There are numbers of different trading strategy in the financial world and this greatly varies from traders to traders. Most of the retail traders start their trading career with indicator based trading strategy but over the course of time, they realize that in order to make money by trading the financial instrument they need to have a perfect way of trading the live assets in the market. Since indicators always give leading or lagging signal in the market they novice traders are never able to execute high-quality trades in the dynamic market. But by using the price action trading strategy a single individual can very easily take high-quality trades in the market. Price action trading strategy is based on raw price data in the market. If you follow price action trading strategy then you will never have to worry about your trading signals in the market. You can easily take high-quality trades in the market with an extreme level of confidence. But in order to make a decent profit out this strategy, you need to have the right trading environment before you execute your trades in the market. So let’s discuss how we can set up the perfect trading environment for our price action trading strategy.
Forget about indicators: Most of the novice traders in the forex market use indicator based trading strategy in order to make a profit in the forex market. They simply think that by using too many indicators they will be able to execute high-quality trades in the market. But in reality, by using too many indicators you are just increasing your risk exposure in the market. So in order to set the perfect trading environment for the price action trading strategy you need to remove all your indicators from the chart. Since price action trading strategy is based on raw price movement and different candlestick formation you need to be able to see the candlestick pattern very precisely.
Let’s look at a clean chart which is suitable for price action trader.
Figure: Chart comparison
In the above figure, you can clearly see that the first chart is totally clean and without any indicators whereas the second chart is full of indicators. So in order to become a profitable price action traders, you need to make sure that you use the first type of chart in your trading platform. Always avoid the use indicators and focus on raw price data in your chart.
Use the higher time frame: Most of the novice traders prefers to use the smaller time frame in their mt4 platform in the market. They simply think that by using the smaller time frame they will be able to execute more trading orders in the market and make much more profit. But in order to make a decent entry from your price action trading strategy, you need to focus on the higher time frame. If you trade the smaller time frame in the market then very often you will have false signal and thus incur losses in the market. If you look at the trading platform of the professional traders then you will see that most of them are trading the higher time frame in the market. To be honest you will have a hard time finding a short time frame traders in the market. Try to draw the key support and resistance level in the market in the higher time frame using the most significant swing highs and lows in the market. All the professional price action traders use the multiple time frame analysis in the market since it greatly helps them to enhance their winning edge in the market. So make sure that you are trading in the higher time frame environment in order to secure the best trade in the market.
Know your trading tools: Price action trading strategy is completely different from other types of trading strategies in the world. As professional price action trader, you will be using many different types of drawing tools in the market in order to find out the important trading levels. For instance, most of the professional price action traders use the trend line, horizontal line and Fibonacci retracement tools too often in their trading. So in order to secure your profit in the market, you need to make sure that you know your trading tools very precisely. Make sure that you arrange them in the right place in your mt4 platform so that in the time of need you can access them within a very short period of time. But some of the trading tools have a wide range of functionality for instance if you use the Fibonacci retracement tools then you can easily modify them or use a certain level to trade the price action confirmation signals in the market. So, it’s extremely important that you know all the details and functionality of your trading arsenal in order to make a profit in the market.
Summary: Trading the financial instrument can be very challenging especially if you are relatively new in this industry. All the professional price action traders use the clean chart in order to make sure that they can assess the market conditions in a clear chart. As a professional price action trader, you should focus on the higher time frame in the market to trade the different financial assets. Over the course of the time try to do the multiple time frame analysis in the market since it will greatly enhance you winning edge in the market. Last but not the least make sure that you know your trading arsenal’s functions very precisely.