The price action trading system is often considered as the best trading strategy in the world. It eliminated the use of indicators and EAs in Forex market. Many expert traders in the United Kingdom is using price action trading strategy to make a huge profit from the Forex market. This system is based on the formations of the Japanese candlestick pattern which allows the traders to make a profit at any market conditions. The traders use the price action confirmation signal to trade the key support and resistance level. Though this system is extremely reliable yet you will always have to embrace some losing trades. But considering the long-term output, this system is one of the simplest ways to make consistent profit from this market. We will high light some key points for which price action trading strategy is so much popular in the today’s world.
Allows you to use tight stop loss
Those who trade the market with indicator based trading strategy, always have to use a wide stop loss. To be honest they don’t have any accurate tools to find the perfect exit point. But when it comes to the price action trading strategy you can easily use the different formations of the candlestick and use a tight stop loss. The use of tight stop loss will also help you to increase your lot size which will eventually increase your profit factors. Some retail traders in the United Kingdom often use too tight stops in their trades. But by doing so you might even lose many good trades. Give you trade enough space so that it can work at any market conditions.
Helps you to ride the trend
Following the trend is one of the easiest ways to save yourself from the losing trades. In the currency spread betting industry, you will often have to face trend reversal in the market. Those who blindly follow the market trend often lose a significant portion of their investment on major trend reversal. This is where price action traders are one step ahead. The candlestick formations give the traders early indication, the market trend is going to change. It eventually helps them to scale their running trades in the market. If you can truly understand the language of the market, you can easily trade the newly form market trend. Every candlestick has a story to tell you. By deciphering the candlestick pattern you can easily ride the new market trend with very low risk.
Keeps your trading system
Those who trade the market with complex trading strategies, never become a profitable trader. You have to keep things extremely simple to become a profitable trader. If you overload your charts with indicators and EAs it will be really hard for you to see the actual price movement of the market. Due to this reason, many expert traders are using the price action trading system. In this system, you won’t have to use any indicators or EAs. You can easily trade the key support and resistance level by using the reliable price action confirmations signal. But before you start using the price action trading strategy, make sure you demo trade the market to learn the actual mechanism of this strategy.
High-risk-reward trade setups
The price action traders are always having high risk-reward trade setups. Those who follow other trading system gets surprised to see 1:3 or higher risk-reward ratio in their live trade. But once you learn price action trading strategy, everything will become easy for you. You don’t have to trade with a complex system to find high-risk reward trades. Some of you might face false signals in price action trading strategy. In such case, you need to switch back to the higher time frame. If you still require to trade the lower time frame, focus on the multiple time frame analysis to filter out the best trades.