Jan 3 2017
Trading the financial instrument is getting huge popularity among the professional traders due to its extreme level of reliability. There are many traders in the forex market who uses tons of indicators to filter out the best possible trades in the market. But at the end using tons of indicators doesn’t help the reality traders at all. Most of the retail trader’s fails to make money since they rely too much on the indicators. Indicators are two types, leading indicators, and lagging indicators. The leading indicators always give early trading signals to the traders where the lagging indicators give a late signal. That means if you trade the market using the indicators then you will never be able to execute any trades in the market with the real time movement of the price. In exchange traded funds, it is extremely crucial for the traders to understand the real time movement of the price. The price action trading strategy is developed on the raw price movement of the price and its gives the trader’s real time information about the market dynamics. But trading the financial instrument with price action trading strategy requires pin perfect execution and experience. In this article, we will discuss some of the most common mistakes in price action trading.
Using the lower time frame: Price action trading strategy is based on the raw price moment and it allows the traders to identify the potential trading spot to the traders. Most of the novice traders trade the lower time frame after learning different price action setups in the market. They simply use the lower time frame since lower time frame offers more trading opportunity to the traders in exchange traded funds. But in order to make a consistent profit and earn a decent living by trading, you must trade the higher time frame. There are lots of false spikes and movement in the market and when you use the lower time frame then you actually expose yourself to false signals in the market. In the eyes of trained professional trading, the financial assets with price action setup should be always done in the higher time frame. If you trade the market in the higher time frame then you will be able to execute your orders in the market without worrying about the false setup.
Taking too much risk: Those who are trading the financial instrument for a long period of time knows the importance of proper risk management factors. They always make sure that they execute their orders in the market by following proper risk management factors regardless of their trading setup and probability. They simply rely too much on price action trading strategy and thinks that it will allow them to make profit 100 percent of the time in exchange traded funds. But if you trade the financial assets then you will always have some losing orders in the market.SO when you trade the market with price action trading strategy always make sure that you use proper risk management factors in every single trade and never risk more than 2 percent of your trading capital at your initial stage.
Avoiding the confirmation signal: Those who are trading the forex market with price action trading strategy knows very well that every price action candlestick pattern in the forex market comes with a confirmation candlestick pattern. The expert price action traders always make sure that they execute their trade in the market after the formation of the confirmation signal in the market. It’s true that by using the confirmation signal in the market you will have to use a little bit wider stop loss but if you truly want to master the art of price action trading strategy then you must use the confirmation signal in the market. Most of the retail traders fail to money in the forex market by using the price action trading strategy due to their aggressive trading style.
Avoiding the fundamental news release: Price action trading strategy is extremely profitable and reliable. Most of the retail traders in the forex market tend to forget about their fundamental analysis since they think that price action trading strategy is enough to ensure their profit in the market. But in reality price action trading strategy is based on the combination of technical and fundamental analysis.SO if you ignore the fundamental news release in the market then there is a high chance of losing in the market. As a professional price action trader, you should always execute your trade after analysis the fundamental factors in the market. The long-term prevailing trade in a currency pair changes its trend on the event of the fundamental news release in the market. So always make sure that you assess the fundamental factors before taking any trades in the market. Every single professional price action traders assess the fundamental factors and market sentiment before they execute any signal trade by using the price action signal. By using the fundamental analysis you will save yourself from many losing trades in the market. Most importantly it also allows the traders to know about the prevailing strength of a trend in any currency pair.
Summary: Price action trading strategy is one of the most profitable trading strategies in the forex market but most of the retail traders fail to make money due to some common mistakes. So if you truly want to master the art of price action trading strategy then you need to learn from your mistakes and trade the market with proper risk management factor.