There are many different types of trading strategy in the financial world. Trading strategies tend to vary from traders to traders. Most of the novice traders in the financial world tends to focus on indicators based trading strategy. They simply jump into the online trading world with a strategy which is developed based on indicators. If you observe the retail traders community then you will be surprised to see that most of the traders in the world focuses on indicators. But trading the financial based on indicators reading is not recommended at all. Indicators should be your helping tools in trading it should never be your price assets for trading. If you look at the professional traders than you will see most of the professional traders are using price action trading strategy in the market. Price action trading strategy is based on raw price data in the market and the professional traders use the key support and resistance level in the market to trade the price action confirmation signal. If you are relatively new in trading then you might be thinking that indicators are the best way to trade the financial assets but over the period of time you will gain experience and see the key benefit of using price action trading strategy. In this article, we will discuss why price action trading strategy is so much popular among the traders.
Clean chart with précised data: Those who are trading the forex market with price action confirmation signal always use the clean chart to trade the raw price data in the market. Unlike the novice traders, they always focus on candlestick formation on the key support and resistance level. On the contrary, the novice traders use the indicators which always give them two types of signal in the market. Since indicators are either leading or lagging and they always give early or late trading signals to the traders. So if you trade the market using indicators based trading strategy than you will never be able to execute high-quality trades in the market. Most importantly you will never able to adapt the dynamic environment in the market. On the contrary, the professional price action traders are always trading the live currency rate in the market based on the different formation of candlestick pattern at the key support or resistance level. Most importantly they do their analysis in the market using a clean chart which gives them the better trading opportunity.
Excellent risk reward ratio: Trading is all about risk management. If you look at the professional forex traders than you will see that all of them execute high-quality trades in the market with excellent risk reward ratio. But if you trade the market with indicators or other EAs then you will never be able to execute high-quality trades. Most of the indicators based trading strategy gives 1:1 risk reward ratio to the traders. But the professional price action traders always execute their trade in the market with at 1:2 risk reward ratio. To be honest most of the professional price action traders use 1:3 or more risk-reward setup for every single trade in the market. Trading the market with perfect risk management factors allows you to lose more trade and still keeps you on the profitable side. If you are relatively new in this industry then you might not understand the importance of risk management factors in trading. In the eyes of trained professional perfect risk management factors is considered to be the Holy Grail in the trading community. To be precise price action trading strategy allows the traders to trade the market with perfect risk management factors.
Allows you trade high probability trades: There are many different types of trading strategy in the forex market. Price action trading strategy tends to create the best trading result in the market compared to other trading strategies. The professional price action traders always use the higher time frame in the market to execute their trades in the market. Many rookie traders often get fascinated with news trading since most of the large moves in the market occur during the event of high impact news release. But news cannot be traded profitably using indicators based trading strategy. The expert price action traders use the higher time frame to spot the key support and resistance level in the market. Once they spot the key support and resistance level in the market they switch to the smaller time frame during the event of the news release. Once the news is released they try to find probable price action confirmation signal at the key support and resistance level in the smaller time frame to execute their trade. It’s true that sometimes they will have some losing trades in the market but if you truly master the art of price action trading strategy then you will be able to trade news release easily. But before taking any trade in the event of high impact data release make sure to follow perfect risk management factor.
Summary: If you are looking to become professional traders in the financial market then you should use the price action trading strategy since its extremely reliable and profitable. Most of the professional traders in the financial industry trade the market by using the price action system. Before you take any trade in the market make sure that you use the risk management factors perfectly. Always use the higher time frame in the market when you do your technical analysis and make sure you to consider the fundamental factors while taking the trade.