The Market Facilitation Index, developed by Dr. Bill Williams, reproduces volume and price characteristics in order to make the trade more accurate. The indicator endeavors to establish the effectiveness of price movement by computing the price movement per volume unit.
This is accomplished by subtracting the days low from the high and dividing the result by the total volume. Nonetheless, if the current price candles MFI and volume are compared to the previous candles MFI and volume, the index starts to have some significant tradable data. This means that the amount of participants entering the market increases , therefore the volume increases and the fresh incoming players align their positions in the direction of candlestick growth.
Notice the long solid candles in the candlestick chart which indicates that the trend has begun and is picking up speed. It means that the market participants are indifferent and the price movement is small on small volumes. This usually happens at the end of a trend. It is highly likely that the market is being supported by broker speculation and not any significant client volume.
In this particular situation bulls and bears are fighting between themselves to see who will dominate the next trend. These battles are noticeable by the large sell and buy volumes. However, the price does not change appreciably since the strengths are equal. One of the competing parties either the buyers or the sellers will ultimately triumph in the battle. Usually, the fracture of such a candle indicates if this particular candle determines the continuation of the trend, or terminates the trend.
Trading too aggressively is perhaps the biggest mistake new traders make. If a small sequence of losses would be enough to eradicate most of your risk capital, it suggests each trade has too much risk. Think about what levels you are aiming for on the upside and what loss is sensible to withstand on the downside.
Doing so will help you to maintain your discipline in the heat of the trade. It will also encourage you to think in terms of risk versus reward. Your email address will not be published. Leave this field empty. Forex Multi Trend Market Signals: Trend and Reversal Trading: Leave a Reply Cancel reply Your email address will not be published.More...