Thread by @siddharth_2410

Let's discuss about PRICE ACTION PATTERN which gets repeated again and again but that FEAR OF MISSING OUT (FOMO) over rides and people do wrong trade

In this post I will try to explain about human mindset when PRICE starts moving higher/lower
If you find this interesting
"RT"

See in this image you are able to see that price is moving higher from a zone which is marked with horizontal boundaries and from there price moves up without looking back
Let say in this manner that if this much PRICE ACTION is present in front of you where you will take a trade

Accordingly there will be two categories of traders
1. Those who will try to take trade at CMP
2. Those who are waiting for PRICE to retrace back to POINT-A and then take a trade

You know why people will be ready to take trade at CMP because of one simple reason "CONFIDENCE"

When I say CONFIDENCE it means when the PRICE moves higher and higher the level of CONFIDENCE among traders keep on increasing & increasing (try to correlate with feeling of COMPLACENCY)

But always remember "THERE IS ALWAYS A POSITIVE CORRELATION BETWEEN CONFIDENCE & RISK"

i.e when CONFIDENCE is HIGHER means RISK will be also HIGHER and when CONFIDENCE is LOWER means RISK will be also LOWER

May be at this juncture its sounding little bit off track
Read on ! I am sure I will clear this confusion and you will dig out some thing interesting

Now those who took trade at CMP or where waiting for PRICE to retrace back to POINT-A and then took TRADE understand one simple thing your SL is taken out in a zap and you are HUNTED

Many will think that this is just one case. I would suggest you to take on such trades
Cont.

and then find out the final results you will find out that most of the time your SL is taken out

Let me tell you the reason "WHY THIS HAPPENS?" and "WHY ITS NOT ADVISABLE TO TAKE TRADE AT POINT-A / CMP?"

See when the price is moving higher and when it moved up to POINT-A

It has left behind "GAPS/LIQUIDS/FLUIDS" and so if you are BUYING at POINT-A then you are buying at WEAK SUPPORT / WEAK DEMAND ZONE because you are just above FLUIDS. And once the price penetrates through this zone at POINT-A it will fizzle out fast because of FLUIDS

Even its not advisable to PUT SL at zone near POINT-A because the chances of being taken out is very high

Now talking about CONFIDENCE and RISK when the PRICE moved HIGHER and reached POINT-A level of CONFIDENCE was HIGH but don't you think your RISK was also HIGH

Because you have very HIGH chances that your SL will be taken out because of FLUIDS and the rally may fizzle out

Also understand where the CONFIDENCE was LOWER to take on this TRADE it was at the "ZONE MARKED WITH HORIZONTAL LINES" but don't you think RISK was also LOWER

Cont.

because your SL will small and PROFIT will be large

So what is best place to take a trade its "ZONE FROM WHERE PRICE STARTED MOVING HIGHER"

Those who can recollect a bit we are discussing about COMPRESSION here which we have already discussed

Those who can't recollect can read it here

https://twitter.com/siddharth_2410/status/1245401321517101056?s=20

Those who are interested in knowing which stock is this
Here it is tradingview.com/x/AIi0dkXv/

Hopefully you were able to gain some idea about when to take a TRADE & when NOT to take a TRADE

Happy Learning

If pay attention to whole market structure at least you will save yourself from
1. Getting into wrong trade
2. Getting your SL HIT

Same concept of PRICE COMPRESSION repeated again

https://twitter.com/siddharth_2410/status/1263091683643674626?s=20

Try to correlate with this concept you will get better understanding about "WHY SUCH MOVES TAKES PLACE?"