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How to Trade Forex Chart Patterns

March 01
03:25 2012

How to Trade Forex Chart Patterns

Here is a nice break down of how forex chart patterns are used to compress the supply and demand zones of the market. Understanding where traders tend to put their stop loss is essential in determining where the banks are likely to step in and start buying or selling. 

Knowing how the average retail trader will respond is essential information for one key reason.

Where the orders are is where the banks will likely take the market.

It is a simple matter of supply and demand. If you desire to buy a large number of apples you must find someone or a group of people willing to sell a large number of apples.

You cannot buy what someone is not willing to sell and you cannot sell if someone is not willing to buy.

This is why banks drive the market to and from pockets of liquidity. Learning to spot these areas consistently is the key to picking high R/R based entries.

Happy Trading, 

Sterling

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2 Comments

  1. webwout
    webwout March 01, 15:40

    Nice video , Sterling. Thanks.
    For every buyer there is a seller and vice versa .. sure but not to be taking litterally .
    There can be 1000 sellers to 1 buyer , and that is what the big boys do , right ? So, this way it’s not 50/50 and that is why they control the market. Their liquidity is so big that they can buy (or sell) as much orders as they want. Would that be the origin of 95 % losers and 5% gainers ? For every buy there is a sell. Thanks again , cheers , webwout.

    Reply to this comment
    • stersuhr
      stersuhr March 01, 22:15

      Yo Wout 🙂

      Long time no talk buddy. Very well said! I should have worded it that way. As you brought out its not and equal amount of sellers to buyers….its an equal amount of liquidity between the buyers and the sellers. There are many reasons for the 95% overall failure rate. One could argue many points. My belief is that nearly every single main strategy does one thing….it lumps retail orders into single locations. When there are many orders in one location the banks will drive the price into that area. They need the liquidity and its shooting fish in the barrel. Trading the price at face value will almost always lead to failure, the CFTC profitable trader statistics don’t lie….that being said said thank you for bringing those points out, and very well said BTW!

      -Sterling

      Reply to this comment

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