Price Action: An Allowable Forex Strategy to Do
Price Action is a way that you can do to make trading decisions from pure charts by analyzing price movements. When you use this means that there will be no other indicators other than a useful Moving Average to help you know the Support and Resistance areas.
Financial markets will produce a data on the movement of market prices in various time periods. Existing data will result in a price movement that is then visible in the existing forex charts. Thus it can be interpreted that the forex chart that you are looking at is an analysis and action done by many parties, be it human, program, and also computer.
From the above explanation we can understand that Price Action is a variable that can affect the market within a certain time period. A price movement reflected in Price Action will provide the necessary signal to float a profitable trading system.
The signals of price movement are what we call the Price Action.
Many people use this strategy because they consider technical indicators to be late. This is because the results shown in technical indicators are the result of past price movements that have occurred.
The Price Action method only utilizes price movement charts and often they learn patterns formed from Candlestick or Bar Chart.
In this discussion we will explain to you some strategies that can be done by using Price Action.
Using Morning Star Patterns As Stratagi Purchases
The Morning Star pattern is a Candlestick pattern formed by 3 Candlestick charts. The characteristics of Morning Star that you can recognize is the first Candlestick is Candlestick Bearish, which in this section is part of Downtrend.
Next there is a second Candlestick that has a smaller Body, this could indicate Candlestick Bullish or Bearish. When this happens then there is doubt in the market. Finally there is the third Candlestick which is a longer Candlestick Bullish than the second Candlestick. The Candlestick Length is not always the same as the first Candlestick, but the closing price position should be half that of the first Candlestick body.
Implementing Aggressive Strategies On Morning Star Patterns
When you want to open a buy position, then do it as soon as the third Candlestick finishes. Stop Loss is there you can place it below the price of the second Low Candlestick.
What about the Conservative Stratos?
You can open a buying position when the price movement has moved upwards to the highest price formed by the Morning Star pattern. Put Stop Loss below the price of Low Candlestick the third or the second.
Other Strategies That Can Be Used
Graph Without Indicator and Graph With Indicator
You can tell the difference between a graph with Price Action and a Graph with some indicators. You can use Graphics that do not have any indicators and pure Price Action. Next use charts that have MACD, Stochastics, ADX, and Bollinger Bands indicators. The four types of indicators we mentioned are just the most common and widely used indicators of the trader.
By observing both types of graphs like the above example, you need to determine which chart type most facilitates the trader to do the analysis. When traders add a lot of indicators to the graph, it will produce more variables for themselves. But the drawback is that you will not get the preview or prediction provided by the pure Price Action.
Determining Market Trend in Price Action Strategy
When you want to use the Price Action strategy, one important aspect that needs to be well understood is your ability to know market trends and market consolidation. Trading using trend is a strategy with the highest probability of success and this you need to learn well in order to get high profit in forex.
The forex market is undergoing Uptrend when making Higher Highs and Higher Lows (HH, HL) and Downtrend occurs when the market makes Lower Highs and Lower Lows (LH, LL).
We assume the market is in an uptrend if making Higher Highs and Higher Lows (HH, HL), and downtrend if the market makes Lower Highs and Lower Lows (LH, LL).
Market Trend Vs. Market Consolidation
In the explanation we have said earlier that Price Action is an analysis of market price movements from time to time. Thus the price movement can be determined with the data underlying the current trend.
Consolidation occurs when a market does not have a trend. Thus you can easily determine whether the market is in a trending condition or in a consolidated state by conducting an analysis using Price Action.
Not difficult to determine the market is experiencing a trend or not, because things you need to consider is to find the pattern of HH, HL or LH and LL.
Implementing a Price Action strategy is actually not hard to do if you understand how to do it well. The simple way we have delivered you can apply easily to gain advantage in the forex market with ease. You can choose to pay attention to current trends or use the Candlestick Morning Star pattern as we have mentioned above.
That is the Price Action strategy we can convey, hopefully can provide many benefits and pengatahuan for you all. If you still feel confused, please ask through the comments field below, we will be happy to answer any incoming questions.
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Good luck and good luck!