Newbie in forex trading? Well, you might be interested in learning new things to be a successful forex trader. That’s quite natural. Like my other posts, this time also, the readers like you will be able to learn one more new concept related to forex trading – “What is price action in forex?”
Have you ever heard the term price action? No? No issues because after this post you will be able to explain it (price action) to your companion and other fellow traders with clarity and much more confidence. Just go through this post properly.
What is price action trading forex?
Price action is actually the movement in the price of a security over time. Price actions are comprehended in chart pattern and technical analysis or indicator-free price chart. It is called pure price action analysis trading. It is a traditional form of trading which has caught on heavily amongst both professional forex and retail traders because of its simplicity and effectiveness.
To make it simpler, price action can be explained as the procedure of making trade decisions based on the price alone because they are already printed on the chart. Some of the market wizards often call it as “trading naked” as all the clutter and confusion of adding indicators are not so important. Even the traders can see their charts easily.
What makes price move in forex?
Most of the traders often get confused regarding the movement of price in forex. But it is quite simple and mainly depends on certain factors like:
- The interest rate
- Trade deficit
- Balance of Payments
- Economic policy of a country
- Employment rate
- Political factors
- Health of the economy
Why use price action trading strategy in forex?
It is evident that there are a number of trading approaches and methods available in the market. Traders can use anyone of them like MACD, Bollinger Bands, Moving Average bounces, etc.
But the trouble with these types of methods is that they don’t work on long term. On the other hand, price action has been proven one of the successful methods to make money in the market. It is also one of the simplest methods which can work both in emerging and trending markets. Also, it can work against the trend.
What are the advantages of price action strategy in forex trading?
There are several advantages of price action strategy, and some of them are mentioned below.
- The biggest advantage of forex price action is that the trader will be trading with the most relevant and accurate reflection of current market conditions.
- Another significant advantage is price action forex simplifies the trading experience, and it also enhances profit making opportunity.
- For price action trading method, the traders are not required to use indicators while trading.
- They are very easy to identify which makes it the most favorable trading technique by most of the forex traders.
Hope all the readers have understood the concept of ‘what is price action in forex.' If still there is some confusion then readers can definitely reach us below in our comments section.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.