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Monday 14 August 2017

An Intro to Trading Forex Using Price Action

Price Action describes the characteristics of a security's price movements. This movement is quite often analyzed with respect to price changes in the recent past. Rather than relying solely on technical indicators price action allowing a trader to make subjective trading decisions by reading the market based on the recent and actual price movements, is a trading technique in simple terms.

The price action trading strategy is dependent on technical analysis tools as it ignores the fundamental analysis factors and focuses more on recent and past price movement. Using price action you must learn how to trade forex.



What tools are used for price action trading?

All technical analysis tools like charts, trend lines, price bands, high and low swings, technical levels (of support, resistance and consolidation), etc. are taken into account as per the trader's choice and strategy fit as price action trading relates to recent historical data and past price movements.

Price bands, simple price bars, trend-lines, break-outs or complex combinations involving candlesticks, volatility, channels, etc are the tools and patterns observed by the trader.

As decided by the trader, an important aspect of price action trades is made up by psychological and behavioral interpretations and subsequent actions. For e.g., the trader may assume a further upward move to take a long position if a stock hovering at 580 crosses the personally-set psychological level of 600, no matter what happens. He or she assumes a price reversal and hence takes a short position while other traders may have an opposite view - once 600 are hit. If you need help the best forex broker in Australia can guide you.

As each will have his or her own interpretation, defined rules and different behavioral understanding of it, no two traders will interpret a certain price action in the same way.

Aided by technical analysis tools and recent price history, price action trading is a systematic trading practice. Here to take trading positions, as per their subjective, behavioral and psychological state traders are free to take their own decisions within a given scenario.

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