Price action is the behavior of price of a specific currency, commodity, stock or other trading instrument over a specified period of time. The predictive capacity of specific price patterns over time can be best seen by price action analysis. Certain price patterns re-occur in the markets and can be used to develop a rule-based system.
Price action analysis provides us with power to see exactly what any market is doing at any point in time. Price action analysis is the study of the visual trail of supply and demand over a specified period of time. All market participants’ expectations and beliefs are reflected in a price chart; the larger and more informed players leave a bigger footprint, by analyzing the behavior of price over a period of time we can make an educated guess as to what traders “in the know” are doing in the markets.
As retail forex traders, our goal is to jump aboard the price trail left by bigger players who have the power to move the market. By building our price action trading system around a few time tested and repetitive setups we give our selves the best shot at riding the momentum of the market to consistent profits. Forex markets produce specific price patterns on a re-occuring basis as an inherent characteristic.
Active traders will attest to the idea that trading is approximately 80 or 90 percent psychological and 10 to 20 percent technique. Many traders start off thinking it is the opposite and end up blowing out their trading accounts as they find themselves in what seems like a constant battle with the market. Price action analysis provides us with a simple, straight forward, and most importantly, effective method that allows us to focus our energy and time on the psychological side of trading. If we as technical traders are primarily basing all of our trading ideas off of charts then why would we confuse and frustrate ourselves with anything but what the chart is made of which is of course price action ?
A mastery of the markets is the result of a trading method rooted in consistency. In order to consistently profit in the market all of our trading related activities muct also be consistent. Price action analysis gives you the know how to recognize specific price patterns that happen over and over in the market. This grants you the ability to acheive the consistency that all traders covet yet that so few ever achieve. Success in any given profession is generally a result of great training and mentoring. To learn consistently profitable price action trading strategies you should learn from someone who trades with the exact same methods they teach. So get yourself forex training in specific price action patterns and I promise that you will be well on the path to trading consistently.
