Price action

Why you should be trading price action.

The hardest part of profiting from the financial market is predicting the right direction of price. The ability to trade profitably and confidently requires good understanding of market behavior. If only that were to be easy, everybody will make a fortune from trading the markets.

Trading is a probability game. To profit, the possible outcomes need to be in your favor.

If there are 20 balls in a box. 19 of the balls are blue and only a ball is red. The box is closed and shaken vigorously. You are then told to close your eyes and pick randomly. What do you think you are likely to pick? If you said blue you are correct. The possibility of picking 1 red ball out 20 balls is unlikely.

To make favorable trading decisions, you should adapt price action trading techniques. Traders who trade with price action are like car racers that drive fast cars like Bugatti Veyron.

Traders that don’t use price action or use too much of indicators are like car racers that drive slow cars. Traders that use indicators are likely to loose the race. Why? because these various indicators are lagging and slow.

In a volatile environment they give a lot of false signals. That means you are loosing your capital. I bet you want to become a race winner. A profitable and confident trader.

Here are key points below on why you should become a price action trader:

  • Anxiety free: I preach “become a confident trader” because price action trading actually gives one confidence when trading. Are you the type that checks your trade every 5 minutes because of fear of loosing or you are unsure. Do you place a trade based on a hunch or mere feelings. After the completion of bridge or a sky scraper. The architects, engineers and builders celebrate and pop champagne. They don’t get worried that the structure will collapse. Price action trading is a skill.
  • Timing and patience: The right timing requires patience. The best golf players take their time. The best daft players take their time. The best archers take their time. The best traders take their time. It is all about waiting for the right timing before you pull the trigger.
  • Repetition: In price action trading, there is nothing like a new pattern. The market repeats the same patterns over and over again. Mastering these various patterns plays a big role to your success in trading. Patterns like chart patterns, candlestick patterns, Higher highs and higher lows. If mastered you keep on trading for a long time.
  •  Confluence: In price action trading, no factor is independent of each other. Everything works together to make the right trading decisions. Factors such as: market structure, support & resistance, candle-stick patterns, multiple timeframes. It is just like a plant. To produce fruits or food. It needs a fertile soil, water, sunlight, carbon(iv)oxide, air, chlorophyll-II and maybe insecticides.
  • Momentum: In trading no momentum/ volatility no profit. Still if you can’t notice when volatility comes into the market you can’t make money. That is, momentum/ volatility = profits. Implementing price action trading strategies will help you spot momentum when it comes into the market.

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