Back to Basics
If we know the two people whose names figure in the disciplines of economics and physics. The first Adam Smith, pioneer of modern economics and a pioneer of the economic system of capitalism. He has claimed hundreds of years ago that if supply exceeds demand at a certain price level, the price will go down, and vice versa. While the second was Sir Isaac Newton's law of motion states that an object will remain within the motion action (motion) until it gets a reaction force (force) that is equal to or greater. More often called Action and Reaction alone. Both simple but brilliant example of this has been enduring all time and direct a major factor in price movements in the market that we are to trade and engage in it today. If they choose a career as a trader, it could be they are traders that is very reliable.
Inside This is about what is called in the conventional technical analysis as a support (demand) and resistance (supply). We will try to peel deeper into what exactly the support and resistance levels, how we identification and quantification on the chart, and how to use them in making objective decisions resulting in a very satisfactory profit.
A trader should understand the market mechanisms no more and no different to any other Market as we know. Whether the stock market or fish market and so forth, we can know how the law works quote request in which humans involved. This is the main reason driving the price, and opportunities arise when price movements become unbalanced. If only we would observation of interaction of supply and demand is always there every time, should the identification process will be reversed when the price is not too difficult but it takes foresight in determining the area.
Support (demand) is the price level at which more buyers than sellers who are willing to buy at a certain price level.
Resistance (supply) is where the available supply more than buyers are willing to buy the supply at a certain price level. Consider the chart below for the identification of what is meant by Demand.
Area A shows the price level where there is a relative balance or equilibrium between supply and demand. Everyone who wants to sell and buy at the price level is still within the limits of the balance, and the price is relatively stable. In closing candle (B), the relationship of supply and demand has shifted and is no longer balanced. Now we know that more demand at a price level than the supply available. How do we know if this is true? The only thing that causes the price goes up like that exemplified is due to the shifting relationship suppy and demand. In closing candle B, we also dapatsimpulkan that there are many buyers who are willing to buy at the A level but is lagging behind because the price has gone up. Area A is skarang can we call it objectively as demand (support) area. Label C showed a decrease in prices back to the level of demand is where we got a chance this month.I'll low risk high reward trade as prices return to areas previously shown dominance buyer. Later we discuss how to capitalize on these opportunities.
Then we can identify supply (resistance) by inverting the logic of the above examples.
Identification of the true price level demand (support) and supply (resistance) may be the decision of the trader who most complicated (complicated). In particular, where we will know the prices will probably reverse direction (turning point) and why the reverse direction. For the definition of demand and supply that I have mentioned above is the only information that we need. Adam Smith made it simple, logical and real. If the theory is applied to a market, it will become very easy.
In fact the only objective information that is available is the price and volume. The others are just derivatives (derivatives) of the price and volume, so why not directly to the source? We've read many books and heard commentators financially talk about movingaverages, Fibonacci retracement, and so as the demand (support) and supply (resistance). This is true but not entirely correct. All indicators or oscillators are referred to as tools (tools) in the identification of support / resistance simply pointing devices certain conditions such a tool, not a supply and demand sebenarnya.Tools show this works only if the conditions that exactly the same as the level of supply / demand in the chart. Can you imagine if the financial director microsoft that its shares listed diNYSE or its fund manager George Soros spoke about oscillator or candle pattern head and shoulder? very little taste.
we do not need to rely on the use of indicators, not at all required. In fact, this will only make a reasonable doubt to a trader. But I remind that these indicators only tools, do not be too dependent on tools. Know the source is the price and volume. Example iseorang mother go shopping as well as any goods wanted, most often first appear are the words "berapaharganya?" and we usually likewise in everyday life. For those who use the indicator analysis do not reverse the process and not the indicator first and price, but the price of a new first indicator moves and always miss the moment. I'm sure a lot of beginners much like the indicator than the price itself, so it is often glued or even stunned at the indicator. Hence the title of this post back to basics, let's try again to understand the market mechanism itself.
Before proceeding, I quote only news UK newspaper The Telegraph yesterday:
This morning the UK Telegraph Reported that Pimco, the world's Reviews largest manager of bond funds, will not buy British debt this year. They are fearful the Brits may be Able to efficiently marketenough Reviews their gilts to fund current deficits. Pimco hinted they may reduce Reviews their current inventory, selling some of Reviews their gilts. A Pimco Spokesman was quoted in the Telegraph: "Paul McCulley, amanaging director at Pimco, said:" We are currently cutting back in the US and UK because ... supply and demand dynamics are Likely to be negatively affected as borrowing rises and central bank buying declines. "
Now you can see for yourself the factors of supply and demand is a major factor in the decision.
In a previous post I had mentioned that "Identification of price levels true demand (support) and supply (resistance) is probably trading decisions that the most complicated (complicated). In particular, where roughly the price will probably reverse direction (turning point) and why turn back." How do I identify the entry area of low risk / high opportunity as simple as possible?
we are trying to do the simple steps below:
Open any chart and should the time frame or the lowest Daily and Hourly time frame could also others which we prefer the technique of supply and demand do not limit the time frame
Notice on the left side of the chart, and find out if there are any areas where there is a row of candle, more neat of runs like people who are increasingly bagus.Hal ceremony shows Atua balance equilibrium relative so it looks priced in the range of motion is limited.
Put a horizontal line between the earlier range, we recommend using only body candle.
Observe if there is a candle / bar closing his mouth through this area, which is the higher of its body the better.
The area between these two lines is the reference that we will use as a base (base) for the What is a decision we will buy or sell in case the price of re-entry and will approach this area again. Laying horizontal lines was not necessary 100% perfect, because the accuracy you will be trained over time and flight hours. With practice and repetition continually, you will increasingly easy identification. The material I present will also be repeated and the repetition of the other senior trader.
By: http://aboutofforex.blogspot.com
Always try and do not despair
"GOOD LUCK"