Forex Price Action

[ameyalokras]

Hello, I have just started reading forex education material so please bear if this is really stupid, I am confused how price action is driven in forex market.
In a typical stock exchange, when you need to buy or sell an equity, your order is executed in the exchange and because of your order execution the price of that particular equity changes. Then the exchange finds appropriate counter party for your trade and finally its settled and your equity is bought / sold.
But in spot forex there is no exchange. All the trades are done 'over the counter', so when you trade a currency pair, your order is matched to a counter party(traders/market makers/institutions) and the exchange happens. Now my understanding of price action is related with demand and supply, If a currency quote is lower, more people are interested in buying it which increases its price to a point that people aren't interested anymore, and vice-versa for sell.

But what I don't understand is because all the trades are over the counter, the number of buyer and seller should always be equal, because unless some one is willing to sell a currency who are you going to buy it from. And if there are always same number of buy and sell transaction occurring, why should the quote change.

 

[Pharaoh]

Things in OTC trading are a bit uglier than in exchange trading.

In some cases, your broker is a pure bucketshop. They get a price feed (and may manipulate it) from somewhere, but take the opposite side of client trades.

Next up is a "market maker". Some market makers are really just pure bucket shops, but others hedge themselves against real LPs every so often. Look for time limits defining scalping and you'll have a clue about how often they hedge themselves.

A true STP or ECN is supposed to pass trades directly into LPs. In this case, larger orders really can affect the prices offered by the LPs to all their broker clients.

 

[downtrend]

Price action is a great method of trading. Most of the traders that are successful use price action trading. Indicator based may work but in the long run, you need to use price action trading to become successful.

 

[EuroTrader]

Price action is a great method of trading. Most of the traders that are successful use price action trading. Indicator based may work but in the long run, you need to use price action trading to become successful.

Yes it is a fact that i am using the Price action in doing my trades and i can say for sure that now i am a very successful Forex trader

 

[downtrend]

Yes it is a fact that i am using the Price action in doing my trades and i can say for sure that now i am a very successful Forex trader

Indeed, when you truly understand the power of price action, you won't go for another method ever.