There are many ways to trade the Forex market. The trading strategy greatly depends on a trader’s personality. Those who love to secure quick profit in the Forex market become scalpers. On the contrary, those who love to trade the market conservatively use the position trading strategy. But no matter which trading strategy you use, you should not make things complex by using too many indicators. Some of you might think the professional traders in Australia use EAs to trade the real market. But in reality, the pro-Aussie traders never rely on EAs or indicators. They use a simple price action trading approach to trade the real market.
What is a price action trading strategy?
If you install the trading platform, you can view the price movement of the financial instrument in the different time frames. Most of the time, the experienced traders loves to use the Japanese candlestick chart. Every candle in the currency pairs has a story to tell. The professional traders know the perfect way to read the story and they execute the trade based on the patterns and formations of the Japanese candlestick pattern.
The price action trading strategy is a very simple process to trade the real market. But there are few important things you need to learn before you consider yourself as a professional trader. Let’s discuss the important parameters associated with the price action trading strategy.
Selection of the period
If you intend to use the price action trading strategy, you must intend to trade the D1 time frame. The new traders might not understand the term “D1” but there is nothing to worry about. D1 stands for daily time frame. In Forex trading, you will have to use many short forms to make things easier. Those who trade the lower period always lose money because they never get an overall picture of the market. However, by learning to the art of multiple time frame analysis, you can trade the lower time frame and make huge profits from this market. So, select the time frame with an extreme level of care and you will become successful at trading.
Analyzing the news factors
Amateurs often think trading the price action signal doesn’t require fundamental analysis skills. But without assessing fundamental data it’s not possible to predict the price movement of a certain asset. You might have to lose money by trading with the major trend. The market trend often gets changed without any prior notice or giving any technical indication. But if you keep yourself up-to-date with the high impact news, you will never have to face such problems in trading. To become a successful trader, you must learn to analyze the major news factors.
Use of the Fibonacci retracement tools
Those who use the price action confirmation signal should learn the use of Fibonacci retracement tools. This tool allows you to find the key retracement zone. If you spot any price action confirmation signal right at the 50% or 61.8% retracement level, execute the trade. Never increase the risk factors while trading the Fibonacci retracement level. Nothing is permanent in this world. Even the long term market trend often changes due to major news. So, be prepared for the worst-case scenario.
Trade with low risk
As a price action trader, you must learn the art of trade management. Those who use the leverage trading account often take a high risk to recover the loss. But this is one of the key reasons people fail to make a profit by using the price action trading strategy. Educate yourself about the importance of money management techniques. Never think you can beat the market. Try to stay with the market trend. Limit the risk in every possible way and always be ready to face losing orders. Never lose confidence in your