Wednesday December 14, 2016 - 17:03:03 GMT
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How to master the art of price action trading strategy
There are many different ways of trading the financial instrument in the forex market. One of the most popular way trading the live currency rates in the market is by using the price action trading strategy. Due to its extreme level of reliability, the number of price action trader is increasing day by day.
If you truly want to become a professional forex trader then the price action trading strategy will be the best pick for you. There are many novice traders in the financial industry who mess up their trading chart by too many indicators. But if you are professional price action trader then you will always have a clean chart.
Bearish pin bar price action trading
Figure: Trading the trend line resistance with bearish pin bar
In the above figure, the professional traders used the bearish pin bar trading strategy to execute their short order in the market. The chart is extremely clean and very easy to interpret. Always remember that in order to draw a valid trend line you must have to connect three points with a sloping line. Professional price action first has drawn the trend line first and then executed their short order right after the formation of the bearish pin at the trend line resistance.
In order to master the art of price action trading strategy, you must know the highly reliable candlestick pattern in the forex industry. The engulfing pattern and the bullish morning star and the bearish evening star is considered to be the most powerful price action candlestick pattern in the forex industry. However, in the eyes of trained profession, the pin bar is also a great price action signal to trade the important support and resistance level in the market.
As a professional price action trader, you must know how to draw the support and resistance zone in the market. In order to execute perfect price action signal in the market, you must consider support and resistance level as a zone. Since price tends to respect a specific are rather than a level in the higher time frame chart. Make sure you always use higher timeframe price action confirmation signal before you execute any order in the market.
Trend line trading technique is another great way of executing high probability trade in the market. Most of the professional price action traders use the trend line support and resistance level as trade execution zone. Once the price hit the specific support or resistance level in the market expert wait cautiously for the price action signal to execute their orders in the market.
There are many novice traders who often forces the trend line to join with the higher highs or higher low in the market. But forcing a trend line to join the higher highs or higher lows in the market always create false support and resistance level for the traders. As a professional price action trader, you should never force the trend line to join with the connecting points. If you can’t manage three connecting points in the higher time frame then there is no possible trend line formed in that specific time frame.
In the eyes of trained professional trading along the long term prevailing trend always generate high-quality trades in the market. If you truly want to become a professional price action trader then you should always trade in favor of the long-term prevailing trend. Make sure that you are taking your price action trading signal in the higher time frame.
One of the most common mistakes that every price action traders makes in the early part of their trading career is not following the risk management factors properly. They are so biased with a price action trading strategy that they think every single trade in the market is going to hit their take profit level. But in reality trading is all about probability and it can never become a certainty.
Execution of 1:2 Risk reward ratio
Figure: Perfect example of money management
Though the price action trading strategy is extremely reliable and profitable but yet you should always follow proper risk management factors in your trading.
Trading the forex market successfully combination approach of fundamental and technical analysis. You might master the art of price action trading strategy but you must know how to do the fundamental analysis in the market. Fundamental news releases are considered to be the price driving catalyst in the market. As a professional price action trader, you must be well aware of the major news in the market and size your trade accordingly. Always remember the most of the major support and resistance levels are breached on the eve of major news releases in the market.
If you truly want to become a professional price action trader then you must have a solid trading foundation. Most of the price action traders are all aware of all different types of trading techniques and strategies in the forex market. After going through all the different stuff they have come to a conclusion that price action trading strategy is the best trading strategy. So, as professional price action trader, you must develop a strong learning tendency and you should always remain up to date with the major financial decisions in the market.
The price action trading strategy is extremely simple and profitable. Those who are trading the financial market for a long period of time with price action signal knows very precisely the power of this trading strategy. As professional price action trader, you must always trade the key support and resistance level in the market. And always make sure that you are executing your trade in favor of the long-term prevailing trend with proper risk management factors.
Article was written by Dwayne Buzzell
An economist, Forex trader and Forex writer. I have a keen eye for spotting international trading trends. My Forex experience as an individual trader has been thoroughly enjoyable and has brought significant returns for myself and my clients. More on my website: Forex Trader
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