1 daily price action forex strategy

These are often called hammer candles , or shooting stars. The setup consists of a major gap up or down in the morning , followed by a significant push, which then retreats. This price action produces a long wick. Often times, this price action is likely to be re-tested. The reason for this is that many traders will enter these positions late, which leaves them all holding the bag upon reversal.

Once they are shaken out, the counter pressure will be weak comparatively, and the stock typically goes up again. This usually leads to a push back to the high. Notice after the long wicks NIO printed a handful of insider bars in either direction before breaking out or breaking down. After this break, the stock proceeded in the direction of the new trend.

Well, trading is no different. We tend to look at a price chart and see riches right before our eyes. Well, that my friend is not always the reality. In the world of trading there are often dominant players that consistently trade very specific securities? These traders live and breathe their favorite stock. Given the right level of capitalization, these select traders can also control the price movement of these securities. Knowing this, what can you do to better understand the price action of securities you are not intimately acquainted with on a daily basis?

A good place to start is by measuring the price swings of prior days. As you perform your analysis, you will notice common percentage moves will appear right on the chart. Sure, the market is limitless and can produce outlier days. Over the long haul, slow and steady always wins the race.

To that point, if you can trade each of these swings successfully, you get the same effect of landing that home run trade without all the risk and headache. At its simplest form, less retracement is proof positive that the primary trend is strong and likely to continue. Smaller retracement The key takeaway is you want the retracement to be less than If so, when the stock attempts to test the previous swing high or low, there is a greater chance the breakout will hold and continue in the direction of the primary trend.

This is especially true once you go beyond the 11 am time frame. This is because breakouts after the morning tend to fail. So, in order to filter out these results, you will want to focus on the stocks that have consistently trended in the right direction with smaller pullbacks.

Using Time to Your Advantage Trading comes down to who can realize profits from their edge in the market. While it is easy to scroll through charts and see all the winners in hindsight, it is much more difficult in real time. The market is one big game of cat and mouse. Between the quants and smart money, false setups show up everywhere. As a price action trader, you cannot rely on other off-chart indicators to provide you clues that a formation is false.

With this in mind, in lieu of a technical indicator, one helpful tool you can use is time. Just to be clear, the chart formation is always your first signal, but if the charts are unclear, time is always the deciding factor. If you have been trading for a while, go back and take a look at how long it takes for your average winner to play out.

In each example, the break of support likely felt like a sure move, only to have your trade validation ripped out from under you in a matter of minutes. Protection There are many ways you can protect yourself against these head fakes. Make sure you leave yourself enough cushion.

Also, let time play to your favor. There is an urge in this business to act quickly. However, there is some merit in seeing how a stock will trade after hitting a key support or resistance level for a few minutes. If you think back to the examples we just reviewed, the security bounced back the other way within minutes of raiding stop losses and trapping traders.

Where to Place Your Stops One thing to consider is placing your stop above or below key levels. Since you are using price as your means to measure the market, these levels are easy to identify. Another easy way to do this as mentioned previously in this article is to use swing points.

A more advanced method is to use daily pivot points. Unlike other indicators, pivot points do not move regardless of what happens with the price action. They are essentially support and resistance lines. Using Pivot Points to avoid false breakdowns Notice how the price barely peaked below the key pivot point and then rallied back above the resistance level.

In order to protect yourself, you can place your stop below the break down level to avoid a blow-up trade. Another option is to place your stop below the low of the breakout candle. Some traders such as Peters Andrew even recommends placing your stop two pivot points below. This is honestly the most important thing for you to take away from this article — protect your money by using stops. Do not let ego or arrogance get in your way. Benefits of Price Action Trading Price action traders are the Zen traders in the active trading world.

These people believe the human brain is more powerful than any machine. Please do not mistake their Zen state for not having a system. The price action trader can interpret the charts and price action to make their next move. Secondly, you have no one else to blame for getting caught in a trap. The biggest benefit is that price action traders are processing data as it happens. There is no lag in their process for interpreting trade data.

Chart Patterns By relying solely on price, you will learn to recognize winning chart patterns. The key is to identify which setups work and to commit yourself to memorizing these setups. The next key thing for you to do is to track how much the stock moves for and against you. This will allow you to set realistic price objectives for each trade. You will ultimately get to a point where you will be able to not only see the setup but also when to exit the trade.

Some Challenges Price action traders will need to resist the urge to add additional indicators to your system. You will have to stay away from the latest holy grail indicator that will solve all your problems when you are going through a downturn. You need to think about the patterns listed in this article and additional setups you will uncover on your own as stages in your trading career.

First, learn to master one or two setups at a time. Learn how they move and when the setup is likely to fail. This strategy is different than most of the conventional breakout strategies out there. Here is an illustration of the Forex breakout strategy. Notice how the market has worked itself into a terminal wedge, which simply means that the pattern must eventually come to an end.

The opportunity to trade this pattern occurs when the market breaks to either side and then retests the level as new support or resistance. In the case of the illustration above, the entry would have come on a retest of support-turned-resistance. Notice how in the USDJPY 4 hour chart above, the market touched the upper and lower boundaries of the wedge several times before eventually breaking lower.

As soon as the 4 hour bar closed below support, we could have looked for an entry on a retest of former support, which came just a few hours later. Although the pin bar trading strategy is my favorite, I have had some of my largest trades using the Forex breakout strategy above. The market will often react quite aggressively after the breakout occurs, allowing traders to secure a large profit in a relatively short period of time.

Summary: So there you have it. Three simple Forex trading strategies for beginners. These strategies are by far my favorite and for good reason. If used properly, they can quickly build your trading account into a sizeable amount. The best part is, they are extremely simple to understand and are therefore easy to incorporate into your trading plan.

Here are a few key points from the lesson: The pin bar trading strategy is best traded as a reversal pattern in the direction of the major trend The inside bar trading strategy is best traded as a continuation pattern The Forex breakout strategy should be traded after a break and retest of either support or resistance All you really need to become profitable trading Forex is two or three great trading strategies General FAQ What is Forex trading for beginners?

Focus on one or two strategies at a time. That way, you can use the rest of your time and energy working on your patience and discipline. What are the best Forex trading strategies for beginners? The pin bar and inside bar are two of my favorite strategies for the beginner. The breakout strategy is another excellent choice.

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