Bid vs Ask Price
Charts are visual representations of the prices where buyers and sellers agreed to trade over at different periods of time in the past. In markets there is a buyer and seller for every trade execution, a stock quote is the price where the buyer and seller agreed and made a transaction.
Buyers and sellers are always equal in trading it is the price that changes where they are willing to exchange a position for cash. Saying that there are more buyers than sellers in a market is incorrect as price is always set where equilibrium is met. There may be different quantities of buyers or sellers at different price points at the bids and asks in markets but the quote is where they met.
The level that trades take place before a stock is quoted is called the bid and the ask prices. The bid price is the current highest price that a buyer is willing to purchase a stock if someone is willing to sell it to them. This is called the ‘bid’. The ask price is what a seller is offering to accept to sell their position for. This price is referred to as the ‘ask’.
The gap and distance between both the best current bid price and the best current ask price is called the spread. The greater the spread the less liquidity and volume their likely is in a market. The higher the amount of buyers and sellers in a market the greater the odds of having enough people willing to buy or sell at different prices to have a tighter bid/ask spread. The wider the bid/ask spread the more money that is lost getting in and out of a market as the gap in prices causes slippage on both entry and exit.
In trading you can see the bids and asks with your broker when you go in to place a trade with the current quote. You can see a more detailed list of the current bid and ask prices along with volume if you have Level 2 quotes.
The bid prices are the willing buyers and the ask prices are the willing sellers and where they meet is the prices you see quoted.
Contents:4 Trading System Ebooks: Format: PDFTitles:1) Forex Hidden Systems2) Forex On-Line Manual for Successful Trading3) Forex Trader4) One More Zero: How To Trade The Forex Like A Pro In One Hour5) Templates Manual
Learning how to trade pin bars can help a trader grab trade entries just as the balance of power is shifting between the bulls and bears. Trading pin bars is one of those Forex trading strategies that can be learned quite easily and is great for swing trading because you may have caught a turning point in the market. You can bring up any Forex chart and see how a pin bar reversal can often highlight important turning points although a higher time frame carries more weight than a small time frame when using any type of candlestick pattern The pin bar, is one of the most high probability reversal candlestick patterns and if you can identify a pin bar on your Forex chart and know where and in what location on the chart it is occurring, you can make a great swing trade. The pin Bar Trading Strategy relies on the Pin Bar Formation. The Pin Bar Formation The Pin Bar is a price action reversal pattern and when it forms, it shows that the price was rejected by the market at a certain price level or point. They stand out on the chart which makes them obvious and can bring order flow into the market if other traders take a position. The Pin Bar The Pin Bar is very different from other reversal candlestick chart formations because it is a bar/candlestick with a long tail or wick, a very short body. The name itself (the pin “bar”) refers to using a bar chart but I prefer using candlestick charts can help you see the formation clearly on a chart. This is a more detailed analysis of the pin bar and then we will cover the Pin Bar Trading Strategy Rules. For A Bearish Pin Bar Formation: The long tail tells you that the bulls took over and pushed the price up to form a high, but that high was not maintained. The bears came, took over and pushed price down all the way, wiping away the price gains made by the bulls The price fell, made a low and then closed below the opening price in the red. When you see such a bearish pin bar formation, you should be alert that the bears are now most likely taking over the market and may continue to push price down. For A Bullish Pin Bar Formation: a bullish pin bar formation is the exact opposite of the bearish pin bar formation: the long tail tells you that initially, the bears took control of the market and pushed the price all the way down to make a low but this low was not sustained. After the low was made, the bulls took over with such ferocity and force and pushed the price all the way up, completely wiping all the downward price moves made by the bears and making a high and finally closing a little bit below the high in the green This means that when you see such a candlestick formation, you should be alert now that that bulls are most likely taking over the market and will continue to push price up. BEST LOCATIONS TO TRADE THE PIN BAR This is one very important criteria if you are looking to trade the pin bar: you just cannot trade all the pin bars you see. It does not make any sense at all to trade all the Pin Bars you see because of one very simple reason: the location of where the pin bar forms impacts you probability of success. So the best places to trade pin bars are in areas that technical analysis traders are aware of already: Fibonacci levels of 31.8, 50 & 61.8 Major support levels Major resistance levels traders action zone pivot levels trendline bounces. HOW TO TRADE THE PIN BAR FORMATION Trading pin bar is really straight forward which makes it a go to trading method for price action traders whether they swing trade or prefer day trading. Pin Bar Trading Strategy Wait and watch for pin bar to form on the levels above like Fibonacci levels etc..that I’ve listed above. Depending on whether its a bullish or bearish pin bar you will have to place a pending sell stop order 3-5 pips below the low of the bearish pin bar and place a buy stop order 3-5 pips above the high of the bullish pin bar. Place your stop losses on the other side of the pin bars of the same distances as you placed the pending orders, that is, 3-5 pips above the high if its a sell stop order and 3-5 pips below the low if its a buy stop order. Take profit targets: use previous swing high points/peaks or swing low valleys/bottoms as you take profit targets. When the price moves favorably, you have to lock in your profits by using the trailing stop technique where you move and place behind subsequent decreasing swing high points/peaks for a sell order and behind increasing swing low points/valleys/bottoms for buy order. In this way, whatever happens, you have locked profits for that trade and if the market moves against you, you would have still made a profit anyway. Trailing your protective stop order allows you to stay in the market as long as possible before the reversal takes you out. BEST TIME FRAMES TO TRADE THE PIN BAR I believe the larger time frames are the best time frames to trade the pin bar: you should be looking at pin bars in the 1hr, 4hr and daily time frames. If you are trading in the 1hr, don’t be just focused only on 1hr charts, check in the 4hr charts as well because sometimes you will notice that you may not see a pin bar in the 1hr chart but in the 4hr chart, a pin bar may be forming which you will not see because you are so focuses on looking at one hr charts only. What I’m saying is learn to use multi-timeframe chart analysis. This is an essential trading skill all forex traders should know.
