave Ⓧ to be more than 261.8% of wave Ⓦ . (TWEWA) ● Wave Ⓧ is usually a single or multiple zigzag. ● When a zigzag or flat appears too small to be the entire wave with respect to the preceding wave (or, if it is to be wave ④ , the preceding wave ② ), a combination is likely. ☝ Notes: ● An expanding triangle has yet to be observed as a component of a combination. __________________________ 🔗References: Elliott Wave Principal 2005 Trade Waves / Elliott Waves Analysis (TWEWA) 📚 Elliott Wave Guide & Ellott Wave Archive ⬇️⬇️
BITSTAMP:BTCUSDEducation
by TradeWaves-EWA
Wave Auction Theory & WHY it worksSup, this is the 30th & the last post that concludes all the previous ones, and finally reveals the name how I've called all this - wave auction theory. Well, me as a creator of all this (or more like a mixer, a DJ lol) I think about it more as a theorem, but that's for nerds and geeks to work it out, me I just wanna flexx. If you take a look at all existing market theories their main thing is they all attempt to divide market activity into parts. Patterns, El waves, Wyckoff market states, then what Steidlmayer created (I call it Interval Auction Theory, since he divided market activity in parts by days, weeks, months etc). The main problem with is all these concepts (maybe except the last one) dem are not well defined, and they apply on the fractal market something that the highest resolution of this fractal (raw tick chart) doesn't have. Wave auction theory ain't superimposing any exogenous structures on the market, such as "crowd behaviors", nah, it doesn't guess and predicts anything, it derives the principles and structures from the sequences of fundamental particles of the market - ticks, and it can be used fully on this fundamental resolution. This is the most fundamental principle how you can divide market activity without any subjectivity: waves and levels. Btw, indirectly, we also gain the interval size information by choosing the right resolutions, while interval auction theory disregards sequence of events (read my post about market & volume profiles). Why it all works It's a lil bit recursive kind of thing, you need to read all the statements below multiple times in different order, then your brain will start making the whole picture out of it, and finally things will come together, you'll feel that "snap" in your head. It's the best I can do. * Market is fractal => all the principles propagate through all the resolutions; * Market is a feedback loop, market is ALL of us together, that famous "composite operator" that Wyckoff tried to explain to people around him, that composite operator is All of us - the collective; * Each individual entity in the collective has different voting power = better you operate = better the market = more revenues & capital you have = more voting power you have; * We all have all the same data => we can gain as much information as there is in the data; * Data on every resolution has information where it is, it was, or it will be cheap or expensive, every1 gains it with different degree of precision, but essentially every1 gains the same info because it's the same market & same data; * The only thing that works all the time in all the cases is being an operator (a market maker) aka you buy cheap and sell expensive; * Market making happens on all the resolutions, be it 1 minute or 1 week chart, on the former it might be one dude with 100 shares, on 1W it might be 100k dudes with 100 shares, the collective is always there, even on yearly charts; * More data & information you have, the more question of "what's going to happen in the future" transforms into the question of "what IS happening NOW"; * market works on the principle I call "GTC Naive" (good till cancel Naive forecast), meaning that "the stuff's gonna continue the same way UNTIL there's an event/evidence that'll change it"; We all make the future, how can we not know what we're making ourselves if we have the info and exogenous factors are not numerous and secondary at best, and the system itself is quazi-closed? Still gonna try to analyze log returns? xD Everything is already decided, we've decided all of that ourselves having the same data & same info xdddd All the prophecies are self fulfilling prophecies by definition lmao, they are consequences of sequences of choices made by every1 through all the timeline. While loosing precision we gain generality => are able to understand what IS happening NOW. Not even contra intuitive aye? The good side point of all this is that now you can rewatch Matrix movies (all of dem) and finally understand the dialogs between Neo and The Oracle (the parts her telling him the choice is already made). Coming back to the theme, I share all this because I think that markets are sadly unhealthy, there's ENORMOUS room for liquidity provision for centuries to come on Ks of assets. Better we gonna operate, more clients = more volume will come to the markets => better for all of us. The last several things I wanna share: 1) You can approach designing an automated agent (a bot) by following principle, smth I call "sMATEs framework"; - s: selection of assets that will end up in your masterlist; - M: management - choosing between the most potent timeframes & assets within the assets in masterlist; - A: analytics, seeing what's happening on your chosen data, choosing the signal generation method aka strategy accordingly; - T: trading, generation the actual signals based on the strategy chosen before; - E: execution, processing & fine tuning the actual executions based on the signals; -s: sizing: choosing the quantities based on equity control and what the market can give. The two small Ss are the only levels where you need to use ML. Reinforced learning for sizing based on order book & equity chart of a given agent. Then you can use ML & AI to form the masterlist, based on what you want. Generally you're interested in action or as I say in MEAT (ain't no vegan bruh sorry). 2) Each market has its own main cycle set: set of properly chosen optimal resolutions & time frames & rolling window lengths (no, there's nothing to optimize there & no need in dynamic lengths). I think you can figure it out reading all the posts & studies I've posted lately. I can give a hint: if you want to divide smth, you always try to divide it by 5 first. If you can't by 5, then by 4. If you can't by 4, then by 6. If you can't by 6, then by 3. If you even can't by 3, then by 7. And omg if you can't by 7, then in theory it's by 2, but not on our planet with our modern time system. Look at the 2 centuries of S&P chart in this post and see what I see. 3) If you a coward, or an overconfident prick, or a cheater, or a lier, or a snitch, you wont't succeed. You'll succeed if you're real & legit, in this case it's only a matter of time. From there it seems like my path goes somewhere else, but this is the way, all good TV, was fun. Remember, there's no noise, only the truth
SP:SPXEducation
by gorx1
1
Finding your optimal performance 🏃‍♂️Most traders spend a good bit of time looking at charts. Well here is a chart we traders should all take a look at. The chart shown is the Yerkes-Dodson Law. The Yerkes-Dodson law is a proposition that people perform best at intermediate levels of arousal, and that performance is lower at high or low levels of arousal. The theory behind this is visually represented by the graphic in this idea. No arousal levels or a bored/laidback approach to life will mean no stress but no real performance in what you are trying to achieve or do. However when arousal and stress gets too high by pushing to hard, performance starts to decrease. It's about finding the right balance to achieve an optimal performance. A certain level of stress about what you are trying to achieve motivates you to study, learn or train in order to do your best. A sportsperson has to get bumped up before an event as well as train hard, But getting to worked up and training to hard could cause a decrease in performance when it comes to the event. Pushing not hard enough to pass an exam will lead to a fail as you haven't studied or don't care, But also pushing to hard could lead to a fail as you've let stress and anxiety take over forgetting everything you studied. Moderate levels of arousal is best for overall performance. This theory can be applied to your trading. Take a non interested approach or bored approach and you performance in this area will be affected. Less potential profits etc. Get to focused on your trading or trade to hard could lead to poor performance along with a load of stress in your life. You as an individual will have to self reflect and determine where you fit on the curve in the idea graphic. If you fell more success, achievement and happiness can be had, by all means crack on and go for it! However, if you are getting to a point where you feel you might have reached your limit, it could well be time to dial it back a bit. Don’t push to hard for it that you go down the opposite side of the curve. This theory can be applied to every aspect in your life by using it to balance all aspects of your life will also help your trading as well as work, relationships and everything else we all go through day to day. Thanks for taking time to read this. Darren 🙌
Education
by pow_removetheguesswork
