It will take some practice and additional learning to take on board that trading price action is the best route to take as you move forward with your trading activity. Recognising and accepting the KEY role played by round numbers and midpoints, the session high and low should simplify how to interpret price action. Plus, you should read very carefully the full article at PIVOT
POINTS…….this is your passport to Trading Price Action.
Top 5 Reasons Why Trading Price Action Is The Way To Go
1. Trading Price Action you will come to appreciate that what you see with your own eyes can be relied upon as price action can repeat itself throughout a trading session. You will know where the market is headed based upon where it started its move UP or DOWN. You will soon recognise clear BUY and SELL set ups allowing you to take your entry and in the safest possible place.
2. Trading Price Action you will be able to look at a clean chart without indicators and recognise the importance of what price action alone has indicated in terms of the next move or current move so will feel more comfortable to let the market try and reach its intended destination. This allows the trader to have an enhanced view of a suitable exit until price action indicates the next safe set up to trade again.
3. Trading Price Action you will be able to think about higher time frames and have a BIG PICTURE view of market intention based upon what has already happened, where the market has indicated support or resistance plus the position of the session high and low can be properly considered as part of the Price Action Trading equation (PATe).
4. You can adjust your trading times to the optimum times to trade when price action will be giving its best view of what comes next. Most markets will settle into one dominant direction during the London open from 7.00 or 8.00
GMT………then when New York opens this direction either continues to dominate or there is a clear signal that the market will change direction.
5. You can pick and choose suitable markets as all price action plays out in a similar fashion across the markets. There should be no such thing as a strategy suitable for EUR/USD only or Wall Street Daily only. Price Action Trading using the PATe method can be applied to ALL suitable markets using exactly the same strategy and approach.
Trading Price Action – It Has Further Benefits
Once a trader is comfortable with trading price action he/she can be more relaxed, less anxious and considerably less confused about what the markets are doing. If nothing else this will help prevent jumping in and out of trades throughout the session and overtime should deliver more profitable pips per trade than ever achieved before once competent.
Trading Price Action allows the trader to stay with the market for longer
resulting in far fewer trades, less time at the trading platform and delivers an enhanced understanding of the BIG PICTURE versus what is happening on lower time frames, which lets face it, is generally just noise or a bit of price action congestion away from the key price levels.
Price action will also be able to demonstrate when it is not clear to get involved making the trader wait until price action becomes clearer.
How To Embrace Price Action Trading – Use the PATe Approach
Making a change to your trading regime may be difficult at first as you are going to be challenging long held beliefs and will need to change how you trade. I often tell people to get to grips with price action trading by initially looking at a clean price chart AFTER the market has closed and to do this for a week or two. That way you are not yet trying to accept price action in real time and so you can be calm and not under any pressure. Instead you can see the set ups and how BUY trades formed above the session low or at a near round number or midpoint support………how SELL trades formed and set up close to and below the session high or at or near a resistant round number or midpoint. This occurs day in day out so the more you see it happen the better prepared you will be for anticipating theses price action clues when looking at real time markets before these moves set in.
You will see how a rising market is supported by a succession of higher lows that start just above the session low and then gradually rise and get higher to support the rise as the move plays out.
How a declining market posts a succession of lower highs that start just lower than the session high and then gradually decline and get lower to keep the decline in motion as the move plays out.
Moreover, you will get a good appreciation of the size of moves in terms of pips on your chosen market and how long they can take to play out. Along with this enhanced understanding of market moves you will develop an appreciation that there will be times when you are not in the market but instead waiting for the next set up to form. The outer edges of the trading range offer the best opportunities to trade. Entries taken mid range are more difficult and safe entry takes time to form fully as it relies on price action informing you where the safe entries are.
Trading Price Action the PATe way is the best, most effective change any
trader can make to their current trading approach if wanting to take pips from the markets everyday you trade.
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- Does Not Need To Be Too Complicated.
We may all start off thinking that trading the markets must be complicated, I know I did. The reality of course is that trading the markets can be as simple or as complicated as a trader chooses to make it. So it can be a little Russian Roulette……..take the complicated route and we ask for trouble.
The sad reality is that traders do have a tendency to adopt the more
complicated route, adding layer upon layer of considerations to their trading regime. I am not entirely sure why this is but visit any trading forum and you will find more expert advisors, technical indicators, trading robots and home grown flung together strategies than there are stars in our solar system. Add to this, pages and pages of chart set ups galore and the only real outcome can be confusion and delusion. Traders can be brain washed into the complicated route helped by other traders, forums and the mountains of junk that litters the Internet.
Look at this messy chart. Who can realistically cope and concentrate on this volume of information.
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Trading the Markets can be a lonely business and there is no dispute about this and I have often described it as a cruel sport because the harder we try at first the more we end to fail. Perhaps this is what draws the uncertain and new trader towards forums in the first place……..once there then information
overload and colliding strategies take over and send the trader into a deeper place. Information is great if it is accurate and well researched but in itself it does not transform a bad trader into a good trader. Information does not equal transformation in the trading arena.
I have never been one for spending a great deal of time in trading forums to be honest. But the time I have spent has always resulted in me being told in no uncertain terms to butt out followed up with lots of Private Messages best described as warnings to stay out of a particular thread or keep my opinions to myself. It only takes a few references to the predictive nature of price action or how misleading technical indicators are and I’m run out of town. I find it funny now but used to let it annoy and frustrate me.
Price Action Trading as an approach to trading the markets is not given enough exposure in forums or in the minds of traders who are struggling with relying on technical lagging indicators or expert advisors and such like. Traders
dismiss it as being too hard without even giving it a chance or really understanding what it is but then spend several years grappling with everything else and still failing to make any head way.
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Or would you stand a better chance at processing this clean uncluttered chart as shown above.