Hi fellow swing traders, here is a swing trading system which you can use to trade the GBPUSD currency pair. This swing trading strategy has the potential to average more than 100 pips a month. You just have to manage your risks and it can be a real killer forex swing trading system for you. Ok, enough of trash talk, lets get started with a bit more detail into the GBPUSD forex swing trading strategy. OVERVIEW OF THE 4HR GBPUSD FOREX TRADING STRATEGY (1)With this forex swing trading system, you need to use the 4hr chart as well as the daily chart to make a trading decision. Your trade entries are made in the 4hrs but you need to check the daily timeframe for what the main trend is before you enter a trade on the 4hr timeframe. (2) You also need to have these forex indicators,: slow stochastic with the settings(13,5,5) applied to both charts, EMA 4, EMA14, and EMA 50 on the 4hr chart. TRADING RULES (1) On the 4hr chart, open a trade at market order or with a pending stop order on the new opening candlestick when 4ema first crosses 50Ema followed by 14Ema (2)Your stop loss should be 50 pips. (3)Exit the trade when 4EMA reverses and crossed 14EMA on the next open candle. (5)Last but not the least, you need a good filter to filter out potential bad trade setups with this swing trading system. Here’s what you need:the stochastic indicator on the daily chart: For Valid Long Entry: Slow %K above Slow %D on the Daily Chart For Valid Short Entry: Slow %D above Slow %K on the Daily Chart Note: the %K&%D on the stochastics are the two line on the stochastic indicator chat that cross each other based on where price is going. The reason why you need to use the stochastic on the daily chart is pretty simple:follow the trend. The daily chart has more importance than the 4hr chart. (6) Take profit: there is not take profit option here(dummy!) because you need to refer to rule (3)! Now if you are still confused, these two charts below will make things a bit more easier for you to understand. Click on the charts if you need to see it more clearly. Now as trade filter, swith to daily chart to see if the two stochastics lines have crossed to the downside to confirm the overall direction of the trend(in this case, its a downtrend): ADVANTAGES OF THE 4HR GBPUSD FOREX TRADING STRATEGY allows you to actually get into a trade just after the moving average crossovers happens, which means you are potentially entering a trade just after the trend has started…which is better than entering a trade at the halfway point of a trendy market move. which means if its going to be a nice trending market, you stand to make a lot of profitable pips and the fact that you are only supposed to close the trade when 4ema crosses the 14 and if that’s in a nice trending market on a 4hr chart, that could mean hundreds of pips of profit you can make. the use of daily timeframe withe the stochastic line crossover allows you to enter trade based only in the current prevailing trend direction thus increasing your odds of success. DISADVANTAGES OF THE 4HR GBPUSD FOREX TRADING STRATEGY The biggest problem I see with this trading system is the entry because moving averages are lagging indicators therefore the ideal entry point would have been anywhere from 2-7 candles back. this also means that at the entry where you got into a trade, price may be due for a temporary pullback and if your stop loss is not wide enough, you will get stopped out. This forex strategy is definitely not good for ranging market, expect your stop losses to get hit frequently. CAN YOU USE THIS FOREX TRADING STRATEGY WITH OTHER CURRENCY PAIRS? The short answer is yes. Better for you to stay with currency pairs that have good trending characteristics.