Thousands of retail traders are using the price action trading system as their prime arsenal. The trading system is straightforward, and it allows the investors to find the profitable trade signals at any market condition. However, learning the detailed mechanism of this trading strategy is quite challenging, and it might even confuse the new investors. You might be saying that the price action patterns of the different candlesticks are more or less the same, but upon close observation, you will be able to spot the difference.
So, how do we become good at price action trading strategy? Is there any way by which we can become professional price action traders within a short time? Well, we will discuss the essential steps you need to follow to become good at the price action trading method.
Strong analytical ability
Before you start thinking about the complex candlestick pattern, you need to ask yourself whether you have strong analytical ability or not. If not, you should spend more time in the demo account and reinforce your basic trading skills. Price action trading strategy is not an entry-level trading technique. To become good at this, you must have a strong foundation. The professional traders integrate the price action trading method with another trading system. So be honest to yourself and learn the basics of trading before focusing on the candlestick patterns.
Selecting a professional trading platform
Smart price action traders always use professional trading platforms as they know slight variations in the price feed can alter the candlestick patterns. That’s why most of the elite price action traders prefer to use Saxo as their prime broker. Once you have access to the professional trading platform, you should study the candlestick patterns.
Learn more about the broker’s server time and see how it affects the formation of the patterns. After knowing the opening and closing price of the candlestick, you can easily curate a professional trading routine that will help you to trade in an organized way.
Learning the basic patterns
At the initial stage, you should be learning about the basic candlestick patterns. Instead of memorizing tons of single candlestick patterns, learn about the most frequently used pattern. For instance, you may study the pin bar formation and see how it works at the critical support and resistance level. Once you understand the functions of the pin bar, it would be wise to learn about the different forms of Doji. The Doji patterns will give you early signals regarding the direction of the price movement.
Learning complex patterns
You can’t become good at price action trading strategy by using the single candlestick patterns only. To improve your accuracy and efficiency during the trading process, you should be working with complex candlestick patterns. Once you become good with the complex candlestick patterns, you may start working on your trade execution process. Always remember, no pattern is perfect. You should always be aware of the risk factors. Never think that by using complex candlestick patterns, you will avoid losing trades in the market.
Managing your risk profile
Being a new price action trader, you might get carried away by seeing your initial performance. To protect your trading capital, you should never let emotions hamper your decision. You should be following the basic rules of money management no matter how significant your investment is. Try to risk only 1% of your account balance at the initial stage. Once you get familiar with the price action trading process, you may vary the risk factors. While doing so, you should always consider the worst-case scenarios.
Try to avoid the trade signals which suggest you take the trades against the major trend. Please stick to the trend trading method as it will significantly reduce your risk exposure and let you trade confidently.