Price Action Forex Trading uses a strategy based on price action to trade the Forex markets. The most critical information on the chart is the price and this type of trading uses repeating patterns in the Forex markets to your benefit.
There are many different approaches and strategies for trading the Forex markets. Amongst others, you could use MACD crossovers, Stochastic overbought and oversold, moving average bounces and Bollinger bands. Unfortunately, many of these methods just simply don’t work in the long term. The most successful strategy to make money in the Forex market is Price Action Trading.
This method is also amazingly simple, universal, and works in both ranging and trending markets, with and against the trend. There are a number of varied price action trading approaches that you can use. Some show up more often than others, but they are all effective at profitable trading of the Forex markets.
Here are a few of the price action Forex strategies you can learn:
The pin bar price action Forex trading strategy uses a stop and reverse technique. It is designed to trade tops and bottoms of markets and, in addition, can be used in trend continuation by buying dips in upward trends, and selling peaks in downtrends.
Inside bars can very effective in trading Forex as they reflect indecision. They are used typically when trading strong trending markets as a trend continuation strategy.
Engulfing bars are excellent for trend reversals. They don’t happen often, but are a very strong price action reversal signal. They are best used for trading key reversals in rangebound markets.
The first thing you should do in learning to trade Forex is to learn one or two setups and have confidence in their success rate. You should become proficient in identifying the setups and learn precisely how to enter the trade. This should become automatic to you, so it’s best to learn one price action forex strategy at a time. Be sure to learn in detail how to trade it and truly master and apply it as a trading approach. Only after becoming comfortable should you delve into the next price action Forex trading strategy. Don’t move onto the next method until you master the first. It’s essential that, in trading, you are able to walk before you run.
Remember the race between the tortoise and the hare?
No system is right for every person because we all have different, expectations, capabilities and personalities. However, there are a small number of trading strategies that resonate with many. They are simple and effective enough that they can give you consistent profits in a relatively short period. Price Action Forex Trading also works in any market or timeframe so it is appropriate for many trading plans so you can be rest assured that if you learn once price action based strategy for one market, you can trade any other market with it too.