What is price action? Should you trade under Price Action? This is the question that any new trader needs to be answered. Let's learn about the concept of Price Action, as well as the applications of Price Action in forex trading!
What is price action?
In Forex, you've probably heard of Price Action, also known as price action. So what is Price Action? Did you understand it, or did you really learn about it? How will Price Action trading work for investors?
Price Action (PA for short) is a method of trading on price action (chart analysis). This is a way of trading without any news or indicator. With Price Action, the fluctuations of the market are expressed through price action.
Features of trading charts by Price Action:
There will always be three types of charts in a trading platform, including line charts, bar charts and candlestick charts. Price Action mainly uses candlestick charts to analyze buying and selling actions of investors in the market. In order to understand the rules of trading in the market, and make appropriate trading decisions.
Price Action is one of the technical analysis methods. A special feature of Price Action is that it does not use indicators.
Traders find that the indicators they receive are often delayed, which will cause them to react slowly to market prices. Price Action often ignores the basic analytical factors and focuses on observing price action, or important price zones in different time frames to find a good trade signal.
In a price chart, two traders can come up with two different conclusions about the trading signal, which is not unusual. By Price Action allows traders to develop their own skills when analyzing markets. Price Action does not have a common formula, it does not rely on indicators to encourage investors to follow a specific direction. Basically, indicators usually give early or late signals, it doesn't have the exact time to enter the order. Therefore, not relying on indicators will be a notable feature of Price Action.
Benefits when trading by Price Action method
As mentioned above, because Price Action is characterized by not using indicators. In the chart, indicators are lines that look very complicated, causing traders to be highly focused when observing. So when looking at the price action of Price Action, it will help you get a more intuitive look by using only candlestick charts to analyze market trends.
Traders need to find key price levels, major support levels, key resistance levels, trend lines, etc.
In Price Action, traders can focus completely and key price areas to pay attention to. However, you must note that in order to trade by Price Action method effectively, traders need to equip themselves with certain background knowledge. This is something that not every new trader can do. Because without the basic knowledge, as well as the experience and trading skills, new traders often find forex very difficult when trading under Price Action.
The disadvantage of this method is that you must directly observe and assess the market, then enter the order manually, it is difficult to apply automated trading when you use the Price action method. And one more thing to note is that no matter how ideal, there is no perfect method, it always has unintended errors.
Hopefully this article with the basics of Price Action is what will help you better understand the method of Price Action analysis, and have a better understanding of the Forex market.