Foreign Exchange or Forex trading is expanding its reach exponentially in the recent years, and more traders are pulled into this trading process every day. Though there are a lot of Forex Trading tips, guides and technical essays, some of the most successful Forex Trading companies and individuals are believed to have used the most simplistic methods to succeed in their business. Price Action trading is one of such strategies believed to have helped many traders to become successful. This is because of the fact that the charts used in this strategy are very use to read and understand. There are some important aspects in this strategy apart from its simplicity that makes Price Action as one of the most reliable and most followed Forex trading techniques.
Out of the crowd Strategy:
Two types of analysis methods were commonly used by traders of all sorts: Fundamental Analysis and Technical Analysis. The Fundamental analysis is done by studying financial data, world events and economic figures, whereas the Technical Analysis involves studying technical variables deeply. The former method is too unreliable whereas the latter is too complex for everyone to learn. But the Price Action Strategies are simple, reliable and if used correctly, accurate. It is not comprised of technical terms neither is calculated by taking external factors like world events into account. The only indicator is the price and only for support & assistance, the technical terms and financial data were used.
Technical Analysis using some of the most complex indicators like RSI and Stochastic gives out a chart that would confuse any normal man. The signals were not clear and were sometimes were not genuine. This leads to the trader in getting anxiety and above all, to lose money by believing false signals. Even though, it requires a lot of technical knowledge about a lot of indicators to draw any information out of those confusing, false leading readings. But, with price as the only indicator, the Price Action charts are so simple to read and drawing trade plans based on the signals are easy as well.
Less Day Trading
It is believed that 95% day traders, i.e. traders who trade every day, lose more money than the traders who trade not so frequently. Experienced and successful traders always suggest less market interaction. The Price Action Strategies prevents a trader from deciding the buying or selling of materials so quickly just by looking at a bearish or bullish signal that may be false. There is a basic rule called “Two Attempts rule” in this type of trading, where a trader has to look for two similar but rhythmic signals before deciding the bearish or bullish behaviour of the market. This in turn reduces the frequent interaction of the trader with the market because two similar signals may take long to appear on the chart and hence quick and negative consequent decisions are prevented.
These are only a part of all the advantages a trader can enjoy while following Price Action techniques. More detailed guides are freely available, helping people to learn and succeed in forex trading quicker than they’ve imagined.
About the author: This article has been written by Mohit Jain. He has written articles for online finance blog and publications and has extensively covered the topic of price action trading and debt relief services.