Monday, 16 September 2019

Get acquainted with Price Action Trading

We have discussed a lot about trading strategies with price action and how to apply them in various market conditions. For those who are not familiar with the price action method at all, this article which is based on the views of renowned trader Niall Fuller discusses the basics of price action and why a trader should apply this method.

What is Price Action?
The financial market is a place of sale and purchase of money exchange rates between market participants. This exchange rate leaves traces of price movements or price actions that can be clearly observed on the trading chart.

A trader will read, digest and ultimately open a trade position following the footsteps formed by price action. This way of trading is called trading with a price action strategy or trading with a price action setup.

In reality, the traces of price movements formed by price action always repeat under any market conditions. This is very closely related to the characteristics of market participants, where the nature of a person in general will be easily predicted when dealing with money. The actions of these market participants are clearly reflected in the formation of candlestick bars (if you usually use candlesticks in trading), or bars on bar charts that form a pattern of price movements that are repeated periodically, so prices This action can be used as a tool in trading to accurately predict price movements.

Not only in the financial market or the forex market, the price action strategy can be applied to any market because the nature and characteristics of the market participants are the same.

Trading with a price action strategy can be applied to any time frame, but it is highly recommended to use daily time frames given the accuracy of the data and signals generated, besides that price action is also suitable and easy to apply in the forex market because more continuous trending patterns occur than with other markets.

Why Use Price Action?
Actually it is easy to answer, because price is a basic element in the financial markets. Like a book, if you do not know how to read it, you will not know what the actual contents or stories conveyed in the book. If you do not know how to read price action in the market, then you will not be able to understand and digest the 'story' of the price delivered by the market.

The final result of the combination of various variables used to analyze or predict the market is the price movement itself, therefore a trader should focus on understanding price action and not on the parameters of various indicators as a predictor.

Important To Look At Price Action Strategies:
1. There are various bar formations on candlesticks that may be formed by price action in different market conditions. Should learn to read and understand one formation before another formation. After understanding how to apply in trading for certain market conditions, just learn another formation.

2. If you used to use time frames below daily (1 hour, 30 minutes, 15 minutes, etc.), start learning to trade with daily time frames to avoid signal errors and 'noise' in price movements, which will greatly affect price formation formed action.
In addition, the smaller the time frame you use, the more likely you are to over-trade or frequent entries, and by the noise and false or wrong signals that often occur at low time frames, you tend to be wrong in predicting movement price.
If you are familiar with daily time frames, start observing the bar formations formed by price action.

3. Learn from traders who have successfully implemented price action strategies, or learn ways of applying

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