Whether you’re trading a trading account in Hindi or other languages, one thing that every trader understands is price action. This involves knowing what is happening on the chart and placing trading accordingly. If you’re wondering how to profit by trading the naked charts, here’s what you need to know about price action.
What Is Price Action?
Price action is a technical analysis used to describe the price movement of an asset, index, or currency pair. Professional traders often believe understanding an asset price is the most important data to make an excellent trading decision.
Price action trading focuses mainly on price history (how price moves over a given period) while ignoring the fundamental factors influencing price movement. When you trade with price action, it simply means you’re making your trades based on what you see on the charts. You’re not relying on complex formulas and time-consuming analysis.
The belief is that price action shows the important variables, such as news, economic data, and events that influence. It is regarded as a purely technical analysis and can help you understand how to trade better and place trades using your understanding of the market.
How to Start Trading With Price Action
To begin trading using price action, there are five steps to follow:
Step 1: Open an account with a broker: Olymp Trade is one of the best trading brokers that offers Hindu traders an avenue to various trading options, such as currency, crypto, or stocks. Register an account with us today and begin your price action trading journey.
Step 2: Identify the market you want to trade: After creating an account, choose the kind of market you want to trade. There are a variety of markets to choose from. You can choose to trade stocks, cryptocurrencies, or currency pairs.
Step 3: Build a personalized trading plan: Trading price action helps you to understand the market, develop a working strategy of your own, and execute trades based on proven market history. Once you have identified a strategy that works, build a trading plan that depicts what you should look out for before placing a trade.
Step 4: Decide when to go long or short: A trading plan helps determine whether to buy or sell, depending on your market analysis. Work with it to become profitable.
Step 5: Open and monitor your position: Whether you long or short the market, endeavor to set a stop loss, take profit, and allow the market to play its hand. Sometimes, you may need to monitor your trade as a beginner, but doing this involves a lot of emotional attachment. It’s best to leave the trade to play out once a position is opened.
Important Factors to Consider in Price Action Trading
When trading price action, a few important structures can help you master the market and determine when to enter a position, here are the top factors or structures to consider:
The trend is the market’s direction in a particular day, week, or month. The market moves up, down, and sideways in three major directions. When the market is moving up, the price is said to be in an uptrend, and when it is down, the price is said to be in a downtrend, and when the price is moving sideways, it is said to be consolidating or ranging.
A popular rule of thumb is to follow the trend. When the market is in an uptrend, look out for buy opportunities; when it is in a downtrend, look out for sell opportunities. A ranging market should be ignored, but with mastery, you can still profit from trading a consolidating market.
Support and Resistance
Your profitability in forex is dependent on mastering support and resistance. Support and resistance and market structure are the bedrock of price action trading. Support are locations on the chat that act as a market floor, such that whenever the price reaches those points, it is pushed back up.
Resistance on the other hand, are locations on the chart that act as a market ceiling, such that whenever the price reaches those points, it is pushed back down. Traders are often advised to buy at support and sell at resistance. This is because history has shown that when the price gets to support, it tends to buy and sell at resistance.
Price action trading involves mastery of the formation of various candlestick patterns. Candlestick patterns determine when to go long or short on an asset. It is a form of naked price action because the formation of a pattern indicates the direction the price is about to go.
Some of the popular and essential candlestick patterns include:
- Morning star and evening star
- Pin bar
- Bullish and bearish engulfing
- Hammer and hanging man
- Tweezer tops and bottom
- Multiple wick rejection
Combining candlestick patterns with other price action elements, such as support and resistance, trendlines, and market structure, can help you to become very profitable in trading naked price action.
Mastery of these key elements can be the ultimate knowledge you need to have an edge in becoming profitable trading price action. You can open an online demo account with Olymp Trade to practice before opening a live account to begin trading price action.