• Home
  • About
  • Contact

Forexobroker

Download Our Forex Strategies and Indicators

  • Daily Forecast
  • Tradingview Tools
  • Courses
  • Metatrader 4 Indicators
    • Free Metatrader Indicators
    • Paid Metatrader Indicators
  • Metatrader 4 Systems
    • Free Metatrader Systems
    • Paid Metatrader Systems
  • EA’s
    • Paid Expert Advisors
  • Forex Brokers

Reading Order Flow with Price Action

September 16, 2016 by Dominic Walsh Leave a Comment

Price Action as many traders know it is what price is doing and how it is behaving on a chart. For many traders they flick on their charts and will see candles moving up and down. A deeper look into price action shows us that what they are actually watching when they watch the candles move up or down is the market order flow that is taking place.

Price Action is the direct result of what has happened with order flow. In other words what the big guys are doing can be seen directly through price action on our charts. It is said that “price action is the foot print to the money” and this is true because through the price action on our charts (the foot prints) we can see what the market order flow is and more importantly where it is likely to lead.

Price Action and Indicators

All indicators including the commonly used indicators such as moving averages and Bollinger bands are built using the information that price gives us.

The reason price action trading is so successful and used by most professional traders is because you are reading the order flow from the market as it is continually printed onto your chart in real time.

How Can We Use Price Action Order Flow?

Order flow is being printed on your charts every second the market it is open. You can simply look at any chart to see price moving up or down to see what the market is doing. Being able to use this information and to trade with it profitability is the next step in the process.

The reason a few key patterns in the market can be very profitable to trade time after time is because they are showing key signs of market order flow and market dynamics. One very simple example is the Pin Bar.
Forex Brooky Shade Indicator

Download My New Forex Forex Brooky Shade Indicator

Pin Bar Reversal

The Pin Bar is a very simple one candle pattern that is especially good at changing the market direction and creating a reversal. To read about the basics of the Pin Bar.

The nose of the Pin Bar is telling a lie and setting a trap that will stop out many traders. To understand why the Pin Bar is successful we must look at the order flow behind the pattern to understand how we can do the trapping and not become the trapped.

As the Pin Bar is being formed many traders are trading and looking for a break out trade. They are entering in the direction of the Pin Bar nose and looking for price to continue. For the Pin Bar to be created one of two things needs to happen;

    1. The buyers/sellers must come in with more pressure to reverse the price or,
    2. Traders begin taking profit which leads to price reversing.

The two charts below explain how the Pin Bar is created with order flow. In the example below we have a bullish Pin Bar. Originally traders would have been short looking for a breakout lower. Chart one show’s how price would have looked as price was breaking out. People were selling and looking for price to continue moving lower.

q11

At some point traders either started taking profit or a fresh wave of buyers came in that pushed price higher. Chart two shows the Pin Bar which has now been created after this fresh push higher.

q12

For the Pin Bar to work and be a successful trade price must move higher to complete the trap. It is here that a lot of stops will give fuel to help price bounce higher. All the traders who traded for the breakout have been successfully trapped. The breakout traders will have a lot of their stops above the Pin Bar high hoping price does not break higher as they will be stopped out and effectively trapped. It is for this very reason that the Pin Bar will get its next push higher due to stopping out the break out traders. See the chart below for a detailed look;

q13

A clean price action chart below shows how this works on a real chart. This chart highlights how the Pin Bar is formed and then how it takes out the stops to move higher.

q14

Recap

The reason a few key price action signals work time after time and repeat themselves, is because they are showing traders the signals of order flow and tipping them off to where orders sit in the market. The traders who trade these patterns can learn to make sure they are on the correct side of the order flow, and not being trapped by the big guys.

Our community traders work with XM.com brokerage company. If you are thinking to open demo or real forex trading account we recommend XM. They currently offer up to 5000$ bonus on your deposit find details below:

Open Forex Account

 

Open Forex Account

Filed Under: Dom's Forex Course Tagged With: price action

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

  • Email
  • Facebook
  • Instagram
  • LinkedIn
  • Pinterest
  • RSS
  • Twitter
  • YouTube
Forexobroker

Archives

  • February 2023 (1)
  • January 2023 (6)
  • December 2022 (7)
  • November 2022 (19)
  • October 2022 (20)
  • September 2022 (27)
  • August 2022 (13)
  • July 2022 (4)
  • June 2022 (2)
  • May 2022 (2)
  • April 2022 (3)
  • March 2022 (5)
  • February 2022 (3)
  • January 2022 (5)
  • December 2021 (1)
  • November 2021 (3)
  • October 2021 (3)
  • September 2021 (2)
  • August 2021 (1)
  • July 2021 (1)
  • June 2020 (7)
  • May 2020 (6)
  • April 2020 (7)
  • March 2020 (7)
  • February 2020 (10)
  • January 2020 (3)
  • November 2019 (1)
  • September 2019 (3)
  • August 2019 (3)
  • June 2019 (1)
  • December 2018 (1)
  • November 2018 (4)
  • October 2018 (9)
  • September 2018 (11)
  • August 2018 (5)
  • July 2018 (6)
  • June 2018 (3)
  • May 2018 (6)
  • April 2018 (2)
  • March 2018 (9)
  • February 2018 (8)
  • January 2018 (10)
  • December 2017 (10)
  • November 2017 (14)
  • October 2017 (3)
  • September 2017 (3)
  • August 2017 (13)
  • July 2017 (25)
  • June 2017 (21)
  • May 2017 (20)
  • April 2017 (21)
  • March 2017 (15)
  • February 2017 (16)
  • January 2017 (18)
  • December 2016 (11)
  • November 2016 (21)
  • October 2016 (63)
  • September 2016 (24)
  • August 2016 (22)
  • July 2016 (16)
  • June 2016 (16)
  • May 2016 (16)
  • April 2016 (23)
  • March 2016 (29)
  • February 2016 (22)
  • January 2016 (22)
  • December 2015 (29)
  • November 2015 (28)
  • October 2015 (29)
  • September 2015 (41)
  • August 2015 (52)
  • July 2015 (47)
  • June 2015 (55)
  • May 2015 (50)
  • April 2015 (58)
  • March 2015 (22)

  • Home
  • About
  • Contact

Categories

  • Daily Forecast
  • Tradingview Tools
  • Courses
  • Metatrader 4 Indicators
    • Free Metatrader Indicators
    • Paid Metatrader Indicators
  • Metatrader 4 Systems
    • Free Metatrader Systems
    • Paid Metatrader Systems
  • EA’s
    • Paid Expert Advisors
  • Forex Brokers

Visit Our Forex Strategies And Forex Indicators Below:

Forex Trading Strategies

Free Forex Indicators

Paid Forex Indicators

Paid Forex Strategies

“Our order process is conducted by our online reseller Paddle.com. Paddle.com is the Merchant of Record for all our orders. Paddle provides all customer service inquiries and handles returns.”

© 2015-2023 Forexobroker

Copyright © 2023 · Magazine Pro Theme on Genesis Framework · WordPress · Log in