Most of us still wonder what the hell we are talking about when we say Trade price. This is how I trade and just possibly, the light might turn on for some people and they will begin to actually see price as it really is. I’m not going to get into candlestick patterns as they are covered by many experts in the field. What I will be talking about is price action and price patterns. It’s what you see on your screen when it’s «naked», void of anything that clouds your view. Perhaps, if you follow along, you will understand why price moves the way it does. Price is «alive» in a manner of speaking.
I treat it as a hunter would. Learning its habits, and it does have habits that repeat over and over, makes all the difference between bringing home a trophy, putting meat on your table or going hungry another day.
When I look at all the trading systems and indicators all over the place and the latest bells and whistles that people use to make their trades, I can’t help but compare those people to «trappers». They are setting a trap. Maybe the fox will show up and get caught, but more than likely, the sly little devil will backtrack on you and slink away. I’m not saying «trapping» is a bad method for hunting, I’m just saying all the conditions have to be right for the prey to get caught.
This is why ALL EA’s and systems work some of the time, but none of them work all the time. When the conditions are correct, the EA or system trap will spring and you got yourself another pelt. Sometimes, the trap is sprung but fails to catch the prey and sometimes, the trap never springs. Your success as a «trapper» depends on a mechanical trap, left to its own means. Let not forget that the fox is a cunning creature and he will learn your trapping ways. He learns to survive by adapting to your ways. Trappers who can’t adapt to the changing ways of the fox, will not last long in the Forex wilderness.
On the other hand, the hunter takes more of an active roll in «the hunt». He doesn’t just set a box and come back and check it 4 days later. He spends days in the prey’s habitat, learning all he can of his adversary. He actively tracks his prey, looking for sign along the way. Learning when and where it feeds, and what it eats and if the prey is large enough, finding the remains of a «trapper» or two along the way. Soon enough though, the hunter tracks the fox right into his den, where the fox lives and is most comfortable. Before it knows it, the fox is skinned and the hunter bags another trophy.
Price moves with direction «and» intent. Too many people try to trade direction only and have not a clue as to the intent of price. Price moves for a set, determined reason. Make no mistake here, price does not move on its own. Price is driven or piloted by somebody or some thing. It is driven with intent. The direction of price is the easy part, it’s intent is something entirely different.
Most if not all of the orders placed by every everyone and in all the bucket shops across the world, never see the Forex market. They are handled in house, by your brokers. The brokers have some influence over price and what happens to your trades. Staying with a fixed spread broker gives some protection from these guys but you pay a little more for each trade.
As the predator, I choose to take the fox in his den along with all his little babies. Learn some additional skill sets and your trading will improve greatly over time.
Huge credit goes out to Captain Jack who helped in switching on the light.
by King Jay