Responsive buying or selling occures if the price moves back to the Value Area. If the price is below the VA, traders will response to the opportunity and buy. If the price is above the VA, traders will response to the opportunity and sell. They buy or sell because they expect that the price will go back to the VA.
Initiative activity is the opposite of the responsive activity. Traders expect that the price will move away from the VA. Buying within or above the VA or selling within or below the VA is an initiative activity.
There is a difference between the caracteristics of initiative and responsive activity.
Initiative activity has big momentum. It is neccessary to have big momentum so that the price can move away from the VA. If we open position, our position will be profitable quickly. We should keep our position until there is momentum.
Responsive activity is much slower. If we open position, we need to sit patiently until the price moves back to the VA. The price could even go against us because it is quite hard to catch the exact top or bottom. The price target is the VA.
There is one exception. After a strong trend, the price could test the high or low where traders will push the price back agressively. In this case the initiative and responsive activity have also big momentum. This phenomenon is called buying/selling tails and it signals that the other time frame traders entered in the market. Our position should be profitable quickly in this case, although catching the exact top or bottom is hard. Many times this is a start of a new trend and the price will move beyond the VA, however it will probably move slowly through the VA.
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