How can a Trader use Price Action Effectively?

Top 2 Forex Price Action Trading Tips for Beginner Traders

May 9 • Forex Trading Articles • 908 Views • Comments Off on Top 2 Forex Price Action Trading Tips for Beginner Traders

If price is everything, why do so many sellers need help making money from price changes? Most of the time, the answer is simple, and all it takes to improve your price action trade is a few small changes. This is easy to figure out.

Here, you’ll find some tips for trading Forex price action. These tips will help the majority of traders to avoid the mistakes that have spoiled their performance in the past.

Tip #1: You shouldn’t trade unless you have a good idea of where prices are going and how they behave

Price action isn’t always clear, which can be scary for new traders. But there’s an easy way to tell if the market is going in a clear direction.

The model you can use daily to figure out the direction and clarity of the market looks for sudden changes in price action. 

In short, an impulsive price action happens when the biggest buyers and sellers on the market act quickly.  

There are three major things with which you can spot these moves:

  1. The bars are a bit larger.
  2. Second, they are usually all the same color.
  3. They usually close near the highs or lows of the swing.

It is important to act immediately whenever you are in such three situations. When the market is unstable, you must trade the same way as most other traders. If you start trading with skill, the possibility of making money increases.

Tip #2: Buy or sell when the previous bar closes in the direction you want

It would help if you stuck to this general rule until you become an expert at spotting betting trends. The reason is easy to understand: 

  • If you want to buy on the rise, you have a better chance of being right if the last bar to close is confident.
  • A sell order made during a drop is more likely to be successful if the closing bar is bearish.

If you want to buy on an uptrend and the most recent bar finished bullishly, that means bulls were in charge during that candle’s trading session. After seeing this good closing, bears may give in to the trend.

Most of the orders at that bar came from them, meaning they are trying to stop yours. Since this is the case, bulls are more likely to sell when they see a bear bar than when they see a bull bar (continued).

But if bears were pushing prices down in the last bar, likely, they are still in charge and leaving you room to move. After reading this, you will have a better chance of making money if you sell on the market.

Bottom line

Trading is hard, so taking expert advice is necessary to improve your chances of winning trades.  At first, try to keep things easy and only trade when it’s clear where the market is going. Keep an eye out for prices that move quickly, and make the most of them when you see them.

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