The concept of price action trading embodies the analysis of basic price movement as a methodology used by many retail traders for financial speculation, and often institutionalized where algorithmic trading is not used. Since it ignores security ‘s basic factors and looks mainly at the price history of the security though it often recognizes values derived from that price history it’s a form of technical analysis.
Price Action Strategy are a trading method that uses a price move analysis to form the basis of a trading method. This trading strategy works from a 1hr intraday chart through to the monthly chart on all. Since all the movements we see on a chart are price movement, it makes sense for beginners alike to advanced traders to learn how to use price action as setups for their strategies not just in Forex Trading but also in Futures, Commodities and Stock markets.
Price action traders think the trading chart is a mixture of the various beliefs and feelings many market traders have about a certain trading device. They believe that price change happens because of the crowd’s psychology, and the prevailing crowd perception will drive the market forward. When reading a price chart, price action traders will search for different trading strategies which are formed by price movement. Therefore, these price patterns will lead them to make decisions based on the context in which the pattern is found.
Through integrating the technical analytical resources with the recent market history to define trade opportunities dependent on the trader’s own understanding, price action trading in the trading community has a lot of support. Advantages include self-defined strategies that give market traders flexibility, applicability to different asset classes, ease of use with any trading software, applications, and trading portals, and the ability to easily back-test any specified strategy on past data. More importantly, the traders believe like they are in control because the strategy helps them to decide on their behavior, rather than blindly following a set of rules.
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