Alan Solarsh (the “passive income guru”) explains why Forex prices move: basic supply-and-demand among millions of traders and the clustering/activation of pending orders (buy stops/limits and sell stops/limits) at specific price levels causes spikes, bounces, and sideways action. He walks through order types and how to place them on a mobile MT4 app, demonstrates live price examples, and argues that many traders use key moving averages (34, 50, 100, 200) as activation points, which concentrates orders and creates noticeable reactions when price reaches those lines. He also outlines a short-term strategy using Doji candles, the 8-period exponential moving average and the stochastic oscillator, and emphasizes looking left for nearby support/resistance and matching the timeframe (example: 5-minute chart behaving like a downward trend).
Questions this video answers
34, 50, 100 and 200 moving averages.
Doji candles, the 8-period exponential moving average (8 EMA), and the stochastic oscillator.
Chapters
Alan Solosh here, the passive income guru in this video tutorial explains to you why the price moves and fluctuates in Forex.
Right, so you know the price goes up and down all the time, but what actually influences and why does the price go up and down all the time? So the reason that the price goes up and down all the time is because this is a supply and demand business. So the more people that want the currency, the higher the price will go and the less people that want the currency. Obviously the converse will happen and the price will then go into a short or a bearing and will be a bearish, you'll be in a bearish type of market and environment. So what's interesting to note is that there are millions and millions of traders in.
In, in forex and on the market. So they obviously are influencing the price. But why is it that the price seems to jump up above in certain areas, seems to like spike and carry on. And why is it that sometimes during the day or during the week the price seems to be going in a sideways market? Well, let me show you something very interesting and I think this is going to astound you. First I want to discuss with you the, the types of.
Orders that exist in Forex. Firstly there is the immediate execution. So when you actually on your phone and you're about to trade, so let's do a trade and you get to the screen over here, you can see that we have market execution and that is when you enter the forex market immediately. So you buy and when you buy you've already bought the currency. But if you touch over here on market execution on your phone, it opens up a drop down menu and you've got buy limit, sell them a buy stop and sell stop. So let's, let's have a look and see what those, what those functions actually are. So when you create a buy stop it means that you're saying that these are orders that you place so you're not entering into the market at the exact minute that you press on the buy or sell button. Okay, so this is an order that's going to be placed. So let's say that you create an order and you're telling MT4 that when the price goes through the price point that you specify, okay, that's when the order is executed. Conversely, for a sell order, when the price drops below your specific price point, then your order will be executed. Now let's, let's go and have a look at that on the, on the phone. So let's do a Buy order. So we're going to look at bitcoin. Let's look at the bitcoin chart and we saying that when the price hits we're going to do actually a sell order because the price I think is going to come down. And let's do it at 1.14373.
Right. So there it is there. We've placed the order. Now if we go to the trade section, you will see here, this is an order over here. So this is. So let's open it up and we can see the price it is currently. Where is that?
Three eight four. So it's on. The price is one four three three seven three. So let's actually do it. Let's enlarge it. Let's go to one minute chart so we can actually see what the spread is.
So let's do it over there. Let's create a new order and we'll say.
1.4380.
Right. So there we go. So there's the sell, there's the sell stop. Okay, we've created two and if we drop it down you can see the price it's on 8:1. And when it gets to 8:O, the order will be executed and it'll come to the top here. So it's gone up a little bit. So we'll just, hopefully we'll get, we can get there. But I think you get the point of what I'm the exercise I'm trying to show you. So what I'm saying to you is, is that this, this is the interesting part. So this is why the price fluctuates in certain places. It's because you have lots of these buy orders and sell orders, these.
Moving averages. So the, so let's enlarge it so we can actually see what's going on. I'm just going to turn my phone to get give you a better, a bit of you here. So a lot of the people will place the orders a little bit above. Okay. So a lot of people will say let's create a buy limit. So when the price touches the red line or let's say you put.
Let'S say you put your buy limit over there. Okay? So you put your buy limit here. So when the price comes down to here, okay, the order is executed. Even if it goes past here, okay, your order still executed. So it's going down. If you've done a buy limit, that means you're expecting the price to go up and the price carries on falling down. Obviously you'll be in a deficit situation, you'll start losing money. But because it's on the, the 200 moving average, which is a key moving average, as I explained to you, a lot of people base their decisions on the 34, the 50, the 100 and the 200 moving averages. Okay? So swing traders, those are people that do trades over a long period of time. So they'll stay in the trade for, let's say, a week or a month or whatever. That's a swing trader. They all base their decisions on the 200 moving average. So when the price, so when you place a buy limit, when the price goes down over here, okay, and hits this line, okay, Even if it goes through the line, it will still activate. So bouncing carries on. So it needs to bounce and then go through. And when it goes through, it will activate, basically. Okay, so that's very interesting. So what I'm telling you is that the, when, when you get to, when you see the price at these key moving averages, the 34, the 50, the 100 and the 200, you'll notice that the price is going up quite a lot because these orders are being activated. So let's go and look at another chart. Let's go look at EJ and see if we can actually see any of these moving averages where we're close to. Okay.
Okay, so here's one. We're looking at the euro US dollar and, and you can see that we're on the 34 moving average. And you can see that the price hits the 34 moving average and then bounces right up. And you'll see that there'll be a lot of fluctuation now because there's lots of these buy orders, sell orders, buy limits and sell limits, or at least buy stops and sell stops, buy limit and sell limits in this area over here. So when there are more orders of, let's say, the buy limit, okay, so more people have put buy limit and, and buy stops in this area. These, these orders will then get activated and the price will go up. So conversely, if there are more sell limits and sell stops in this area, then obviously then the price will come down. But what is interesting to note is that there is a lot of activity when you get to these, when you, when the price gets to these moving averages and we can't predict, okay, Our job is not to predict. Our job is to follow a strategy. The strategy is the Doji, the 8 moving exponential, the 8 exponential moving average and.
The stochastic. To give us an idea, okay? And using that strategy, in this case being below the, the 8 exponential moving average. But, but we're on a, on a, on a five minute time frame. It still works. Okay. We should theoretically be in a downward trend. But we need to look left to see if we're on a point of resistance. And as you can see, a point of support or a point of resistance. And as you can see, we are basically at a point of support and resistance. There it is. So there, there it is. It's quite interesting to note that the price touched the, touched the line over here, which is the 34 moving average and then it bounced all the way up. Okay, so we could be in a retrace. No one knows. But at the moment we're in a, a, a downward trend. This is a.
A hanging man. This is a spinning top. So we haven't seen a Doji yet which is given us an indication that this will, that the price will reverse. What is giving this, the currency weight. For it to reverse is to note that we're on the 34 moving average. And we know that there are lots of traders that activate their orders on a 30 on, on these moving averages.
Most of them. The most powerful moving averages is the 34, the 50, the 100 and the 200. Okay. Not to mention the fact that we're also in an over sold position over here. So the chances of the price retracing above the 8 exponential moving average is very, very high.
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