Principle #4: Price is more Important than Time

 

Many retail traders today are obsessed with the timing of their trades – and they pay good money to learn various techniques to decide when to enter and exit the market.

These typically include some combination of technical indicators that supposedly provide accurate entry/exit signals.

Now, I’m not going to tell you that timing techniques aren’t important, but what most people don’t realize is that the timing of trades is only effective in the context of the current price level.

You see, for us to sufficiently profit from a trade entry signal, the market price must have significant potential to move further in the anticipated direction.

For example, a trade entry signal to “buy” is dangerous if current prices have hit a historical resistance area. The same entry signal however, would be a lot more effective if current prices are near a support area, in an uptrend.

You see, when people decide to buy/sell a certain currency (or pretty much anything else), the operative factor is the relative price. The timing is of secondary importance.

To understand what I mean, allow me to give a non-currency example.

Let’s say you run a gold dealership that specializes in gold coins and bars.

You buy gold from various suppliers as well as from walk-in customers.

You sell gold to anyone who is willing to pay your listed price. In addition to selling at a small mark-up for your efforts, you want to profit from the fluctuations of gold prices in the open (financial) market.

This means that when gold prices are relatively low, you want to buy (and hold) as much gold as you can get your hands on. When prices are relatively high, you want to sell as much of the gold as people are willing to buy from you.

 

This may seem like a no-brainer example, and that’s exactly my point.

Whether it be gold, pork bellies, currencies or orange juice, all markets are driven by the basic premise of whether prices are relatively high or low.

If the price of gold has been ranging from $1,800 – $1,900 the past 4 weeks, would it be a good idea to BUY more gold when the current price is at $1,899? Even if your indicators show a “buy” signal? (hint: the answer is no)

We’ve all heard of the phrase, “buy low, sell high”.

These days, a variation of it, “buy high, sell higher” has become increasingly popular.

But regardless of your trading philosophy, both methods require you to understand something about what is considered to be ‘high’ or ‘low’ – and this refers to the context of price.

The point I’m trying to make here is that no matter how many entry/exit techniques you’ve acquired, they are unlikely to keep working in the long run unless you have a view of the bigger-picture that tells you whether prices are relatively high or low.

In my candlesticks e-book, I mentioned that being a trader is like being a detective. Candlestick analysis is what we use to gather “evidence” of where prices are likely to move next. But doing this without the context of the current price level is like looking for evidence at the wrong crime scene.

We can only make a profit when we sell at a higher price level than we buy, and vice versa.

The timing matters only when it coincides with the right price level to buy/sell.

 

The Right Price determines the Right Time

(not the other way around)

 

So think about how you’re currently taking trades.

Does your trading method place emphasis on the price, or the timing of your trades?

 

What Do You Think Of Principle #4?

Let Me Know In The Comments Below!

 

Next: Principle #5

Click here to read Principle #5

 

Your Comments (42 comments so far)


  1. Don

    Chris since I have never traded anything beofre, unless of course you include baseball trading cards when I was very young, I am wondering just how much your candlestick course can teach me. I am assuming that your course mostly just teaches different candlestick patterns in which one could trade, but doesn’t really teach one the mechanics of actually trading and learning how to trade.

    Your comments would greatly be appreciated.

    Take care of yourself,

    Don


    • Chris

      Hi Don,

      The mechanics of trading baseball trading cards is similar to trading any financial instrument… the difference being the reasons why they are valuable, and why people trade them. In the end, it comes down to demand and supply.

      It is perhaps better for me to share with you what the Candlesticks Made Easy e-book is NOT about, rather than try to tell you what it is (you can find this out at the website)

      1) It does not cover the mechanics of how to trade, such as how to install the trading platform or calculate trading lot size etc.

      2) It does not teach different candlestick patterns per se. There are 5 particular patterns to pay attention to, but the core of the e-book is not about memorizing patterns. It is about teaching you how to read and understand candlesticks so you don’t have to memorize anything. Again, this has to do with demand and supply in the market.

      Please feel free to drop us an email at support[at]pipmavens.com if you require further clarification or have any other questions.

      I hope you’re enjoying the Manifesto so far.

      Cheers,
      Chris


  2. Don

    Yes Chris I am certainly enjoying your manifesto so far. It is somewhat (to say the least) very interesting. I sent you an e-mail thru the regular channels with a few questions about your candlestick course. I see here that you have basically answered my few questions about your course. Any suggestions as to where I might find somebody that may be able to actually teach me how trade with some degree of competency and hopefully with some success?

