It is quite important to predict market movements by spotting signals and patterns in price movements with the help of price action trading. You should know all about these plan action strategies. If you don’t have an idea about any such strategy, then we have mentioned them in this guide. You can check the details below:
Price action trend trading
If you are a beginner or a new trader, this can be a great tool to predict price movements in an underlying market. You can use many techniques to follow and spot price action trends. The head and shoulders trade reversal is one of such techniques that help learn from experienced peers. It can be done by chasing trends as they are visible.
Trend following breakout entry
If you want to spot major market movements, then this strategy may be useful. These major market movements can be after a retracement or price spike. If it moves outside the resistance line, then this is called a breakout. This can be an important signal that may give you an idea to act.
Pin bar or candlestick strategy
When you spot and follow this pattern, you see it looks like a candle having a long wick that shows a rejection and reversal of a specific price. Tail or wick of this distinctive shape represents the rejected price range. By observing the shape, you can make assumptions about price movements and use it to decide if to take a short or long position in the market. If you see a pattern with a long lower tail, it shows a trend of lower prices being rejected and it can be about to rise.
Inside bar
This is suitable for skilled and experienced traders as they can use it to spot the trend by using macro knowledge to find out if the inside bar shows shift or consolidation in the prevailing trend. The position and size of the inside bar may tell if a price may go down or up. It’s a two-bar strategy where you can observe that the inner bar usually forms during market consolidation and is smaller than the outer bar.
Trend following retracement entry
This is an easy strategy where traders follow the existing trend. If you observe price is on upturn means if it is rising, with the lows and highs trending rising higher, they you may wish to purchase in. You may seem to take a short position, if the price is in a downturn.
Conclusion
In trading, price action analyses the performance of commodity, index, security and currency. It helps in finding out the future performance. You may take long position if price is about to rise and you may not want to buy in if price is about to fall. You should understand how to look pattern and find out the key indicators that may impact your investment. We have mentioned 5 excellent price action trading strategies above, hope it will help you.
