Learn How To Trade Price Action
Learn How To Trade Price Action
Many new traders that hear about well experienced traders making trading decisions without indicators just "price action", are then forced to ask the big question: What is price action and how should I trade it?
If you ever asked this question to somebody, you probably got this kind of answer: You know supply and demand, swing highs, swing lows If this is the case, I'm sure you still want to know what exactly price action is.
To explain you this, let's imagine you are completely lost in the woods, where should you go? If you don't have an idea of the direction you should follow you will probably walk and walk in circles till somebody find you. But if while you walk you see human footprints, what should you do? Logically, if you follow the footprints you will find your way out.
In the currency market price action is the money "footprints". Following and understanding those "footprints" enable us to make better trading decisions. So in other words, trading price action is just about taking decisions based on past price performances and its actual behavior.
Now that you understand the "what" let's talk a little bit about the "how". Trading price action is the opposite of trading mathematical formulas like indicators, so first of all you need to open your mind and believe that price will tell you all you need to know to make good trading decisions.
If you truly believe in price, you won't need indicators anymore, so the second step is obviously clear up your charts and let the price talk to you.
Next step is probably the less interesting in the process of switching to price action trading but it's no doubt, the most important of all.
If you have an electronic device and you don't know how to use it, the most logical thing to do is to read the manual or instructions from the manufacturer of that device. It's the same thing for currency markets, if you want to fully understand how price behave you need to get back to the basics and acquire some market knowledge.
I will list below everything you need to know and understand in order to trade price action successfully:
#1 Understand the core concepts of a market (supply and demand)
#2 Understand what move the price in Fx markets (Order Flow)
#3 Learn how to track Order Flow in your charts
#4 Learn to exploit Order Flow with powerful systems or methods
#5 Practice, practice and practice.
Obviously, this will take you some time and a lot of effort, but believe me, it's worth it!
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