    I am certainly glad that you have “resurfaced”. I have always enjoyed your e-mails with the info. that you have put into them.

    Take care of your self, Don

    P.S. How can I get to your candlestick site? I would like to read more about your course.

    Thanks again


  3. Umaru

    H!
    Hmm! Ride on Mr. Chris.


  4. john

    very interesting concept, not as exciting as scalping but perhaps more reliable.


  5. michael

    I THINK UR EXPLAINATION ON TIMIMG OR/AND PRICING

    IS FANTASTIC. VERY SIMPLE & PRACTICAL IN ALL SENSE.


  6. jeff

    Chris,
    Have thoroughly enjoyed your manifesto so far. I especially like that your approach is simple while based on sound fundamental elements of trading, not that I am an expert by any means. I still consider myself a beginner as I havent made any “real” money in the forex market yet. One thing that really hit home with me was with Principle #4, as I think timing is imperative in any business venture or transaction. I make some extra income by playing poker, where many if not most approach the game as pure GAMBLING, they treat it like the lottery, when in fact if you peel back the many layers of the game it becomes a business where discipline and timing will make or break you, much like the forex market it becomes not an issue of IF you should bet/buy/sell rather WHEN you should. Thanks for sharing your common sense approach to the markets,

    Regards,

    Jeff


  7. Chris

    Hey guys, thank you for the encouraging comments! They are truly appreciated…


  8. Frank

    Hi Chris
    Thanks for Principle # 4.
    Many wise words spoken. Thanks.
    I am looking forward to Principle #5.
    Kind Regards
    Frank


  9. gbenga

    Mr Chris, i have been jumping from one method of trading to another, yet nothing to show for it after 5 yrs of trading. what i really need is what you are sharing with us right now. GREAT PRINCIPLES from Great Mentor, THANKS


  10. Tony Groot

    Hi Chris
    Plain down to earth common sense, I have fallen for it at times.
    Thanks for re-enforcing it.
    TG


  11. Gina

    Hi there!
    What can I say?
    I actually thought the same thing would you beleive it about the price.

    Look forward to N5 of Manifesto!!!!!
    Take care
    Gina


  12. Frank Lobach

    Hi Chris, I am surprized at the low number of comments so far,although a lot read and move on I guess?I think you are brilliant and spot on with all you have said so far ,[so much is basic common sense though, that most most people have lost the ability to see anymore],and I have thought along the same lines for a long time.My problem is that I do not retain a lot of what I learn ,unless I re-read or watch it a lot,and as such ,have collected an enormous amount of material,systems, methods,quite a few EA’s[no good so far].I read articles like yours, and immediately remember [ and agree with] similar info,but when I am trying to formulate a plan,I forget it until it is too late.I am about to list and then prioritize what I have collected,and try to sort out what to select to develope a simple,end of day,longer term trading plan that will let me have a life, another income stream,and be able to ignore [more easily] all the stuff coming at me every day here.I really have difficulty deciding what to read,as even just sorting out the junk and ditching it takes more time than I am happy with.
    I am very glad I came across your e-mail and did not ditch it.
    Thank you for your input ,very much.


    • admin

      Hi Frank,

      Thank you for your comment!

      Yes, I really get what you’re saying. I’ve found that it’s usually the fundamental (yet effective) knowledge that often gets replaced by short term, exciting tactics that don’t work in the long run.


  13. johann

    great stuff my friend – really appreciate your input and kind gifts


  14. BRAZILIANVINI

    Hello Chris! Okay? I speak here of Brazil.

    I’ve been following your report and I enjoyed the first four principles. I’m waiting for the next and final principle to know the answer to the big question …

    First, I wonder if I can apply their knowledge reported here in the manifesto on the Forex market to use in Binary Options?
    The book you sell on the site is only for Forex http://www.forexcandlesticksmadeeasy.com/ or can I apply it to binary options as well?

    I’m new in negotiations and started to learn a little about binary options through an Internet forum, and it is a new type of investment that allows profits in shorter periods as 5min 1H.

    Anyway, if the methods are only for the Forex market, I first of all congratulate him for his material available here, by the extreme clarity and quality of its information. You were also very straightforward and advice regarding the most appropriate methods to make profits in forex long term. It really is something that a lot of confidence for someone who is starting out in Forex market and still has a few concepts to learn.

    Thanks again!


