Secrets of price action trading strategy in the forex market
There are many different types of trading strategy in the forex market. Most of the retail traders use indicators based trading strategy and mess up their chart by using too many indicators. Trading with an indicator is not at all profitable since it creates too many false signals in the market. If you truly want to become a professional for trader then you need to learn how to trade the market using the price action trading signal. The price action trading strategy is nothing but the study of the raw price data in the market and execution of high probability trades in the key support and resistance level. Indicators can be your helping hand but being a professional forex trader you can never rely on indicators only. There are two types of indicators in the forex market. The first one leading and the second one is lagging indicators. Just by reading the name you can understand that indicators will give you early trade signals or late entry point in the market. But in order to trade the market profitable, you need to trade the live data of the market. In this article, we will be sharing some of the key secrets which made the price action strategy so much popular in today’s trading world.
Précised trade setup: Those who are trading the forex market with the help indicators knows very accurately that indicators can never give them accurate entry point in the market. To be precise stop loss and take profit levels are not at all accurate when we set them with the help of indicators. But the professional price action traders always have the précised entry point in the market since they wait for price action confirmation signal when the price hit the key support or resistance level in the market. Most importantly all the price action traders use tight stop loss by using the price action confirmation signal. They set them the profit to the nearest key support or resistance level in the market. If you trade the market with the price action trading system then you will that indicators are nothing but the waste of time and money. So it’s your chaise whether you will trade market profitable by using price action signal or lose money by trading with the indicators.
The solid reason behind each trade: Those who are trading the forex market by using the price action trading strategy knows exactly how reliable the price action setups are. Every single trade executed in the market based on price action trading signal have a definite reason. For instance, if you enter long in the market you will have proper logic behind your trade. Even if the trade goes against you then you will be able to give a valid reason why the trade has failed. In order to master the art of price action trading strategy, you need to know how to draw the support and resistance level in the market. If you don’t know how to draw them properly then price action signal will be of no use.
Higher time frame: Those who trade the financial instrument with price action trading strategy always use the higher time frame and trade in the direction of the prevailing trend. If you see the trading strategy of the struggling traders then you will see that most of them are using the lower time frame in the market. Using the lower time frame generate too many false signals in the market. Since price action traders always use the higher time frame in the market their trade setup has always had the added advantage of hitting the take profit level. In the eyes of trained professional trading the higher time frame allows the traders to execute high probability trades in the market.SO as a professional price action trader you should always focus on quality trade execution rather than quantity.
Risk reward ratio: Proper money management is the key to success in the forex industry. If you don’t have any proper risk management factors then you will never succeed in the forex market. Those who are trading the forex market for a long period of time always use high-risk reward ratio in the market. By trading the forex market with price action signal you will always have excellent risk reward ratio trade in the market. All the professional price action traders always make sure that their winner is bigger than their losers. A proper risk management factors will help to become a profitable trader in the forex market even after having more losing trades in your portfolio.
Market emotion: Sentiment analysis is extremely important in forex trading. If you go through many different types of trading strategy then you will understand that none of the trading strategies comes with the sentiment analysis. But when it comes to price action trading you are assessing the market sentiment when you assess your trade setup in the market. All the candlestick in the chart tells a different story to the price action trader. Being a price action trader you will know what to do when a specific setup pops up in the market.
Summary: Trading the financial instrument can be extremely difficult if you are relatively new in this industry. If you truly want to become a professional trader and live your life by trading then it’s highly imperative that you learn price action trading strategy. By becoming a professional price action trader you will know the market sentiment better than anyone else in the market. It’s true that in the very beginning you will have some difficulty. But if you are truly committed to learning the art of price action then it will enhance your trading performance in such a way that you could have never imagine.