Thursday December 29, 2016 - 11:48:01 GMT
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Why should you use price action trading strategy?
There are a number of different ways of trading the financial instrument in the world. Some might be using indicators and other tools and some might be using price action trading strategy in the forex market. To be precise there are a countless number of ways of trading the financial instrument in the forex market. As a trader, you can choose any trading strategy at any time but if closely go through many different trading strategies then most probably you will pick the price action trading strategy.
What is the price action trading strategy?
The price action trading strategy is the study of the raw price data in the market. Most of the professional trader in the financial industry use price action trading strategy due to its extreme reliability and profitability. Compared to other trading strategy price action trading strategy gives the best trading environment to the professional trader. To be honest, if you use price action trading strategy for one month then you will never use any type of trading strategy in the forex market for the rest of your life.
Indicators based trading strategy: Those who are using the trading strategy based on indicators are often frustrated by a false signal generated by the indicators. They might be trading the financial instrument very successfully by using the indicators but in reality, they are doing too much work compared to other traders due to the use of indicators. On the contrary, if they use price action trading strategy they would be able to execute high probability trades in the market with the great level of confidence. They will never have to look at many different indicators for entering into a trade in the market. To be precise price action trading strategy is way more advance then indicator based trading strategy.
Key support and resistance level: In the eyes of trained professional the key support and resistance level are the best spot the trade the financial instrument in the market. If you use indicates in your trading strategy then you will never be able to execute your trade at the key support and resistance level. On the contrary, the professional price action trader always cautiously wait for price action confirmation signal to trade the key support and resistance level in the market. They simply know that price action candlestick pattern formed at the key support or resistance level will help them to make the huge amount of profit in the forex market.
Clean chart vs. messed up the chart: If you are trading the forex market with indicators and EAs then you will probably have a mess up the chart on your trading platform. Since most of the professional trader who uses indicators in their trading uses too many indicators for confirmation and thus messed up their chart. To be honest they rare see the different candlestick formation and the key support and resistance level properly due to their extensive use of the indicators. On the contrary, the professional price action trader always has a clean chart. They simply use some drawing tools to draw the key support and resistance level in the market. Once the market hit the key support and resistance level they execute their trade with price action confirmation signal in their clean chart.
Filter false signal: Those who are trading the financial instrument by the help indicators often incurred huge losses in the market due to a false signal generated by the indicators. There are tons of indicators in the forex industry and you can’t master all of them. Most importantly indicators are either leading or lagging which means they will not give you any data which can be executed on the live market. On the contrary price action trading signal is based on the formation of the different candlestick pattern in the charts as price action trader you always have the added advantage to trade the live market with the current sentiment.
Risk reward ratio: This is one of the best things that price action trading will offer to you. If you become a professional price action trader then you will see that the risk reward ratio in price action trading is extremely great compared to other trading strategies in the world. Indicators based traders usually take 1:1 or 1:2 risk reward ratio trades in the market. On the contrary professional price action trader always use 1:3 or more risk-reward ratio in the market.
Gives you better risk management factors: Money management has always been the key to success in the forex industry. If you follow strict money management then you will be able to minimize your loss to a great extent in the forex market. Compared to other trading strategy price action trading strategy offers the best risk management factors to the forex traders.
Summary: Trading can be extremely difficult if you are relatively new in this industry. But if you are committed to becoming a professional price action trader then you will have less difficulty in achieving your goal. In the above article, we have mentioned the key advantage of using price action trading strategy. So as a professional trader you will never get such unique advantage if you use any other trading strategy. It's true that you can still make money other trading strategy but compared to offered benefits by the price action trading strategy it's totally up to you which trading strategy you will pick. But to be honest, if you use price action trading strategy only for two months then you will never use any other trading strategy in the forex industry.
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