In a definition of Price Action trading (PA) strategy, it is an act of responding to ways and manner that price behaves or behaving during a period in time. With PA, you are going to trade what you see and not relying on any complex indicator that you did not even know how it’s been calculated. You act based on some laid down rules as regards price behavior.

Although, price action is best recommended for anyone who’s just beginning in financial market. I could recall my first encounter with FX market, I was so overwhelmed with a whole lot of different trading strategies. They all appear great in theory, but ugly in practice. Not until I’ve learn to settle down for price action strategy and the reward was huge.

No strategy is fail safe, price action inclusive. No strategy or system will single-handedly give you consistent result or profit. Every time we speak of consistency in Forex trading, little do we know that it cut across the way we interpret the market, the way we stick to a strategy over a period of time, the way we keep to a leverage size and the time we open and close the trading terminal every day.

Well, I wouldn’t want to bug you with too much talk. If you’ve been in the market for a while, you might have come across several topics on price action already. I’m not here to tell you that trend is higher highs/lower lows. The article in front of you had only spelled out – what should be your mindset when trading price action strategy. The kind of questions and answer you should look out for whenever you carry-out market analysis.

However, the following will be your tool box when trading price action strategy.
1. Mind (Your mind)
2. Support and Resistance levels
3. Fibonacci Retracement
4. Japanese Candlestick
5. An oscillator (for divergence measurement)
6. Moving Average (highly recommended for beginners)

Each of the tools mentioned above has a very important part played for full analysis of price behavior per time. The most important of all is your mind.

Let’s get started,

You may wonder why I regard our Mind as a tool. As far as financial market is concerned, our mind is the greatest tool ever. The kind of thought, mindset and question you ask directly indicate the kind of success you’ll. It will interest you to know that our mind undergoes major analysis through questions and answers. So, why can’t we find out the right questions to ask, at a point in time, especially when analyzing price chart?

The following are the question to ask when analyzing price actions

1. Question One: What is the trend? – Up trend, down trends?
2. Question Two: What is price doing at the moment? - Impulsive? Corrective?
3. Question Three: Conditional Questions
- If price is corrective at the moment, when is price likely to resume (i.e. becomes impulsive)? and,
- If price is impulsive, has it shown any sign of trend exhaustion? Is price near a major support and resistance level?

All these question call for careful attention while asking and answering them. You do not need to over think. You only answer based on what you see on your price chart.

Question One: What is the trend? Fig. 1: Price above 100 MA indicates bullishness What is price doing at the moment? - Impulsive? Corrective?


Fig, 2: Retracement Using Fibonnacci Retracement tool
The Fig. 3.0 is a typical clear mind process to analysis price behavior per time. None of these steps should be omitted. Fig. 3: mind mapping in analyzing and interpreting the current price behavior In conclusion, never – ever be in haste to jump into the market. Disregard the saying that “opportunity lost can never be regain”. It is a total trash when it comes to Forex trading. Opportunity lost could be regain in manifold, aside, the opportunity that you perceived lost may not even be a true opportunity. So what I’m saying in the essence is that you take your time to analyze the market. Follow through the process diligently, and you will see how your equity becomes green every time.
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