If you follow us here at price action trading system, then it should be no secret to you as to how we suggest you trade, and that’s with high probability price action trading patterns. It’s true that you can use price action to improve your Forex trading results. The problem with most traders is that they do not stick with anything long enough to become proficient with it when trading. They try something and if it fails once or twice, they are then moving on to the next trading idea, when they should be finding something that is proven to work and then sticking with it until they actually learn to use it properly.
Price action trading is the only way to go, and if you stay with it long enough to learn to spot the patterns and actually see the prices unfolding in front of you, then you can become a profitable trader. The thing is, it won’t come over night and it will take hard work, which most do not believe or at least they are not willing to give the necessary time and effort that it will take to properly learn. Regardless of how good a driver you are, do you think you could get in a car tomorrow and compete in a NASCAR race and win the first time out? The odds are stacked so strongly against you that it would be doubtful.
Trading is no different, as you are going up against the best traders in the world. However, if you started practicing and learning every day, eventually you might be able to make a great NASCAR driver, and the same is true in trading. If you stick with it and continue to learn, you may eventually learn to read a price chart and consequently become a great price action day trader. We found the following article that was written by Johnathon Fox at www.dailyforex.com, and it had the following to say about making money in Forex:
For many traders long gone are the hopes of making millions of dollars over night, and all they wish to do is stop losing money and begin to turn their trading accounts around. There are many mistakes that traders make that contribute to getting themselves into this situation, and this article is going to cover the top 5 things traders can do to turn their accounts and performance around!
Pick a Trading Method and Perfect it
Traders that come to Forex in most cases are looking to make a lot of money and very fast! To achieve this they begin to chase the “Holy Grail” that will make them all their riches. Instead of looking for a method that will give them gradual success, they search for the latest fancy indicator that will do all the work for them. I am here to tell you that we all would be rich if this was possible!
If you are serious about making money in the Forex markets it is time you get rid of this mentality and settle in to learning a method that you can use for the long term.
One method that can be used to trade the markets successfully is Price Action trading. Price Action trading has been around for a long time and it will be around for a long time to come. Price Action trading will not stop working every time the market dynamics change.
Price Action trading involves traders learning to read the raw price on a chart, and focusing on high probability Price Action patterns that repeat themselves. Price Action is a very simple method that most traders can get their head around with a little help and the correct education.
Once a trader has picked the method that best suits their trading style they need to give up on the idea of the “Holy Grail” and begin perfecting their chosen trading method. Chopping and changing trading methods only leads to confusion and frustration.
The only way to perfect your chosen trading method is to commit to it, and practice it until you have perfected it!
Learn to trade on the Higher Time Frames
Many traders have the misconception that the lower the time frame chart, the more chance they have of making a trade and thus making money. Whilst it is true that traders will get more signals the lower the time frame chart they go down to, it is also true the lower the time frame the more false signals there are and the harder it becomes to making money.
Traders can begin to turn their trading around by taking just this point on alone! The higher time frame charts are where most trading should be done for learning traders.
One of the best reasons the daily chart is a lot more powerful than a lower time frame charts such as the 1hr chart is because of the time that goes into making the signals. An example of this is an inside bar. If we see an inside bar on the 1 hour chart we know that price could not break out of the previous candles range for 1 hour. If however we see an inside bar on the daily chart it means price has gone through all trading sessions including the UK and US sessions and has been unable to break out of the previous day’s range. Obviously a candle with the 24 hours worth of information is telling us a lot more than the candle made up of only 1 hour!
Because of this extra time that goes into making the daily chart signals compared to the lower time frames, the signals are much more reliable and powerful.
Stop Watching Charts All Day Long
Once a trader has committed to only trading the larger time frames such as the daily chart, it is now time to turn get rid of one of the most wide spread trading mistakes there is: “Watching the Charts All Day”!
This trading habit is a very serious mistake many traders make. If traders were to watch the charts all day and not doing anything this would be fine, but from watching the charts all day traders start to make mistakes such as:
Enter trades when they shouldn’t
Take trades off when they shouldn’t
Take profit when they shouldn’t
Tighten stops when they shouldn’t
When a trader has committed to trading the daily charts only they only need to look at their charts once a day. That is it!
When the market closes for the day the trader should switch their charts on and look for possible trade setups. If there is a trade they should set their entry, stops and targets. If there is no trade they need to turn their computer off and walk away and do something else!
There is nothing more they can do. The market has to move and it will do the same thing whether you are watching it or not. Walk away and let the market “do its thing”. You can read the rest of the original article here.
If you watch our YouTube videos, then you have heard me say it many times: Practice and review your trading charts daily if you want to get better at reading price action. There are very few people in the world that can go up against professionals in anything without practicing first. If you didn’t like my earlier analogy of the NASCAR racing, then substitute NASCAR with any professional sport and you will get the same results.
I don’t care how good an athlete you are or how fast you are, you can’t expect to go to the Olympics and win a gold medal without improving your speed and techniques, and trading is no different. You must improve your techniques, which translates to learning the most opportune times to enter and exit the market if you want to be profitable. First, find a technique that works, and we can tell you that price action trading is one of the best techniques in which to learn to trade profitably.
Once you find your desired technique, get to work on it and don’t give up until you learn it and can do it. Stop jumping from idea to idea without ever learning a single profitable technique first. Start with a single pattern if necessary and perfect it before learning a second one. Regardless of how you do it, most importantly, get started and stay with it until you learn it. If you are willing to put in the time, effort and stay with it, you really can use price action to improve your Forex trading results.