Podcast:
 

Understanding How The Forex Market Works

In this video:

00:12   Understanding the market

04:03   Profitable trades especially on the 4-hour charts

05:38   Really amazing trade on a gold trade

 

Understanding How The Market Works

Hi traders, in today’s video I want to explain the importance of being able to read and understand the market and then talk about the results that will surely follow once you have an understanding of how the market works.

Let’s get into that right now.

Hi traders, it’s Andrew Mitchem here, The Forex Trading Coach. Today is Friday, the 17th of October and I want to talk about the importance of learning to read the market and understand the market because it’s a common problem so many traders especially new traders have. Actually a lot of people that I talk to who have been trading for number of years though still do not really have a very good understanding of the market and there’s a number of reasons for that.

But one of the most common reasons is so many people use the standard indicators. When you look at any charting package, when you look at any online reviews or sites or whatever it might be, forums, etc., everybody’s talking about using the standard indicators. Yet when you think about it almost everybody gets the same results which are not good so there’s got to be some form of correlation there when you think of the logic behind that.

The problem is, that so many indicators whether they’ll be good or bad doesn’t really matter. The problem is they don’t really teach you how to read what’s happening in the market right now and to look at what’s happened previously and to make a judgment based on what’s happening right now. You see, the problem is with indicators is not only to most of them lag time and price really badly is that people get so focused on looking at where the line is, what’s crossing over something else, whether it’s overboard or oversold, you know, X crosses Y and ends up being something else, you know, it’s just a complete and becomes too much focused on the indicator rather than focused on the actual price. That also applies to people who trade robots and try to create systems that are automated, that happens as well because you don’t get to understand what’s happening in the market.

The way that I like to trade and also to teach my clients is to gain an understanding and read the market, read the charts, read the right hand side of the chart. Look at what’s happening right now in the market.

Are there more buyers in the market right now?

Are there more sellers?

Is the price being pushed up?

Is the price being pushed down?

And Why?

I’m looking at support and resistance level whether they be, previous swing highs or lows, or pivot points or round numbers, whatever it is let’s see the process moved up to this level.

Why is it moved up to there?

Is that a significant round number?

Is that a significant bounce?

Has the price bounced there previously in the past?

If it has and you see a good candle formation occurring at that same level then surely that has to add to the probability of that trade being a profitable trade because you’re taking a trade at a level for a specific reason based on what’s happened previously and you know that the price bounced there previously, you’re getting some indecision and then some confirmation whether it’s go long or short and then you’re taking your trade at a level that in the past you’ve seen this  being a significant price action at that level.

What Really Counts

So it’s getting to understand that type of information within the market and also having the ability to do that from the right hand side of the chart what’s happening right now. Taking trades in hindsight you know back testing it’s...