Price action trading strategy is one of the most effective trading systems in the world. With the help of the Japanese candlestick pattern, you can easily find reliable trade signals and execute the trades with a high level of accuracy. But knowing about the different forms of candlestick patterns is a very tough task. If you are new to this market, you are most likely to mess things up. However, if you manage to learn things strategically, you should be able to trade the market with a high level of precision.
Today, we are going to teach you the perfect method to master the price action trading skills. After reading this article, you may consider yourself a skilled price action trader. Now let’s get into the details.
Selecting the time frame
One of the major mistakes that most traders make is associated with the selection of the time frame. They usually think trading can be done without doing any proper research on the time frame. Eventually, they take the trades in the lower time frame and expect to make more money by over-trading the market. But overtrading is one of the most common reasons for which rookies are losing money at trading. To solve this issue, you may switch to the paper trading account trade in a higher time frame. Once you start taking the trades in the higher time frame, you will learn some amazing techniques and ignore the lower time frame trade signals.
Choosing the candlestick pattern
The novice traders start with the complex candlestick pattern. But if you start with the complex pattern, the overall trading process is going to get much harder. That’s why the smart traders at Saxo suggest to the retail traders to trade with the single candlestick pattern. For instance, you can learn about the pin bar at trading. Once you become skilled at analyzing the pin bar, executing the trades at the support and resistance level will be much easier. Most importantly, you will become more confident with your actions.
Once you become good at analyzing the single candlestick pattern, start learning about the multiple candlestick patterns. The multiple candlestick patterns should give you a clear insight into the market direction. While doing so, analyze the data in a higher time frame. If you avoid the daily or the weekly time frame, you will mess things up even though you might have strong knowledge of candlestick pattern trading.
Trade with the trend
Trading with the trend might seem a daunting task but once you learn to identify the endpoint of the market retracement, things will start to make sense. There is no reason to risk your real money when you can learn trend strategy in the demo account. Stick to the demo account for few months and try to improve your basic trading skills. Use the Fibonacci retracement tools, moving average, and other important technical indicators to find the overall trend of the market. Once you become good at analyzing the existing trend, price action trading will become much easier.
Some of you might think price action trading is developing to trade the major reversal. Though it can help you to identify the key reversal point in the market, still you should not trade the reversal. Learn to trade with the key trend as the risk factor is comparatively low at trading. Follow the conservative method and try to reduce the hassle.
Learn from your mistakes
After knowing the basics of price action trading strategy, you should work hard to identify your mistakes. By identifying your trading mistakes, you should be able to fine-tune your trading method within a short time. Remember, trading is a long-term investment game. If you intend to make a quick profit by learning the price action trading method, you are walking on the wrong path.