It's on the Chart Right in Front of You, Open Your Eyes

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Sam Seiden

23 Jun, 2017

in Technical Analysis and 1 more

I have always found it very interesting, how many different ways people look at charts and all the different pieces of information people try to attain from a price chart. How could so many people look at the same chart and have so many different opinions? Fascinating.

With all the different schools of thought on money, markets, charts and so on, what should we really be looking for on a price chart? I mean, conventional technical analysis books have hundreds of pages in them with information on so many indicators, oscillators, chart patterns and more. With all this, there must be some edge to be gathered, right? I speak with thousands of traders around the world and everyone is trying to make something “work”. This is where I see most people get it very wrong. They spend more time trying to make the latest strategy or indicator “work” instead of taking a moment and thinking about how money is made and lost in the markets, because after all, isn’t that what everyone is really trying to figure out?

Let’s go down the simple and logical path for a moment and ask ourselves a few questions to make sure we are very focused on what information we need to get from a price chart:

Q)       How are profits derived when trading or investing in a market?

A)       Buy low and sell higher or sell high and buy lower.

Therefore…

Q)      How do we buy low and sell high?

A)      Figure out where price will turn and where it will go.

Therefore…

Q)      How do we figure out where price will turn and where it will go?

A)      Identify where willing demand exceeds willing supply and vice versa.

Which leads to the final question…

          What does this look like on a price chart?

When we think in these simple terms, we see that the last question is all we need to focus on. The good news is, we have the answer. Beyond these questions, there is literally nothing else needed to consider when it comes to proper trading and investing, but most people don’t ever get to this level of simplicity because they are blinded by the illusion of complexity offered by the world of conventional technical and fundamental analysis, as well as so many opinions from various sources. Let’s look at a recent income trade.

Income Trade – 12th June 2017

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Notice the supply zone in the yellow box. Price was trading in a range and then fell from that level, telling me supply exceeded demand in that area (yellow box). I know this because the only reason why price would fall from that level is because supply exceeded demand; there can be no other reason.

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foroom lluzers;2933936
you know what is going to happen next .great .you will make a killing in trading.


the trend is your friend until the end when it bends

:lol:

Aug 10, 2017

Member (516 posts)

Re: It's on the Chart Right in Front of You, Open Your Eyes

Good article outlining that prices moves quickly away from a zone where supply and demand are out of balance. Once you have identified a few of these zones then it is down to your trade plan rules how you enter and exit the market.

Aug 01, 2017

Member (24 posts)

Plebtrader;2926458
Hi there, I am new to trading, you dont have to reply me if my question is too stupid.
Is there any chance that the chart has been manipulated? People in those huge banks and hedge funds (they are those who able to consistently beating the market), are they trading by just look at the supply and demand curve as well? I know that some people in hedge funds they even laugh at S&D theory (my heart broke when I talk to them). They only use fundamental and technical analysis to create a trading algo. Hence, is it possible that we can make profit with simple steps? If yes, would mind tell me how can we outperform those people or at the same level as them.


i am not the author..but as you got no reply I will give my opinion..it all depends on what market you are trading..and who else is trading it..it is easier to see manipulation in some markets compared to others

while i do agree with a lot of what the author wrote..it is not that simple..as again..depending on what you trade..and when you trade it..there can be a big difference in how the price behaves..which can be a lot to do with your manipulation question

the author is correct when he says to keep it simple..and the simpler the better..providing of course you fully understand your instrument..it's characteristics..it's key times..and what ever other information is relative..successful trading requires much more than using a box..but a box can be a great starting point to get you focused..as without focus you will not see anything

Jul 14, 2017

Member (818 posts)

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