    • Chris

      Hi Brazilianvini,

      Binary options are a derivative of the spot Forex market, so the concepts remain the same. However, do be aware that there are some differences when it comes to practical application, simply because the instruments work differently.


  15. Tomas Tabilo

    You sir have been read all over the world, greetings from Chile.

    It all makes much more sense for me now, still can’t quite believe someone would just give away such awesome knowledge and understending of a matter, you’re ok man hahaha.


    • Chris

      Hi Tomas,

      Much appreciated. 🙂


  16. Captain Rusty

    Chris great stuff ,, its a eye opener….. Thanks Rusty/ from my sail boat here in the U.S.V.I.


  17. Bhagirathpuri Goswami

    It is alright that the price is important than time.Good thinking.


  18. Helmut Thoma

    Hi Cris,
    Every successful trader will agree that managing the trades correctly is the #1 key to consistent profita.


  19. maxwell

    Dear Chris,

    Thanks for the retail forex manifesto. When I read the the chapters, most of the things you’ve discussed about forex trading I have gone through the process… won some profits but lose many profits along the way. The manifesto shed some light on why I and 95% of the retail traders out there still not making any decent income from the world of forex. So I am looking forward to the final chapter…. Thanks Chris for your sharing…

    By the way, are you planning to have a trading course for fx retail traders? Many of us wish to make a decent n consistent income. I not saying I’ll be a millionnaire overnight, but earning a few hundred extra a month wouldn’t hurt in our present state of the world economy.

    Hope to see you soon Chris…

    Thanks

    Max


    • admin

      Hi Maxwell,

      Thanks for the comment!

      Yes I do offer a FX trading course, but it’s not for everyone.

      Just stay on the mailing list and I’ll send you the details over the next couple of days.

      Cheers.


  20. paul kirschke

    good info to pay attentuion too.reminds me of what I have forgotten..
    lets see the rest…


  21. david

    this is nothing but the truth buy low and sell high thanks a lot


  22. Terry

    Chris,
    Thanks for the manifesto. Ironically alot of what you said sounds intuituvely correct and especially the last part really gave me one of those “I thought so” moments! I, like many I believe, was one of those people always looking at charts thinking that there “must” be a better way to do this…… since I wasn’t very successful it wasn’t a difficult presumption 🙂 So many people have said that you shouldn’t need to spend more than 30 minutes a day or a week analysing and setting up your trades. Your 4 part series reinforced my own thinking that this was taking waaaay too much of my time. Looking forward to what you have for us next!
    Cheers, Terry


  23. Richard

    Hi Chris, don’t know what to say except it is typical case of not been able to see the trees for woods in other words,I find I get caught in all kinds of documents freely available on the net so your logic reasoning does not function. Once again for the super eye openers and for making it so easy to reasoning logically many thanks
    Richard (South Africa)


  24. anwar

    Well that was my game.


  25. Cesar Ruiz

    Chris,You are drawing the picture very clear. Now we need to collect evidences about the future of the price. Excellent!. These words sound like my granfather´s, life is easy, we make it hard. Thanks a lot agin.


  26. Gerry

    The buy high and sell higher seems to be the modern way of thinking. Totally too risky!


  27. margaret

    Hi Chris
    Thanks for your practical simple approach to the market.
    your efforts are highly appreciated


  28. sean bensberg

    Yes, think I understand principle 5, price is more important than time,


  29. Zam

    True.


  30. Tezcan Cirakoglu

    Support – Resistance & Trend Lines were ok for me, i added candle stick analysis and price action to the portfolio 😉


  31. JM

    Chris, You are hitting all my week points so far. There is one more thing I hope you can shine some light on how to find an honest broker. Thanks so much for teaching. JM


  32. kenneth

    Thanks Chris for your trading advice. I would like to use your principles to construct a trading plan with a training method on how to trade. Could you advise?


    • Chris

      Hi Kenneth,

      Look out for an email from me soon.


  33. paul

    Very enlightening,Chris & straight to the point


  34. olabinjo jide

    I will just thank you for sharing all this information to me indeed u are saving accounts from burning


  35. Jivan

    You are absolutely right! Price is the best timing indicator. Never lagging. But the most important aspect in Forex remains the psychological attitude. Traders must stay “ZEN” all the time, under any circumstances: very flexible, focused, ready to change his trade with no fear, no greed… just like a warrior, protecting his wealth all the time. Thank you Chris to share your experience with all of us. Great job!