Why are Many Price Action Traders Successful?
Success in Forex trading is hugely determined by one’s foundation in the trade. Most successful Forex traders had a very good mentor to help them curve out their trading career. In addition to this, the kind of training one gets also plays a major role in one’s build up as a successful Forex trader. Many price action traders start out trading in Price Action without necessarily knowing what it is exactly they are doing. They are taught how to perform their trades basing them on daily lows and highs, price movements and other patterns based on time. Within time, these individuals grow to be advanced Forex traders using strategies based on price and its movements. This forms the perfect foundation for Price Action traders.
It is only after a while that they get to understand the strategies they use are simply Price Action strategies. With a little bit more training, they turn to Price Action trading professionals. However, nowadays, majority of Forex traders rely more on indicators and the likes. They spend hours daily looking at Bollinger bands and scrutinizing various candlesticks. But in as much as such individuals concentrate ion using the long way out, the agenda is all the same; earn the highest number of pips possible. This also applies for the simplistic traders using price Action strategies.
Normally, some of the first things one is taught in most Forex training courses is some of the more technical software used in the trade such as EMAs and Fibonacci. Such items might come in handy once in a while but are not all that important. As a matter of fact, most trading experts have referred to them as ‘laggish’ indicators. This means they only indicate what has already been established such as a pattern that has already changed. That is like having a weather forecaster announcing yesterday’s weather! The use of price action strategies is based on real-time aspects of the trade. Ione can actually get a predictive kind of mentality as to what, how and when to trade. However, Price Action traders have to be very vigilant not to skip a single pattern. They base their observations on short-term trade scenarios.
Another vital reason why Price Action traders are as successful as they are is because they are guided by a specific set of rules. These rules are meant to establish when and when not to exit or enter a trade. They are based on actual movements of currency that have been established within a specified period of time. Many a times, these rules are set based on specific pairs or currency. They are based on specific times of the day, specific times frames, currencies and volumes. An example is:
- Check the EURO/USD rates in the morning (8am to 8.30am Eastern Time)
- Make sure to take note of all the lows and highs that will happen in those 30 minutes
- Once the EURO/USD hits the low or high a breaks by anything above 10 pips, state the trade
- Trade towards the break
- Use 40 pips for both the SL and the profit
This is an example of one of the full proof Price Action strategies used by Price Action traders.
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Category: Investing
