Price Action in Forex Trading

Price Action in Forex Trading

Submitted by adil on Tue, 04/16/2013 - 07:04

Price action can be defined as the information that we get on any trading instrument because of the price. We can also define Price action as everything that price does and we see that information on chart.

Different economic variables are involved in the price movement which can be seen through the market�s price charts. This factor makes price action analysis more important in Forex. One can trade Forex market by analyzing the price action. Mainly there are two types of Price action analysis;

1. Candlestick Analysis
2. Support and Resistance Lines

Requirements to Trade Price Action:

Here are few of the requirements to trade price action effectively.

Clean Charts:

Clean charts eliminate the need of having fancy indicators or any such things to trade price action. Some traders think that if they have more indicators on the charts, they have better chances of predicting the price movement in the right direction. This is a wrong approach. The more indicators you have, the more complex will be the situation. Try to avoid such confusions and complex situations. A clean chart will do the best for you.

Currency Pair Selection:

Price action strategy requires no specific currency pair to trade. You can trade any currency pair by adopting price action formula. However it can be confusing to trade too many currency pairs at the same time. So, it�s best to concentrate on main currencies like EUR/USD, USD/CAD, USD/GBP and USD/JPY.

Time Frame:

If you are using Price Action strategy, you can go for any time frames from one hour to daily charts. This is because it is easy to spot the pattern in these charts.

A Lot of Practice:

Price action methodology needs practice to master this skill. With the advancement in trading technology, it is obvious to have knowledge about new advancements in Forex field.

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