Learn Forex Price Action Strategies - Price Action Strategies
A trader must create a trading strategy which they stick to when trading the online FX market. A trader must have the discipline to follow the rules of their trading strategy at all times. That's why it is better to come up with trading strategies that are profitable - profitable systems will be a lot easier to follow and stick to. This is because a trader knows that by following the rules of their system they will be successful.
A carefully designed trading strategy which has been back tested and proven to produce profitable results is one of the keys to becoming successful when trading the FX market. This type of strategy will make it easier for the trader to follow the rules of their trading strategy because they already know that the trading strategy is profitable, therefore maintaining the discipline to continue following the trading system will be much easier.
Successful trading strategies will also include:
1.Money management rules
2.Forex Psychology Mindset
These 2 will greatly improve the success of any trading system.
However, Let us look at price action strategy before explaining more about forex money management & forex psychology.
Price Action Forex Strategies
Price action is the use of price movements to determine when to buy or close trades. Forex price action will use the study of chart patterns that form time and time again and these chart patterns can be interpreted in different ways. The trader will use this chart pattern to determine the likely market direction that the market is likely to take next based on the price chart patterns that have been formed on the charts.
In forex price action traders may use different methods to generate signals from the chart setups. Some of these techniques are:
Candlesticks chart patterns - a trader may use the study of Japanese candlestick chart formations which is the study of various candlestick formations along with how to interpret these candlesticks formations. A candlestick pattern may consist of only one candlestick or a multiple of candlesticks. To learn more about candlesticks patterns traders can find these candlestick patterns tutorials on the learn forex trading lessons of this site under the forex technical analysis concepts.
Support and Resistance Levels - traders can use price action and combine this price action with support and resistance levels. A trader will wait for price to hit the support level to open a buy trade and wait for the price to touch the resistance level to open a sell trade. The concept of trading major support and resistance levels is a very popular method in forex. For example in a upward trend a trader may wait & only open buy traders when prices hit support levels - at the same time a trader will take profit once the price hits a resistance level and then wait for another pullback to open a buy trade again.
To learn more about support and resistance levels traders can find these tutorials on the learn forex trading lessons of this site under the forex technical analysis concepts.
Trend lines - traders can also use trend lines to determine price action direction or the market trend. For an upwards trend line that shows the market is trending up a trader will open buy trades once price touches the upward trend line. For a downward trend that shows the general market direction is downwards a trader will open sell trades once the price touches the downward trend line.
To learn more about how to trade with trend lines traders can find these tutorials on the learn forex trading lessons of this site under the forex technical analysis concepts.
Chart Patterns - chart patterns is different from candlestick patterns, these are two different methods of technical analysis, and traders should learn more about chart patterns in the forex lessons section of this web site under the technical analysis concepts.
Chart patterns is the study of a formation of several candlesticks over a period of time. These patterns are consolidation patterns, trend continuation patterns and market reversal patterns. Traders can use the study of these chart patterns to determine the next likely market move.
Trading Strategy Tips
Once a trader has come up with their strategy, they should also include the following so that to make their trading strategy more successful.
1.Money Management Rules
2.Forex Trading Psychology
Money Management Rules
Money management rules should be part of your trading strategy - these rules will help you as a trader to manage risk. This means that you will use the two rules of forex money management - these are risk : reward ratio & drawdown reducing technique when placing your forex trades to determine the lot size that you will open in the market. The most popular money management rule use in forex & the one that you should also add to your trading plan is the rule that says a trader should never risk more than 2% of their account balance on any one single trade.
To learn more about these two forex money management rules, traders should read the money management guide that is on the learn forex trading courses section of this site under the forex key concepts lessons.
Forex Trading Psychology Mindset
In order to become successful when trading the forex market a trader has to learn about forex psychology. The forex psychology or mindset that is required to become successful in forex trading is one that avoids the emotions of fear & greed while trading the market & is a mindset of total discipline that a trader will follow all their trading rules & their strategy & only trade with signals that are generated by their forex strategy. With discipline a trader will not trade unless their strategy gives a trading signal. A trader will have the mindset of only following their trading system 100% all the time without second guessing the trading system. A disciplined trader will also not place trades in market just because the currency market has started to move upwards or downward, instead a trader will wait for a trading signal to trade to be generated by their trading strategy.
In order to study more about forex psychology and how to manage emotions while trading the online forex market a trader can read the forex trading psychology guides from the learn forex trading courses section of this site under the forex key concepts tutorials.
