Price Action Trading
Price action trading is key to trading in forex because it gives you the power to see clearly what the buyers and the sellers are doing in the market. It is a concept that help you to take off all the indicators on your charts and leaving it plain, in a way that you can see the raw price bar of the chart. Most of the successful traders out there, use candlestick charts to make their money, and they trade primarily keeping it simple. Price action trading has no universally accepted definition among traders, I will say that it is a technical analysis that describe the characteristics of price movement in a chart in any market. The smallest move that any market makes is one tick (one pip for the Forex markets, although pips are now often subdivided into tenths, which most of the traders out there ignore). If a market moves up one tick, it is because there are not enough sellers at the current price movement to fill all the buy orders, and the market has to go higher to find more sellers at a point. Also, if it falls one tick, it means that price is searching for low level to see if there will be enough buyers to take the other side of the bears.
This type of trading can be applied to Intraday or swing trading. As an intraday trader, all you want is the ability to analyze the market to see if it will go far enough for you to make some profit when buying or selling a currency pair or stock etc. As a trader, all you should be worry about is the price action trading because that is what is happening on the chart between the buyers and sellers. One big secret is to know what the market is doing at a given time. The market price move in uptrend, downtrend or sideways so knowing that goes a long way to help you as a trader to know when to buy or sell only at some level in the market. When the market is trading sideways, I will recommend that you stay out or trade it if there is something that works out for you. Trading becomes simple when you keep it simple by trading with a plain chart. Always trade the strategy that best work for you that way it will become easier for you to move forward with your trading to the next level and begin to realize some profits. When you observe that a strategy is not working well for you then you should not hesitate to stop and try to find out why and if at the end of the day, you see that it is not really working for you then change to another price action trading strategy that will make you profit.
In recent time trading has become very competitive with the presence of auto trading software so I will recommend that if you are trading as an intraday trader then consider trading lower timeframes like 5 minutes candle chart which is going to help you a lot with your money management each time you go wrong whether you are trading one ration one or using a trailing stop. I observed in trading, those that trade higher timeframes or swing trading, it works best for them because it is an investment trading, where investors know or have deep fundamental knowledge of the market trend, going up or down within a period. The higher timeframes are mostly use in options trading.
Does candlestick chart patterns work?
This is this question most traders out there don’t ask themselves. The reason why 95% of traders are losing while 5% are winning is because the 95% of traders did not know what the 5% know about the market. When you look at most of the trading websites they offer free beautiful pdf with rules on candlestick chart patterns. The professional or profitable traders does not trade using the free so-called candlestick chart pattern pdf rules, the professional traders do totally ignore the so-called candlestick patterns and often buy at the bottom of a strong bear candle or and sell at the top of a very bullish candle pattern. Why do you think the professional are having an edge in the market? Because they know what you don’t know which gives them an edge to make money. If those free candlestick patterns pdfs are revealing the full truth about price action trading then 95% of the traders will be making money but reverse is the case as only 5% are the ones making money. The truth about what most traders read about candlestick patterns is nonsense because it doesn’t work and the professional traders doesn’t use it to trade, that is why they have an edge over others and they are the 5% group of traders making money.
How to Trade Price Action
The way to trade price bar is by looking for a setup that is composed of two things, a signal and confluence. Confluence (different clues) factor is an important concept in trading. A lot has been written about candle bar signal which is not true in trading. I will say from my experience that without a signal and confluence a trader should not take a trade. One key factor is by knowing what has happen in the past, I mean all the bars to left should be supportive of your trade. A good-looking signal in a range or consolidating market often lead to losing trade. A trader should always look for other reasons to take a trade, for example, market price being at a strong support or resistance level. I hope reading this article on has help you with some important tips. I discussed it in detail in my price action trading course.
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