There is a lot of forex trading strategy that you can use. Starting from trading strategies for beginners to experts. But of course, every trader has their own strategy. One of the most popular strategies for forex traders is price action.

In the market, where this place is the location for buying and selling transactions of money exchange rates between market players, the exchange rate will leave a trail in the form of price movements or price action that can be observed on the trading chart.

Price action is a movement in the price of an asset or a currency pair. This method is based on price movements history or we called as technical analysis. Traders will find price movements patterns, but maybe it seems random at first glance.

Price action is one of the analysis models that seem simple and quite popular among traders. This analysis only uses horizontal, diagonal, or maybe vertical lines. Not a single technical indicator on the chart to pay attention to. Didimax forex broker will help you understand it.

Main Components in Price Action Analysis to Maximum Your Profits

It might look quite strange if you are not familiar with analysis models that use a lot of colorful technical indicators. However, there is a forex trading strategy that does not make use of technical indicators at all. This analysis is usually called naked trading.

This trading only uses a price movement chart (candlestick or bar chart) as a reference for their analysis, which is called price action. There are several main components that you need to know in price action analysis, namely market reaction, support, and resistance.

What is meant by the market reaction in price action analysis is how the global market conditions after experiencing an increase in price in a trend. Traders can find out what conditions the market will accept and confirm or, conversely, cancel the movement on the chart.

In addition to market reactions, in price action analysis, also pay attention to the resistance and support components. There is an important aspect as a benchmark for traders, namely the level of price movement, resistance, or seller offers and support is the starting point for buyer demand.

At first glance, price action uses analysis and focuses on candlesticks so it feels complicated. However, if you are used to using it, then you will understand and be sensitive to the slightest price movement. Continue to be disciplined to learn to understand forex trading.

Maximizing Forex Trading Strategy with Price Action

The price action strategy can be maximized by adopting "aggressive" and "conservative" trading methods. In an aggressive strategy, you can open long positions as soon as the 3rd candlestick is finished (closed). The stop loss is placed below the low price of the 2nd candlestick.

In a conservative strategy, long positions are opened when the price movement has broken through the upside touching the highest price formed by the pattern. Stop-loss can be placed below the low price of the 3rd or 2nd candlestick.

However, price action is not a perfect method and can give you a consistent profit. There is room for error or the possibility of the market not moving as expected. Therefore, using risk management and good capital management will perfect your forex trading strategy. 

There are various bar formations on the candlestick which are formed by price action in different market conditions. Therefore, it is important that you learn to understand one formation first before studying another. You could choose the best forex broker to be your partner.

There is no need to worry about applying the price action method to the trading strategy you currently have. It will not mess with your trading and will help to sharpen predictions of market price movements. 

Didimax as the right forex broker partner can help you choose and understand the various forex strategies that are right for you. Because not all the strategies used by other people are also suitable as a forex trading strategy for you.