first test run: psychological effect range theory applied to fibMost things are written on the chart. I have hidden the reference fib itself as it is specifically edited for a certain purpose, but I base it on the psychological effect range theory (should be easy to figure out my methodology just knowing that) as well as the silver ratio for highs rather than the somewhat misused golden ratio (it's not really that prevalent in things, but... the silver ratio is). If it pans out I will show it perhaps If you are not familiar with the silver ratio it is 1+sqrt(2), or 2.4142~. It is an irrational number. It is an infinitely descending series of 2 + 1 over itself. i.imgur.com image so it makes more sense First we need to know why fib is naturally flawed (a fib haha!) as a tool. phi (yawn trdvw wont let me post the greek letter), phi = 1 + sqrt(5) / 2. Now, this seems to be too complex needlessly to me. Nature is simplistic in its foundation, but simple in its own way. It is highly irrational when it begins to contend with shapes that are not squares. A circle by definition is irrational, since it is made of an infinite number of angles, and this concept is best described as an o. But regardless of how people talk about it it's not proven in any measure to be truthful, BUT can be used it certain ways to frame one's set of planning, better than no planning and all. so what makes more sense for a deterministic chart 1+sqrt(5)/2 or 1+sqrt(2)? trick question, neither does. However, I am using it as my upper range in regards to the fib retracement tool. It is the 'end goal'- of the bull run. this happens to be 25k, if you don't zoom around the chart. the first target, however, is the sqrt(2), 1.4142. that's at 20,400, and completely reasonable to blow past should the psychological barrier of 20k (which is 2/3rd of the way from the line below sqrt(2) and the previous line, btw). There is the math behind the levels being picked, but really, the concept underlies effect range theory, in that most people tend to over or underreact to situations, and if in a median approach, tend to end up in another one before too long. The trend sections on my (not shown, but published privately yesterday for honesty's sake) chart show the channels of interest mostly lining up with profit/loss; if a range is being overused, it won't want to stay in that range, otherwise what's the point? you're trading the same amounts for the same amounts. I am rather new to financial markets but not new to analysis so I welcome anyone who can lead me to those that already decided/figured some of these out. I am still studying and trying to learn.
COINBASE:BTCUSDEducation
by foxymethoxy
2
🌀 Cycle Theory and Wave Analysis 🌊👋🏻Hi guys. 💋Well, let's continue develop ourselves???💪🏻 Today I would like to tell you about the 🌊wave analysis🌊 ☝🏻😉For those, who have recently joined, I would like to say, that we are studying technical analysis.💪🏻💪🏻 👇🏻👇🏻👇🏻Below you can find my previous educational ideas.👇🏻👇🏻👇🏻 Ok, now let's start from the few words about theory of cycles💪🏻 🌀The theory of cycles is more developed at the theoretical than at the practical level, and deals with cyclical fluctuations not only in prices, but also in natural phenomena in general. Almost all methods of technical analysis fit into this classification.✔ 💥 If you wanna be successful trader, you need to understand this method of analysis 💥 ☝🏻 The trend (impulse waves) has a 5-wave structure (waves are indicated by the numbers 1,2,3,4,5, A, B, C ) and consists of impulse waves and correction. 📌 Impulse Waves 1,3,5 - longer than correction waves - show the direction of the trend 📌 Correction Waves 2 and 4 - has a 3-wave structure (a-b-c) - show the direction opposite to the current trend ☝🏻 1st, 3rd, 5th impulse waves have a 5-wave structure of their subwaves. Correction waves (2 and 4) have a 3-wave structure and are denoted by A-B-C. 📌 Signs of a trend reversal in terms of wave analysis are: - finite diagonal triangle - extended 5th wave - truncated 5th wave 👉🏻 The 2nd and 4th waves are corrective. The movement on these waves takes the form of the following correction models: - zigzags (5-3-5) (Zigzags) or simple (zigzag) correction - planes (3-3-5) (Flats) or flat (flat) correction - triangles (3-3-3-3-3-3) (Triangles) or triangular correction - double triples and triple triples (combined structures) - incorrect correction In fact, wave analysis has nothing to do with the market. At least in the modern world. This theory once worked, but not now. ☝🏻Although it attracts a lot of people with its simplicity and visibility. Now you will not find two wave operators, that would give the same market assessment and forecasts. So many directions and methods of wave analysis have formed today. Wave analysis is an artificially invented method for predicting markets, that is, not natural even for human behavior. 💥If you use it, then be extremely careful. To say, that wave analysis doesn't work is too subjective. Each for himself decides what and how to use. 😆Right or wrong - the market will judge by adding or taking money to the account.😆 🤔I hope I have clearly explained you my vision of wave analysis, if you are interested, you can study this method more deeply.💪🏻💪🏻 😸Subscribe and don't forget to put like to my enthusiasm, I try for you😉😉😉 Stay with me🌞 Kiss You 💋 Your Rocket Bomb🚀💣
BITSTAMP:BTCUSDEducation
by RocketBomb
5