Everyone knows trading is one of the most lucrative business in the world. The new traders are always making mistake since they don’t understand the proper way to deal with the volatile market. But the experienced Aussie traders are always one step ahead. Instead of using indicator based trading strategy, they are always placing trades with price action signal. So what is price action trading? Price action trading is nothing but the study of the Japanese candlestick pattern and using them to trade the key support and resistance level. Let’s learn how to master price action trading strategy just like the expert Aussie traders.
Know your chart
Majority of the traders don’t know how to analyze the data in their chart. As a full-time trader, it’s highly imperative you understand the candlestick chart. Every candle will give you clear hint about the future price movement of the financial instrument. If you don’t do so some extensive research it will be nearly impossible for you to decipher the basic formations of the Japanese candlestick. Start to trade the market with the demo accounts since you won’t have to lose any real money.
Read books and articles on price action trading
Information is one of the most powerful things in currency trading profession. The novice traders are losing money since they never have a clear view of this market. You have to read lots of books and articles on a price action trading strategy to have a clear understanding. Some of you might think reading books and article is a little bit time consuming but you can easily avoid such problems by taking some professional course. Many experienced price action traders in Forex market are willing to educate the novice traders with a very small fee. It’s better to pay for the paid program rather than losing money without understanding the market nature.
Focus on the daily time frame
Once you learn the basic formations of the price action signal, trading CFD will become easy for you. But even after knowing the different formations of the Japanese candlestick pattern, the rookie traders are losing money. They often say this system doesn’t work at all. But in reality, they are losing money since they are focusing on the lower time frame. You have to stick to the daily or higher time frame when it comes to price action trading strategy. The higher time frame trade setup is always more accurate and it enables the novice traders to make more money.
Risk reward ratio
Finding the high-risk reward trade setup is the most important thing in currency trading profession. In fact, this is the only way you can cover up your trading loss. As a price action trader, it will be really easy for you to find the best trades even during the high level of market volatility. At times you will find a very good trade setup but the risk-reward ratio will not be perfect. Never execute any trade unless you have a 1:2 risk reward ratio. Try to be smart and trade the market with precise risk management. Never trade the market with a negative risk-reward ratio as it will kill the potential recovery factors.
Be a disciplined trader
No matter which trading strategy you follow, you must become a disciplined trader. The novice traders don’t really understand the importance of proper discipline. They are always taking a huge risk without knowing the importance of risk management. Even after losing a few trades, they are trying to recover their loss by increasing the lot size. If you do some research you will understand how this market works in the long run. Write down the details of each trade in a piece of paper and try to follow a trading journal. At times assess your past trades since it will give you a clear overview of your trading performance.