Many aspiring traders look at the chart with horror and do not understand how in this chaotic price movement you can find at least some pattern and predict the market move up or down to go into the deal in time. The right market approach should be used to answer this question. To understand the market is likely to predict price movements.
This task is handled perfectly by the Weikoff method, which is based on two phases of the market: balance and imbalance. Explore the method in just minutes - and increase your deposit, anticipating price behavior!
Richard Weikoff wrote about financial markets in the early decades of the 20th century. Thanks to an innovative approach to technical analysis, Weikoff 's method of trading has emerged. Weikoff 's theory helps to choose the most profitable tools of the trader, as well as to manage risks competently, using not only technical, but also psychological features of the market.
Weikoff himself did not consider himself a born great trader, but as a result of hard work and self-control, he achieved impressive results. He combined the methods of work of great contemporaries into a single system with step-by-step guidance, called the Weikoff technique. Weikoff 's method helps determine the best moments to enter the market, or being outside it. Thanks to it, you understand how big players manage the exchange, change the trend and create activity when moving the price.
Weikoff 's theory gives a special place in Forex trading to fear and greed. An American scientist believed these were the two main psychological factors driving the market. The actions of all participants determine the fear of losing funds and the desire to earn more. Only those who can abstract from these stimuli are able to sober analyze the F myforex market and make maximum profit.
Richard Weikoff had many followers, one of them Tom Williams. Studying practical examples of the application of the Weikoff methodology, Williams developed his own technical analysis methodology for volume work called - VOLUME SPREAD ANALYSIS (VSA). Richard Weikoff 's method and VSA analysis are rightly considered classic tools of technical analysis that have won the recognition of millions of followers.
Weikoff 's methodology is based on observations of price, key moments of trend development, and periods of accumulation and distribution.
An American scientist described a number of rules that can be used together with cycles, which helps to determine price locations within a wide price corridor.
Richard Weikoff 's method of trading includes rules such as:
Use deferred orders in trading;
Use Stop Lossa;
Work in small time slots;
Plan carefully to open warrants;
Have a habit of finding time not only for work, but also for study;
Use the abstract;
Work with real money.
Richard Weikoff 's method teaches Forex trader and investor - the market and individual securities never repeat their own combinations. The trend develops through a wide range of similar price models that have infinite variations in development. With each new turn, the price tries only to confuse market participants more strongly and mislead them.
Practical examples of the application of the Weikoff technique highlight two types of market entry tests.
Tests of purchases. Are applied after falling:
The goal of downward movement has been achieved;
Volume grows on growth, falls on fall;
Proximity of level of support;
The market responds to the rise, resists the decline;
Resistance level is punched;
Growing support, rising daily lows;
Rising peaks, daily highs rise;
The expected profit should relate to losses 3 to 1.
Tests of sales. Are applied after growth:
The goal of moving up has been achieved;
Volume grows when it falls, decreases when it grows;
Proximity of level of resistance;
The market responds to the fall and resists growth;
Support level is punched;
Falling support, falling daily lows;
Falling tops, the daily highs decline;
The expected profit should relate to losses 3 to 1.
Weikoff 's method suggests using these tests before the deal is opened. It is not allowed to delete individual items, if for any reason they do not fit into the desired situation. These tests represent a holistic system and should be used in full for:
Determine the current trend and forecast its behavior in the future.
Choosing the most liquid instrument to maximize profit using the idea of relative strength.
Choosing exactly the currency that has the best prerequisites for maximum movement. Use graphs to explore the potential for possible price movements.
Weikoff 's method of trading is based on three main types of graphs:
Vertical lines or bars;
Figures, or in another way - a graph of cross-nols;
Additional wave schedule.
Each myforex graph provides unique information, they complement and reveal each other.
Bars help to define:
direction of the line of a trend;
Periods of market entry and closing;
Approximate level of achievement at a price;
locations Stop Lossov;
Analyzing price and volume.
Figure graphs are designed to determine the distance a price should pass. These charts are responsible for your profit, help not to leave the position ahead of time.
Wave graphs analyze the psychological aspects of the market. They take into account the behaviour of large and small players, their reaction to events, and behaviour in critical zones.
The Weikoff method assumes the existence of:
Three types of trend: bull, bear, Forex flash;
Three time intervals: short-term, medium-term and long-term;
Significant trend difference between time periods.
Weikoff 's theory identifies three basic laws.
Law of Supply and Demand. When there is an excess of goods on the market, the cost decreases. The market should raise funds to buy back the surplus formed. Because there are not enough funds, sellers are forced to lower the price so that buyers can see the benefit of purchasing the item. If there is a shortage of anything, the price will rise, as buyers want to buy the goods they want, and are ready to pay more.
