AN EDUCATIONAL POST ON STRUCTURE AND BANK MANIPULATION
This is just a simple yet helpful example as to how a trending pair works for those who are willing to learn something or improve their trading in order to have an additional edge over the market.
I could have made this over EUR/USD and simply draw up the candles myself in order to get more views, but the recent example of NZD/CHF serves me much better, so please the ones that see this, like it so that we can get it up to the featured posts of the day.
What you can see on the chart is a classic example of how structure works. As highlighted, what really occurs is that when we get a break of a significant structure level, the price will come back to retest that level before continuing higher (uptrend) or lower (downtrend). If you want a real-life analogy we could use the one of a track runner as an example. Take Usain Bolt for example. He can run 100m at full speed without the need to catch a breath. Make him run 1km at full speed, and things will likely change, and that's due to human nature. He will need to pause, or run slower, before he can carry on at full speed. The same concept applies to the Financial Markets as well. The market will never move in one direction without corrections. It will always retrace, or correct before carrying on to its predetermined destination, and just like human nature, market nature also exists and this chart highlights that perfectly.
The reason I'm posting this is to help traders avoid the mistake of jumping on a trade too early, because they're seeing it take-off. Instead it's much wiser to wait for it to retrace and then enter. Buying at the top or selling at the bottom can be extremely dangerous. Sure the price will sometimes shoot-off for much longer before retracing, but again just like a track runner, it will take off for a certain period and it's only a matter of time before it starts correcting, which is why patience is of a key essence when trading.
Furthermore, on the title I also included Bank Manipulation which occurs day in and day out and we can see that thanks to the price action, which is something the banks cannot hide from us. There are many videos on Youtube concerning the subject so I won't get into too much detail, but the general idea is that at key levels (prices), the banks will tend to manipulate the price in order to "trap" retail investors on the wrong side. While some people will think that this is entirely unethical, if we think about it and compare that to a real-life example, this is exactly the case with any business out there. A business will obviously want to generate as much profit as possible, and the Financial Markets are obviously no different. Banks run the business and just like every other, they will want to generate the most they can and they will do everything they can to do that. Whether we like it or not, we're playing their game, but if we are more aware of what they're actually doing that will at least help us avoid getting trapped.
What happens on these significant price levels is that the bank will most likely drive the price beyond the point in order to make you think that the price will continue higher or lower, depending on the trend, inducing buying/selling pressure and when a lot of orders (volume) have been placed on the wrong side they will drive the price to the opposite direction and basically generate more profits for themselves.
These are just 2 simple techniques from the many that can help you with your trading, so I hope the ones that read it will see some improvement.
See the related ideas section for more examples.
I could have made this over EUR/USD and simply draw up the candles myself in order to get more views, but the recent example of NZD/CHF serves me much better, so please the ones that see this, like it so that we can get it up to the featured posts of the day.
What you can see on the chart is a classic example of how structure works. As highlighted, what really occurs is that when we get a break of a significant structure level, the price will come back to retest that level before continuing higher (uptrend) or lower (downtrend). If you want a real-life analogy we could use the one of a track runner as an example. Take Usain Bolt for example. He can run 100m at full speed without the need to catch a breath. Make him run 1km at full speed, and things will likely change, and that's due to human nature. He will need to pause, or run slower, before he can carry on at full speed. The same concept applies to the Financial Markets as well. The market will never move in one direction without corrections. It will always retrace, or correct before carrying on to its predetermined destination, and just like human nature, market nature also exists and this chart highlights that perfectly.
The reason I'm posting this is to help traders avoid the mistake of jumping on a trade too early, because they're seeing it take-off. Instead it's much wiser to wait for it to retrace and then enter. Buying at the top or selling at the bottom can be extremely dangerous. Sure the price will sometimes shoot-off for much longer before retracing, but again just like a track runner, it will take off for a certain period and it's only a matter of time before it starts correcting, which is why patience is of a key essence when trading.
Furthermore, on the title I also included Bank Manipulation which occurs day in and day out and we can see that thanks to the price action, which is something the banks cannot hide from us. There are many videos on Youtube concerning the subject so I won't get into too much detail, but the general idea is that at key levels (prices), the banks will tend to manipulate the price in order to "trap" retail investors on the wrong side. While some people will think that this is entirely unethical, if we think about it and compare that to a real-life example, this is exactly the case with any business out there. A business will obviously want to generate as much profit as possible, and the Financial Markets are obviously no different. Banks run the business and just like every other, they will want to generate the most they can and they will do everything they can to do that. Whether we like it or not, we're playing their game, but if we are more aware of what they're actually doing that will at least help us avoid getting trapped.
What happens on these significant price levels is that the bank will most likely drive the price beyond the point in order to make you think that the price will continue higher or lower, depending on the trend, inducing buying/selling pressure and when a lot of orders (volume) have been placed on the wrong side they will drive the price to the opposite direction and basically generate more profits for themselves.
These are just 2 simple techniques from the many that can help you with your trading, so I hope the ones that read it will see some improvement.
See the related ideas section for more examples.
Idea Berkaitan
