Price action trading strategy is based on the formation of the candlestick pattern. The expert traders use the different forms of the Japanese candlestick to execute high-quality trades at the key support and resistance level. Being a professional price action trader you can easily make a huge amount of money. But in order to do so, you need to develop your trading knowledge extensively. If you have a weak foundation in this market then you will never be able to make money by using price action trading strategy. There are many trading systems in the world which are mostly based on indicators reading. But the experts in Switzerland always prefer price action trading and consider it as one of the easiest ways to trade the live assets. However many people will have a different opinion on this system but we will focus on the majority. Today we will give you three amazing piece of information about price action trading and it might even change your trading career.
Figure: Different types of account offered by reputed broker Saxo
High-risk reward ratio
There are many ways of trading the live asset but none of them will give you high-risk reward ratio trade. For instance, if you trade with indicators based trading system then if you risk 100 USD then you will win 100 USD which gives you 1:1 risk reward ratio. But in forex, you will often have some losing trades so if you don’t trade with higher reward then you will never survive the market. The professional price action traders use they key support and resistance level and even execute 1:4 + risk reward ratio trades. So by mastering the price action trading strategy, you will be able to lose more trades but still, make money. If you are new to price action trading then signup for a demo account and trade the market. Never trade with your real money unless you are totally comfortable with your trading system.
Allows you trade the news
News trading is very much popular for the professional trader. Even the novice traders tend to trade the news due to its extreme level of profit potential. But to be honest you should never execute any trade in your online trading account if you are new to the news trading section. The market becomes extremely volatile and placing a quality trade at that time is very tough. However, the professional price action trader easily makes a decent amount of money y trading the high impact news data. They simply switch to the lower time frame prior to the high impact news release and wait patiently for price action confirmation signal. Once the right candlestick pattern is formed in the trading chart they place their trade with proper money management. Some of the advanced price action traders often do the multiple time frame analysis to increase their winning edge while news trading.
Trend trading strategy
Price action confirmation signal can be used with the trend trading system. The expert traders at Saxo always suggest the new traders trade in favor of the trend so that they risk is reduced to a great extent. But when you draw the trend line in your trading chart make sure that you are using at least three connecting points. A faulty trend line will cause you heavy loss so take some time in your technical analysis. Once you have the perfect trend line wait for price action signal at the trend line support or resistance level to execute the trade with précised stop loss. Though the system is extremely profitable but never risk more than 2 percent of your account.
Summary: the Price action trading system is one of the best systems due to its simplicity. As a professional price action trader, you should always follow the above mention tips of this article. Always trade to focus on quality trade execution and aim for high-risk reward ratio trades. And never take too much risk in any single trade.