Trading Price

This is a discussion on Trading Price within the Trading Journals forums, part of the Reception category; Trading price requires a perceptual and conceptual readjustment that is somewhat like parting a veil -- or taking the red ...

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Old Aug 11, 2016, 12:29am   #1
 
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Trading Price

Trading price requires a perceptual and conceptual readjustment that is somewhat like parting a veil -- or taking the red pill -- in that doing so enables one to look at the market in a very different way, one might say on a different level.

One must first accept the continuous nature of the market, the continuity of price, of transactions, of the trading activity that results in those transactions. The market exists independently of you and of whatever you're using to impose a conceptual structure. It exists independently of your charts and your indicators and your bars and your fanciful shapes. It couldn't care less if you use candles or bars or plot this or that line or select a 5m bar interval or 8 or 23 or weekly or monthly or even use charts at all. And while you may attach great importance to where and how a particular bar -- or candle -- closes, there is in fact no "close" during the market day, not until everybody turns out the lights and goes home (if you trade futures. there's no close until the end of the week).

Therefore, trading price, or at least doing it well, requires getting past all that and perceiving price movement and the balance between buying pressure and selling pressure independently of the medium used to illustrate the activity.

For example . . .

Click the image to open in full size.

After 10 hours of moving sideways, a rally is staged on Friday that takes price all the way to 4798. This is a point of interest because this is where buyers were no longer willing to pay the ask. Price then drops to 82. This is a point of interest because this is where buyers found what they considered to be value and not only stopped the decline but advanced price on Monday 19pts. Price then drifted down through 82 for 16pts to 4766, relatively equidistant from 82.

Interesting.

Price then rallies at the end of the session to . . . 82. Price then anchors itself to this level for sixteen hours, rallies a bit, hits 82 hard at 0930 and rallies to 4808, after which it drifts down to . . . 82. Price then rallies during the next eleven hours to a point that is within a couple of ticks of Monday's high, then declines, today, to a point that is within a few ticks of Monday's low, after which it returns, like a swallow to Capistrano, to . . . 82.

So what is it with 82? Who knows? Who cares? Finding the trading opportunities begins with (1) recognizing the footprints of demand and supply, (2) determining the level at which traders are finding value, i.e., finding trades, in this case, 82, the level at which the vast majority of trades are taking place, and (3) detecting how far away from value traders are willing to go in order to profit from the risks they're willing to take. If one understands the characteristics of a range and how to find the median, all of this dovetails nicely. If one doesn't understand any of it, the movements appear to be random, mysterious, a series of traps set for the unwary and the unprepared.

Complicated? No. Complex? Slightly, depending on how well one understands the behavior of buyers and sellers. Trading price is, after all, about trading behavior, and the more sensitive one is to the nuances of trader behavior, such as an increasing reluctance on the part of buyers to pay the ask, the more successful he will be in trading price.
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Old Aug 15, 2018, 1:48pm   #2
 
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dbphoenix started this thread Under reconstruction. Watch this space.
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