Effect of Price Action on Currency Trading! Keep these three points in mind

Price action trading is a method of day trading where traders make decisions about trades based on price movements rather than on indicators derived from technical analysis.

What Is Price Action Trading?

Some traders make decisions based on the price movements of an asset. This is the premise of price action trading—following the movement of prices and trading based on the actions they think are most profitable.

Most price action traders don’t use technical indicators, such as moving averages or Bollinger bands, but if you do, you should give them very little weight in the trading decision process. A price action trader believes that the only trustworthy source of information comes from the price itself and its movements.

If a stock price begins climbing, it shows that investors are buying. They then assess the price action based on the aggressiveness of buying; the historical charts; and real-time price information such as bids, offers, volume, velocity, and magnitude.

Why trade currencies with price action?

The answer is simple – prices are the essence of any financial market. It is similar to mathematics. If you don’t understand the terms of the task, you won’t be able to provide any solution. So if you don’t know how to read price action in a market, it’s unlikely that you know how to understand what a price chart is telling you. Therefore, you will not know how to use price action to trade forex.

Every trader who tries to convince you to trade with an indicator or trading software instead of a price action indicator is not aware of the reality of the market. The reality of the market is that the current price is the end result of all the variables associated with the market. Besides this price movement, what are you worried about what you are analyzing? Forex traders often fall into the trap of using unreliable forex indicators and forex robots simply because the people who sell them exaggerate their effectiveness.

To fully understand Forex price action, it is important to understand that there is no easy way to make money in this world. Remember that any shortcuts you think you find in the market are only temporary. By understanding price action, you will have a better chance of success in forex trading.

What’s the best way to learn about price action?

There are three things to keep in mind when learning Forex price action:

1. You need to learn one price action foreign exchange trading strategy at a time. By mastering a price action setup one at a time, you’ll learn it inside-out and can then go on to make it your own. Many traders jump from one strategy to the next without really giving them all the attention they need.

Also, experts in any field are usually the ones making the big bucks, not just the average guy who might know a little about a bunch of things. So try to really master one setting before moving on to the next.

2. You must first start learning to trade Forex using price action using a higher time frame. The number one reason to focus on the higher time frames is because it is our best protection against overtrading.

Overtrading is an account killer and no trader is invincible. By focusing on the higher timeframes, you can benefit from their ability to filter out price noise on the lower timeframes, increasing your overall win rate.

3. Forex price action trading rules are examples to follow from successful price action traders. The most effective and efficient way to become an expert in the field of forex price action trading is to learn from successful price action traders.

Many traders have done this and occasionally share their experience with newbies. In other words, you can drastically shorten your learning curve and avoid a lot of trial and error by following the advice of skilled and proven price action traders. In addition to all these rules, it is also important to interpret the best way to trade price action in Forex. It is wise to wait for the best price action setup, rather than trading whatever you think might be a setup.

Also, after you have mastered successful price action strategies and concepts, you should finally have no doubts about what you are looking for in the market. The forex market is a market where you need to show patience, wait for the ideal price action setup to appear, and then trade flawlessly.