What is the structure? Why do we need it ?
Structure is a thing constructed. A complex entity constructed of many parts.
There is a famous saying in trading. “ Trading is 10% strategy, 20% money management and 70% psychology“. That 70% part includes understanding your own psych and also the psych of the other traders. It is impossible to predict what’s going on in other’s mind and how they will react with 100% accuracy. Of course we can predict that to some extent but it is not cent percent accurate. So we can predict how market might go, but we can never say how market will go.
So, we need a structure to understand that and to keep the odds in our favor before taking a decision. I think you understand the necessity of defining the structure. Simply said this is the battlefield where we are going to plan and fight with other traders.
Many theories tried to define the structure of the market. We have Elliot Wave theroy, Gann theory etc. I heard somewhere that people use planetary movements to take trading decisions But it is not wrong guys. When the environment is uncertain, there is no wrong and right theories. If something works for you, use it. If something doesn’t work for you, discard it. But don’t judge it.
According to YTC price action trader book,
Market moves in a framework of support and resistance and when the framework is broken, it enters into a new framework of support and resistances.
Before going into the explanation of the above point, I have few things to explain. I said that market is a collection of traders taking trading decisions. Those decisions results in the net orderflow and the net order flow drives the market in a certain direction.
The core reason of the market movement is traders taking decisions. Traders are humans and they have memory. We humans don’t like to change a habit so easily. So does the market. Market has memory and it behaves in a certain fashion when price approaches a certain level where it has felt some unexpected force in the past.
Market has inertia and it resists the change of environment and it tries to continue the same behavior. Until market shows clear evidence of reversal, don’t take decisions against the direction. I hope you are clear with the explanation till now. If you aren’t, please read this article again before proceeding further
Structure is a thing constructed. A complex entity constructed of many parts.
There is a famous saying in trading. “ Trading is 10% strategy, 20% money management and 70% psychology“. That 70% part includes understanding your own psych and also the psych of the other traders. It is impossible to predict what’s going on in other’s mind and how they will react with 100% accuracy. Of course we can predict that to some extent but it is not cent percent accurate. So we can predict how market might go, but we can never say how market will go.
So, we need a structure to understand that and to keep the odds in our favor before taking a decision. I think you understand the necessity of defining the structure. Simply said this is the battlefield where we are going to plan and fight with other traders.
Many theories tried to define the structure of the market. We have Elliot Wave theroy, Gann theory etc. I heard somewhere that people use planetary movements to take trading decisions But it is not wrong guys. When the environment is uncertain, there is no wrong and right theories. If something works for you, use it. If something doesn’t work for you, discard it. But don’t judge it.
According to YTC price action trader book,
Market moves in a framework of support and resistance and when the framework is broken, it enters into a new framework of support and resistances.
Before going into the explanation of the above point, I have few things to explain. I said that market is a collection of traders taking trading decisions. Those decisions results in the net orderflow and the net order flow drives the market in a certain direction.
The core reason of the market movement is traders taking decisions. Traders are humans and they have memory. We humans don’t like to change a habit so easily. So does the market. Market has memory and it behaves in a certain fashion when price approaches a certain level where it has felt some unexpected force in the past.
Market has inertia and it resists the change of environment and it tries to continue the same behavior. Until market shows clear evidence of reversal, don’t take decisions against the direction. I hope you are clear with the explanation till now. If you aren’t, please read this article again before proceeding further
