Price action trading strategy is by far the most effective way to trade the market. The majority of the professional traders use the price action method to find reliable trade signals. Some of the retail traders often use other complex trading systems, still, they analyze the candlestick pattern to get a general idea about the direction of the market. As a novice trader, you might be thinking that learning about the price action trading strategy is a very tough task. But if you carefully evaluate the important market details and follow some basic rules, you should master this trading technique in less than six months.
In this article, we are going to discuss the key steps by which you can master price action trading strategy. Go through this article as it will make you a better trader.
Set up a demo account
To learn things in the Forex market, you need to get yourself in the demo environment. You should have access to the real market price feed where you can trade with the help of the virtual dollar. Usually, you can easily gain access to such a market by opening a demo trading account. With the help of a demo account, learn about the market basics. At the initial stage, you should not be bothered about your price action trading skills. Learn how this market works and try to improve your basic knowledge of this market. If required, use the mt4 copy trading service and see how the elite traders are taking their trades.
Support and resistance level
As a smart trader, you should learn to analyze the important support and resistance level in the market. Unless you know the proper way to find the critical support and resistance levels in the market, there is no real benefit by trading the market with the help of the price action confirmation signals. Use the higher time frame to draw the critical supply and demand zone. Check the price movement and see if these levels are respected by the market. Once you become confident that you can identify the important support and resistance level, you need to move to the next stage.
Learn about the basic candlestick pattern
The novice traders often get puzzled by seeing the tons of candlestick patterns in the market. Instead of going through tons of candlestick patterns, it will be wise to rely on the basic candlestick pattern. By doing so, novice traders can learn some powerful price action confirmation signals. Once they become good at analyzing the single candlestick pattern, they can move to the complex pattern. Instead of memorizing the candlestick pattern, a trader should know why a certain pattern pushes the price up or down. If possible look for this patterns at the important Fibonacci retracement levels as it will give you better signals.
Curate a trading strategy
After learning about the candlestick pattern, the trader should focus on the strategy development phase. This should be done in a professional demo trading account. You should be using the reliable price action confirmation signals and take the trades at the important support and resistance level. If succeed to make a regular profit at the critical trading levels, you should be able to execute high-quality trades without having any major problems. Thus you can earn more money without having much trouble.
Develop a robust risk management plan
Professional price action traders should always trade this market with a robust risk management plan. Unless they trade the market with a robust risk management plan, it will be really tough to manage the risk profile at trading. Things might seem very easy but once you start doing it in the real market, you will feel the pressure. After developing the trading strategy, you should also stick to the rules. If you break the rules, there is no point in trading the market with a price action trading strategy.