| I use price movement based trading strategies in my | | | | analysis indicators are helpful, all of those indicators |
| forex trading, and I have found this approach to be | | | | are considered to be "lagging indicators." A lagging |
| very effective. When I started forex trading, I began | | | | indicator appears only after the price pattern has |
| using these types of strategies. However, at the | | | | changed or a new trend has already been set. |
| time, I didn't even know the name for what I was | | | | Traders who prefer price action strategies believe |
| doing. See, I never even studied the more in-depth | | | | that actual price movements within certain time |
| technical indicators. From the beginning, I traded | | | | frames are more predictive of what is going to |
| based on price movements, daily high/lows, | | | | happen in the short-term trading scenario. |
| time-based recurring patterns and such. I suppose I | | | | So what specifically is a price action based forex |
| was lucky as I had a good mentor when I started | | | | strategy? Basically, it is a strategy with entry and |
| trading forex, and this person directed me to price | | | | exits based on "rules" ; and the rules are based on |
| based trading strategies from the start. Since then, I | | | | the actual currency movements within a specified |
| have interviewed and read the books of many full | | | | time frame. Often times the strategy will have |
| time successful forex traders. It seems to me thus | | | | specific rules related to a specific currency pair. For |
| far, that "home-based" traders who are the most | | | | example, the following might be considered a price |
| successful are also using priced action strategies. | | | | action based strategy (by the way, this is an |
| When I see traders scrutinizing and drawing complex | | | | effective and simple strategy:) |
| lines on charts, discussing Bollinger bands, and | | | | 1. Observe the EUR/USD from 8:00 am to 8:30 am |
| analyzing candlesticks, I think - "Why are they | | | | Eastern Time in the morning. |
| working so hard when they can get a more reliable | | | | 2. Take note of the high and low points during this 30 |
| outcome with simpler strategies?" Of course, they | | | | minute time frame. |
| think I am strange too. It's ok, though. There are | | | | 3. When the EUR/USD breaks through the high or |
| strategies for different personalities, and everyone | | | | low point by at least 10 pips, initiate the trade in the |
| has different objectives for why they trade and | | | | direction of the break. |
| different goals for their trading. The main desired | | | | 4. Set a 40 pip SL and a 40 pip take profit. |
| outcome, whether you use complex technical analysis | | | | As exemplified above, price based action strategies |
| or simple price action strategies is that you earn | | | | have very specific rules when to enter and close a |
| more pips than you lose. | | | | trade. As this example shows, the strategies are |
| When you begin learning about strategies for forex | | | | very specific, and include rules for when to enter, |
| trading, you are likely to learn about fibonacci and | | | | when to exit, and how to manage losses. This makes |
| EMAs and all the complex techical analysis that may | | | | the strategies very simple to implement, even for |
| be applied to the forex market. It is important to | | | | the novice trader - as no complex technical analysis is |
| understand, that although those traditional technical | | | | necessary. |