In trading in the Forex Market, you should remember the word “KISS” which means “KEEP IT SIMPLE STUPID”. With almost every Forex trader utilizing trade off indicators and trading software, he somehow neglects one of the basic Forex Trading Strategy which is the Price Action.
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Forex Trading Strategy – Price Action Definition
Price Action is a Forex Trader’s way of looking at the market’s movement without using any technical indicators. It is basically the footprint of money. The exchange of money in the market leaves a trail and this trail is considered as the price action which is apparent on the price chart. If you will use the Price Action as a Forex Trading Strategy, you will be harnessing the power of price and be considered as a price action trader.
Forex Trading Strategy – Price Action VS. Technical Indicators
Most Forex trading systems are made of technical indicators or trade off indicators such as Moving Average Crossover, Overbought Conditions, Oversold Conditions and many more. Technical indicators are series of data points plotted on the price chart and these points are derived from a mathematical formula applied to the price of any given paired currencies. In short, it helps us see the other aspects of price.
Because of all these overwhelming technical indicators, one might be focusing more in using trading tools which draws him away from using the Price Action itself. Similarly to following other people’s hunches, one might hold on to these technical indicators to hope for a positive outcome of the movement in the market even though they really don’t understand or don’t feel confident about their decision in their trading.
Read more about Forex Trading Strategy: Price Action Trading Patterns
The reality of the Forex Market is that the price action itself is the end result of everything including all the variables connected to the market, so taking the price action for granted is considered to be a bad move. Most traders if not all tend to fall in the traps of easy money schemes through widely advertised Forex technical indicators, trading tools and other software which give off false promises. The truth is there is no easy way to success.
In order not to delay one’s success in Forex trading, it is strictly prescribed to use Price Action in Forex Trading. It is a strategy to eliminate useless tools and focus on important things. Not only that your time is saved and effort is lessen, it gives you a more accurate edge in identifying the direction of where the market is going. With that being said, the use of Price Action will give you a less hassle, no frill, type of trading from a naked chart than all the technical indicators combined.
Forex Trading Strategy – Three Points In Learning Price Action
- One Price Action Strategy At A Time – It is better to focus and master on one thing first then the next than having to learn plenty of things with little mastery of it.
- High Time Frames First – It is a way to prevent oneself from doing an over trade. With over trading, it will lead you to a natural death in the Forex Market. It is better to focus on high time frames first because you can benefit from the filtered price movement “noise” coming from the lower time frames hence improving your position towards the winning side.
- Learn From The Best – A wise Forex trader always learn from other people’s trading mistakes as to avoid any trial and error style of trading. It is a way to control the risk that trading poses. Mistakes that are made once are okay but when repeated, it is way beyond tolerable. Always learn from the best and proven Forex trader.
Bottom line is always remember the word “KISS” (one of the Best Forex Day Trading Strategies) and you will have an easier time in the Forex Market. Also, never ignore Price Action Forex Trading Strategy because it is one of the Winning Forex Strategies out there. For more Free Forex Trading Strategies, keep on reading! Happy investing everyone.
- Price Action Basics. Retrieved April 11, 2013. http://www.stratsforextrading.com/dokuwiki/doku.php?id=path_of_learning:price_action_basics
- A Beginner’s Guide to Forex Price Action Trading. Retrieved April 11, 2013. http://www.learntotradethemarket.com/forex-trading-strategies/a-beginners-guide-to-forex-price-action-trading
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