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Bias

The Value of PriceA basic concept in price action trading is that when it comes to the analysis process of price, some candles are more valuable than others. By "more valuable" I mean, some candlesticks have more weight in the analysis process of price than others. Before I explain which candles have more inherent value, let me explain a bit of price action philosophy. When it comes to an asset's price, or even the market in general the price action trader believes that it is a living breathing entity. Just the same as you and I, the market's movements differ from day to day and past behavior does not predict future behavior. That said, just like you and I, the future behavior of an living breathing entity is much easier to predict if based on the analysis of recent behavior. So in other words, if I were to predict your next move, it is much easier and practical to base that analysis on your recent behavior, rather than your behavior 2 years in the past. So this core philosophy pretty much dictates how you can set values to price. Simply put," Current price is more valuable than past price in terms of the analysis process". So if you were to predict the future direction of the price of an asset, it is wise to analyze current price rather than past price; simply due to the fact that past price has less weight in terms of the analysis process than current price.So for example, if your analysis of price for the last 3 months was stating that price will rise in the future; however this week's price is stating that price will fall, the price action trader will not hesitate to sell as dictated by their analysis of current price. So the next time you find yourself confused about the future direction of price due to conflicting signals. Ask yourself, " what is current price telling me about the future direction of price?" and let past price stay where it belong, "in the past." That's it! Have a great day! Ken
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by TradingForexPriceAction
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