Price Action Strategy: A Quick Guide for Forex Traders


Are you a Forex trader? Be confident about the assets you purchase using accurate Price Action Trading Strategies listed here!

Are you new to Forex trade? As a trader, you will want to keep track of the stock market trends. One of the key trends to focus on is the market price. Trading with price action lets you observe the market and make informed decisions.

This article will explain what price action trading is and why you need to consider using its strategies if you trade Forex.

What Is Price Action Trading?

Price action trading is the study of market price trends with the intention of making purchasing decisions based on observations made. This method is based on the fact that all there is to know regarding a market is found in the price. Studying the price shows traders if stock prices are going up or down.

As a Forex trader, you can receive misleading information regarding what assets to buy. Trading robots or indicators will entice you. Nobody likes to do unprofitable business or to make losses.

Price action trading allows you to analyze all active buyers and sellers in the market. This method of trading is applicable in all financial markets, including Forex. Price action trading is the highest-probability way to trade. Once you learn how to read the price trends, you can easily predict the future of an asset before you invest.

Why Is Price Action So Popular Among Forex Traders?

People who have been trading Forex for a while love price action trading. Here are the reasons why:

  • The Forex market is mature. It is easy to track price trends and make reliable decisions. You can easily spot the patterns, too, which help make predictions.
  • The Forex market is liquid. With price action trading, traders can easily open and close positions. You can trade in and out of markets within no time.
  • A small deposit in Forex trading goes a long way. You can manage a large position and make big wins.
  • Forex prices are constantly changing. But big highs or lows are uncommon. Even new traders trying out smaller trades can easily use these price trends.

Top Price Action Strategies That Can Be Applied By Forex Traders

Now that you are familiar with price action trading let us look at a few price action strategies that will take your trading experience to the next level.

Candlestick

Traders observe candlestick patterns on price trend charts. A pin bar with a candle shape is used. The pin bar represents the rejection of a price, while the tail represents the range of the rejected price.

The price is expected to move in the direction opposite to the tail. With this information, you can decide whether to make a large or small investment. 

Inside Bar

This strategy uses two bars. The inner bar is usually smaller compared to the outer bar. Inside bars appear during consolidation in the market and often signify that the market trend is about to take a turn.

As a trader, you can use these to your advantage. Inside bars will help you determine if the price will go up or down.

Forex Price Action Scalping

This strategy is helpful to traders looking to make short-term trades. Filters guide the trader in determining the trending markets. With this information, a trader can decide whether the buyers or sellers control that particular market.

Trend Following Retracement Strategy

In this strategy, the trader simply goes with the existing flow in price trends. For instance, if the trader observes that the prices are constantly going down, they will choose to take a short. If prices continually go up, then the trader makes a large investment.

Conclusion

Forex trading is a lucrative industry that most people take an interest in. To succeed and make large profits, you need to use reliable strategies. Strategies that involve observing the price trends are the most accurate. One such is the Price Action Strategy discussed in this article.

FAQS

  1. How can I read Price Action?

Data on price action is usually presented in bar or line charts. When you get hold of the chart, you first identify the direction of the price and then the direction of volume. If the price and volume increase simultaneously, it means that many investors are making purchases as the price goes up. However, if the volume is low, it indicates that fewer investors are making purchases.

  • Is price action trading accurate?

Price action trading strategies have a success rate of 75% and above. 

Reference Links

  1. https://www.avatrade.com/education/online-trading-strategies/price-action-trading
  2. https://www.ig.com/en/trading-strategies/top-7-price-action-trading-strategies-210510
  3. https://admiralmarkets.com/education/articles/forex-strategy/forex-price-action-trading-strategy
  4. https://www.thebalance.com/what-is-price-action-trading-1031471
  5. https://www.investopedia.com/terms/p/price-action.asp

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