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DXY : What I learn so far (Part 3/3)
This is the final part. Please also read part 1 & 2 if you have not.
We all know that close to 80% of traders lose money. Actually, ALL got trapped the moment they set foot in this business for almost ALL will begin their journey learning the ‘Methods’ as expounded by the ‘Experts’. You can find these ‘Methods’ all over. And when you fail, it is because you do not practice good money management, not having proper psychology, get emotional, do not understand the methodology etc. Of course, your failure has nothing to do with the ‘Methods’. Some might encourage you to pay and attend their classes. Some will try to sell you ‘signals’ that can get you immediate profits.
From my observation, failure begins when your analysis consists of too many variables and each of these variables carries with it much uncertainty and guesswork. Wave counting is an example. Endless possibilities with no definite answer. So is Fibs. How much would the price retrace? 0.236, 0.382, 0.5 or 0.618.? Are you so sure human thinking/actions really correspond to fibs sequences as said to appear in many biological settings like in the arrangement of leaves on a stem?
My only advice is, use common sense and persevere if you intend to profit from trading. Common sense will be your only guide to your goal. You must separate what can and cannot work.
Price analysis – only 3 things to remember:
a) It only moves up and down – think vertical. It does not move sideways, so please do not try to use lines to justify trends. When 2 or more dots meet, it is purely coincidental. When price moves up and down, you have a top (Supply) and bottom (Demand). The middle would be the equilibrium where both parties agree to be the ‘fair’ price.
b) To understand PRICE better, you MUST also look at quantity aka VOLUME. As many of you may have learnt from Economics 101, Price (Y-axis) is always paired with Quantity (X-axis). This is well known. You do not analyse Price by pairing it with ‘indicator’, ‘fibs’, ‘waves’, ‘bats’, ‘pitchfork’, ’spirals’, ‘clouds’ etc.
c) Time if not of significance in the analysis of price. Read (b) above again and think a bit how it relates to this. For example, in a market where both buyers and sellers are comfortable with the prevailing price, you can wait forever but the price will remain the same. Until of course something ELSE trigger a change in equilibrium. So try NOT to analyse Price/Volume by time. For example, in a 4H chart, below each bar is another bar showing volume during each 4H period. By now, you should see why trend lines have no real value.
And when you add a + b + c above, what you must do is to ANALYSE PRICE BY VOLUME aka Volume Profile. Once you know how volume reacts at different price level, things will become much clearer. You know exactly the equilibrium price. You know exactly if the market is having more buyers or sellers. You can finally see the Law of Supply & Demand at work.
Now your trading is simple and clear. You have only 2 variables, Price and Volume. You must keep it this way.
Please switch to DXY - Capitalcom as their chart support Volume. TVC here does not have volume.
Wishing you lots of pips in 2022.
P/S : Do not just believe what I say. Use your common sense.
We all know that close to 80% of traders lose money. Actually, ALL got trapped the moment they set foot in this business for almost ALL will begin their journey learning the ‘Methods’ as expounded by the ‘Experts’. You can find these ‘Methods’ all over. And when you fail, it is because you do not practice good money management, not having proper psychology, get emotional, do not understand the methodology etc. Of course, your failure has nothing to do with the ‘Methods’. Some might encourage you to pay and attend their classes. Some will try to sell you ‘signals’ that can get you immediate profits.
From my observation, failure begins when your analysis consists of too many variables and each of these variables carries with it much uncertainty and guesswork. Wave counting is an example. Endless possibilities with no definite answer. So is Fibs. How much would the price retrace? 0.236, 0.382, 0.5 or 0.618.? Are you so sure human thinking/actions really correspond to fibs sequences as said to appear in many biological settings like in the arrangement of leaves on a stem?
My only advice is, use common sense and persevere if you intend to profit from trading. Common sense will be your only guide to your goal. You must separate what can and cannot work.
Price analysis – only 3 things to remember:
a) It only moves up and down – think vertical. It does not move sideways, so please do not try to use lines to justify trends. When 2 or more dots meet, it is purely coincidental. When price moves up and down, you have a top (Supply) and bottom (Demand). The middle would be the equilibrium where both parties agree to be the ‘fair’ price.
b) To understand PRICE better, you MUST also look at quantity aka VOLUME. As many of you may have learnt from Economics 101, Price (Y-axis) is always paired with Quantity (X-axis). This is well known. You do not analyse Price by pairing it with ‘indicator’, ‘fibs’, ‘waves’, ‘bats’, ‘pitchfork’, ’spirals’, ‘clouds’ etc.
c) Time if not of significance in the analysis of price. Read (b) above again and think a bit how it relates to this. For example, in a market where both buyers and sellers are comfortable with the prevailing price, you can wait forever but the price will remain the same. Until of course something ELSE trigger a change in equilibrium. So try NOT to analyse Price/Volume by time. For example, in a 4H chart, below each bar is another bar showing volume during each 4H period. By now, you should see why trend lines have no real value.
And when you add a + b + c above, what you must do is to ANALYSE PRICE BY VOLUME aka Volume Profile. Once you know how volume reacts at different price level, things will become much clearer. You know exactly the equilibrium price. You know exactly if the market is having more buyers or sellers. You can finally see the Law of Supply & Demand at work.
Now your trading is simple and clear. You have only 2 variables, Price and Volume. You must keep it this way.
Please switch to DXY - Capitalcom as their chart support Volume. TVC here does not have volume.
Wishing you lots of pips in 2022.
P/S : Do not just believe what I say. Use your common sense.
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