Now that I have a trading plan
as well as some form of money management
in place, I will need a trading strategy. Accessing http://www.forextrainingworldwide.com/
website I found a number of successful strategies and they are simple and easy to execute and seem to be profitable if I stick to the rules of that strategy. I will be focusing on the Price Action strategy and in this article I will be discussing price action basics and not setups as such, that will follow in up and coming articles.
Why trade with price action? Looking at all the strategies available the common denominator within all of them was that every chart had price action. What is price action? The best way to describe it’s the “footprint” of money. Financial markets are where money is exchanged between market participants, and this exchange of money leaves a trail, this trail is a market’s price movement or price action and it can be observed on a price chart. The price action strategy can be traded in any financial market and on any time frame. Trading any financial market means that I can trade commodities (gold, silver, oil), Index’s (SP500, UK100, etc) including Forex. The time frame I will mostly be trading in is the D1 and H4 which suites my currently life style. As I discussed in my previously article Forex Trading Plan
, Forex Training Worldwide mentions the following “DO NOT CHANGE YOUR LIFE FOR TRADING. We can help you change trading to suit your life.”
Human beings ultimately behind the price movement of the Forex market and it seems that human emotions are relatively predictable especially when it gets to the matters of money their actions in the market often result in price action formations that repeats itself periodically. So by learning how to read these price action charts correctly it will allow me to use my strategy successfully due to the way the market thinks. A simple way of explaining this is by combining price action setups with core support and resistance levels and dynamic support and resistance levels. Core support and resistance is where I can see that the market reached either a peak or bottom at some point in time this does not mean that price can not break out even higher or lower, but if I can see that in the past when price reached that level and it bounced down or up from that key level of support and resistance then the probability the market may follow this pattern once again giving me the best chance of getting into a profitable trade.
One of the main things that stand out with the price action strategy is that I have a clean canvas with no noise. What do I mean by this? Normally the videos or tutorials I have see in the past all display charts with dozens of colours and lines these are known as indicators. I am not speaking against indicators as such but nothing can beat price that should be our strongest indicator. As a trader I should be able to look at any chart and decide where and how price will move in any any financial market. It seems once again I need to keep all aspects of trading simple and not over complicate which may interfere with my decision making, please note that there are many ways to create a confluence and indicators are one of those tools.
I will keep you updated with future trade setups and see if they are profitable or not
LET THE JOURNEY BEGIN!!