There are many traders who have spent many years in the forex market yet struggling to make a consistent profit. They have gone through all the indicators and much different trading strategy but none of them tends to fulfill their purpose. On the contrary, there are many traders who have enlisted their names in the professional trader’s list by mastering the art of price action trading strategy. But before you switch to price action trading you must understand that success lies in simplicity and clarity. Price action traders simply use the raw price data in their analysis and execute the best trading setup. Before you read the next part of the article think again whether you can through all the messy indicators in the trash and start your trading career with a whole new different angle. If it’s a yes, then congratulations to you since, you have just stepped in the right path.
Price action trading is considered to be the most advanced trading forex strategy in the financial industry. Many professional traders use this trading strategy in their full-time trading career. They are making a consistent profit by trading the financial instrument just by using different candlestick patterns along with other technical parameters. Before you go deep inside make sure you have a clear understanding of the forex market. You must know how the forex market works and the important driving catalysts in the market. You must have a solid trading foundation and a clear understanding of this industry. There are many different online resources from where you can get all the details needed to become a professional trader. So if you think you have to lack in understanding then you should recover the lacking by your heart before you move to price action trading.
There are major three types of analysis in the forex market. You must learn all the three types of analysis if you truly want to become a professional price action trader. Fundamental analysis is the study of economic new releases which helps the traders to forecast the next possible price movement of any currency pairs. For instance, if US hike their interest rate than we can easily assume that the country economy is doing well and it’s time to buy the US dollar. On the contrary, technical analysis is the study of chart pattern and price movement. Traders use different trading tools and indicators in their technical analysis in order to find possible trade setup. Last but not the least is the sentiment analysis of the market. The market sentiment is dangerous factors which can totally control the price regardless of fundamental and technical analysis. So you must master this three analysis technique before you go to the advanced level of price action trading.
As price action traders you must have to identify the potential support and resistance level of any currency pairs. These are the trading level which the professional traders use as potential price reversal zone. There are many different types of candlestick pattern in the financial industry which gives us a strong indication of price reversal and continuation. For instance, if you find a bullish morning star in the potential support zone of any currency pair then you can easily enter long into the pair. A bullish morning star in the potential support zone usually represents bullish price reversal in the pair. Trained professional uses tight stop loss while using the price action confirmation signal. Different price action candlestick tends to have different reliability. In general when price action signal is traded in the higher time frame traders get the better result. Trained professional always trade in the direction of the prevailing trend when they use candlestick pattern. There are some experts who can pin out the tops and bottoms of the currency pairs by using technical and fundamental analysis. Once the market rejects a key resistance level or bounces back from the support level they enter the trade with valid price action trading setup.
The price action trading strategy is based on candlestick formation. Traders can use signal or multiple candlestick patterns during their analysis. Different patterns tend to have different reliability. The most popular pattern in the forex market is the bullish morning star, bearish evening star, engulfing and pin bar pattern. Due to their high reliability and success rate, many professional traders simply follow only these types of price action setups. Though these are extremely profitable reversal setup but imperative that traders know all the different types of candlestick formation including its meaning. But before trading the important candlestick pattern it’s imperative that traders know how to draw valid support and resistance level in any financial instrument. Those who are trend traders can trade the trend line with candlestick confirmation signal. Different types of chart patterns like head and shoulders, a triangle pattern, rectangle pattern can also be traded with the great level of accuracy by using continuation candlestick formation. To be precise, price action trading strategy comes with the complete trading solution for all level of traders.
Summary: Forex market is high leverage market which means there is an endless possibility to gain and lose. Trained professional always trade the market with the reasonable trading decision .They use price action confirmation signal formed in the higher time frame to trade the market. Though the price action trading strategy is very profitable yet traders always use the golden formula of success that is money management. They always make sure that they are going to lose less compared to their winning trade. This allows them to stay profitable even after losing more trades. Always make sure that you enter the market after completion of the price action setup. Don’t just rush and try to catch a falling knife. The market will always give you better trading opportunity to make the profit. Keep your chart clean and trade the important level of any financial instrument using highly reliable candlestick pattern.