Law of relationship of cause and effect. A reason is required to change the price of an item. The power of the movement will be directly proportional to the cause that caused it. The strongest movements to change the value of a currency occur when a price has spent enough time in accumulation or distribution zones.
The Law of Communication of Efforts and Results. If a force is applied to achieve the goal, there must necessarily be an outcome. If this is not the case, other principles or laws are violated. Think about how volume-changing efforts are changing the value of the currency? If you have a large amount of funds, you can change course and achieve a better weekly trading system result.
The Weikoff method includes 4 cycles:
Cycle of accumulation Vaykoffa
The Weikoff method determines the start of a new cycle of price movement from the accumulation phase. The accumulation phase sets the trading range. Here after the climax of sales, the market is like a spring. Energy accumulates in this zone: the longer the price is clamped in a narrow range, the stronger the movement will be. It is often possible to observe the situation of foot hunting - when on small volumes there is a sample of support, feet work, throwing many players out of the market. After that, large accounts of buyers come into play, raising the price above the resistance.
Cycle of a marking Vaykoffa
The next phase of the price movement, Weikoff 's method calls a change in the trend in which the value of the currency goes beyond the trading range, heading for new highs. At this stage it is proposed to work exclusively according to the trend, to use kickbacks to find purchase zones. At this stage we will either enter the market or be added to already open positions. The marking cycle is accompanied by growing volumes and new local highs. The accumulation of funds in the previous stage was completed and there was a trend movement.
Cycle of distribution Vaykoffa
After a long rise, the price rests against the ceiling, the maximum is re-tested. A failed attempt by buyers to break through to the new vertices means that the distribution phase begins. This stage is similar to accumulation, when smart money ends purchases and begins to gradually record profits. They cannot close their positions dramatically, as it will disrupt the balance of supply and demand. To prevent it, they start the game. Moving the price up and down, within the trade corridor, gradually closing positions and attracting new buyers to the market. Inexperienced traders hope to continue growing when they see a continuing trend figure like the myforex flag on the chart. In fact, by selling everything that was bought in the previous rally and accumulating funds in the hands of buyers, large investors are preparing to move to sales. Having managed to redistribute funds, the distribution cycle often ends with growing volumes, against which the market remains in a lateral trend. It 's market makers responding to bulls "attempt to go to new highs. When the price leaves the distribution area down, buyers understand their mistake, start closing Stop Loss deals or manually, which leads to an acceleration of the fall. The Weikoff method is intended to help the investor distinguish between the figures of continuing the trend and the manipulation of the market by large players.
Cycle of a markdown Vaykoffa
The last cycle of price movement the Weikoff method defines as a markdown. This stage is dominated by supply, and the price goes down almost without stops. Our task is to watch the market, to look for points to strengthen our position. The markdown cycle ends with the accumulation phase.
Weikoff 's method of trading introduces the concept of bottom climax sales. The climax of sales is the ending of a panic rid of a certain currency. As a rule, this process is accompanied by large volumes when sellers are desperate to reduce losses. The price chart is pointing down and aiming for important lows. Often, after sales are complete, the market unfolds and begins to crawl slowly up on small volumes. Uninitiated investors seem to have experienced a reversal, but in reality only the second wave will show the strength of buyers, their willingness to change the trend.
If buyers were not going to hold their positions for a long time, they will finish sales in the area of local highs - sellers will re-enter the game at these levels. Weikoff 's method calls this movement a technical correction. If the supply of sellers is much stronger than the demand of buyers, the market will react by falling prices to new lows.
When the exchange responds to technical correction with declining volumes and the price keeps above lows, it is a sign of the end of the sale and stabilization in the market.
Weikoff 's methodology suggests opening deals to buy after the climax of sales:
At the bottom point, at the bottom of the market, with the installation of a small stop loss;
When testing the bottom of the market again, on falling volumes. The ideal situation is when the price does not reach a few points to the local minimum. It is considered the most favorable point. Support zones can be tested several times before a bull market is formed;
The least successful moment Weikoff calls the local top. Highest price, place of correction and resistance level. Here the investor has to buy on growth, and Stop Loss carry below lows.
Each market participant makes a trade decision based on the analysis of news, the alleged reaction of other players to them, takes into account rumors and advice of other traders. It may seem that Weikoff 's method is merely a reflection of the principles of technical analysis. We see such figures of reversal and continuation of trend as: double top, head and shoulders, flag, pennant Forex, figure of wedge, saucer. In fact, Weikoff 's signals explore the psychology of the behavior of large and small players, and given all the factors: psychological, technical, fundamental help to find entry points into the myforex market.