There are many ways by which you can master the art of price action trading strategy. Being a new trader, you might think learning about the formations of the candlestick pattern is impossible as we have more than hundreds of patterns. But in reality, you can learn about thousands of candlestick patterns by using some simple techniques.
To become a professional price action trader, you have to follow certain rules. Without following some fixed sets of rules, you should never expect to master the art of price action trading strategy. Without any delay, let’s learn the process by which we can learn price action trading strategy.
To learn price action trading strategy, you need a learning environment. Some traders use the demo account and some rely on simulation software. So, which one is better? Well, there is no exact answer but we would suggest you trade in the demo account. The novice traders often get their demo account from the low-end broker and mess things up. But the selection of your learning environment greatly affects your trading performance. In order to enjoy the best possible tools, we suggest finding a high-end broker like Saxo.
We have already said, there are most than hundreds of candlestick patterns in the market. Instead of learning about the complex candlestick pattern, we strongly recommend that you learn the single candlestick patterns. Try to understand the key reason for which a candlestick pattern works at the support and resistance level. But those who have basic knowledge about the Forex market may go for the complex patterns. So, how do you assess your trading level? You need to ask yourself a simple question – how to start Forex trading? If you manage to give a perfect answer, you can also learn about the complex candlestick patterns from the start.
The novice price action traders keep on struggling in the retail trading industry as they don’t assess the position of the candlestick patterns. For instance, if you spot a bullish pin bar between the support and resistance level, you should never take the trades. The bullish pin bar should have been spotted at the major support level. So, try to relate the position of the candlestick pattern with the support and resistance level. Once you become good at doing this, you will become more confident with your actions.
Now you know the basic steps to execute the trades based on the price action confirmation signals formed at the important support and resistance level. But remember, this strategy is not going to provide you 100% win rate. You must assess the risk factor, risk to reward ratio, and the market condition before opening a new trade. By doing so, you will eliminate the risk factors to a great extent. After the trade execution, try not to change the important parameters. If you do so, you will develop some bad habits. Moreover, you might ruin the associated risk parameters for that certain trade.
When it comes to trend trading strategy, it is better to trade the major trend line with the price action confirmation signals. As the price test a major trend support or resistance level, look for the formations of the candlestick patterns. Based on the candlestick patterns, execute your trades at the important level. But do not think you know every bit of detail about this market. Be prepared to lose trades even after taking the trades in favor of the trend.
After learning the important technique of price action trading strategy, you should back-test your trading system in the demo account. Based on your demo trading performance, you should bring some positive changes to your existing trading system as it will help you to optimize your trading performance. Moreover, it will also boost your confidence level as you will be winning more trades.
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