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Rabu, Mei 27, 2009

Volatility prediction VS Price Action prediction

There are two flaws in the signal action.Between voltality and price action that I would describe the weaknesses and advantages on these both indicators.

Volatility
  • Only in some difficult long-term and short term.
  • Easy to give false signals from true signal, a lot of "noise"
  • Have to wait until the signal volatility occur
  • "Moving averages, Stochastic, MACD, among them are Alligator, Bolinger Band" and so on, with a Moving average calculation.
  • Signal occurs at the breakout in the trend.
  • It's difficult to put the Stop Loss by estimates.
Price Action
  • Can be considered for short and long term.
  • Less give false signals.
  • More efficient signal seen before volatility signal occur.
  • "Candlestick, spread movement, High & Low, Volume Market, Support & Resistance, Zigzag".
  • Signal occurs at the Time Frame consumed.
  • Easy to place Stop Loss estimates.
Volume is the exception because the volume is only counting the number transaction supply and demand.
In the above explanation has been given a bit of "Hint" to identify how to trade successfully, even for an estimate on the chart position in the Forex (BUY or SELL).

There is a question?? It's used to be traders (stock) using volatility indicators, and now after almost a decade candlestick introduced in the Western, many people learn the technique of Price Action.Why ?

Because they were bored, volatility using a variety of mathematics-based calculations can provide information by candlestick.In other hand Price action used market strength, and a sign change direction and estimate the trend is going to happen, with more accuracy.The volatility problem is by the calculation,it self and the calculations are in accordance with the average (average) for the price (price) in the market, where prices are collecting and averaging, of course, the trader is able to evaluate the trend will occur, but whether the trader is able to do "head shot" at that position.

However, I will explain to you how these volatility in about and why I say it has many false signals (Signal Noise). For example I took Moving average.

Calculating the moving average as the average price, basically, almost all indicators volatility formula Moving Average, just as there is an increased exponent and breakdown support and resistance.

However,using both Volatility and Price Action will help trader to enter the positioned with a good accurately.

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