The novice traders have a lot to learn from the expert traders. The expert traders know the INS and OUT of the Forex market. However, knowing the details is not enough. You have to create a strategy to find potential trading signals. Indicators and EAs are mostly used in the development process of strategy. However, these are considered as helping tools. If you truly want to get into the manual trading strategy, you have to focus on the core price movement. Learning about price action strategy will give you the insight to trade the Forex market like big players.
This article is going to act like the beginner's guide to master price action trading strategy. Spend 5 minutes on this concept and you will never regret it as a trader.
Definition of price action trading
Price action trading is the process of placing a new order in the Forex market by analyzing the Japanese candlesticks. The candlestick has a lot to tell to the traders. Those who have the knowledge to decipher candlestick patterns are known as price action traders. For instance, with the help of the bullish pin bar, you can trade the bullish support of the trend line. A single candlestick can provide you vital information to place the stop at the perfect place.
Learning the major patterns
Hundreds of candlestick patterns are used by the different levels of price action traders. However, memorizing all these patterns and implementing them in real life is not so easy. Instead of thinking about the bigger scenario, you have to focus on the major patterns. For instance, having fair knowledge of the engulfing and pin bar pattern can significantly improve your trading edge. With these candlesticks, executing the orders in the Forex trading account will be very easy.
Support and resistance
Educate yourself properly so that you can find the key support and resistance level in the major pairs. If you use the candlestick patterns to trade the minor levels, you will often lose the trade. On the contrary drawing, the levels using the daily swings and major pivot points increases your profitability factors. You can get the idea of support and resistance level trading system by reading some articles but you must practice trading with the Saxo demo account to master the true method of finding such a sweet spot. Forget about the aggressive methods in trading and try to learn more about the use of premium tools. Use them as your arsenal and look for the most profitable setups.
Compiling your strategy
The beginners need to compile the concept of candlestick pattern with support and resistance level. This is a very tough task as you will spot many reliable signals at the minor trading zones. The market might start moving along the trend just by finding some decent push from the minor trading spot. So, it’s very obvious, trading the minor support or resistance level is profitable. However, you have to focus on the improvement of your accuracy. Dealing with the minor levels reduces your trade accuracy and makes you a loser.
Changing your trading style
You have to change your trading style based on the initial performance in the demo account. Losing most of the trades based on some particular candlestick pattern indicators, the strategy is not working. So change the candlestick patterns and see how it works. Once you find the perfect method, it’s time to find your desired trading session. This is also very important in the assets selection process. Assume you have gone long in USDHK pair based on the bullish pin bar. But you are during the London session. So expecting a decent movement will be a big mistake. Find the active trading hours to find the volatile market condition. Use these simple methods and placing the quality trades using the candlesticks will be easier.