4 common mistakes in the price action trading strategy Mar 12th
The price action trading system is based on the
Japanese candlestick pattern. The Japanese candlestick pattern lets traders
know about the direction of the market. Most of the time, naïve UK traders rely
on the indicator based trading method and eventually they lose a big portion of
their capital. You should never try to use a complicated method since it can
make things really worse. You should learn about the price action trading
method as it will make you a better trader. In fact, most skilled traders rely
on the price action trading method because it allows them to trade with a high
risk to reward ratio.
So, it’s obvious that pro traders use the price action
trading method to improve their execution process. But this doesn’t mean you
are going to make a big profit without facing any difficulties with the price
action trading strategy. Today, we are going to highlight some of the key
mistakes that can ruin your career even after learning to trade with the price
action signals.
Analyzing the lower
time frame
Analyzing the lower time frame is the most common problem of rookie traders. After knowing the basic price action
pattern they start focusing on the minor details of the market and try to
improve their win rate by trading the lower time frame data. But the smart
traders at Saxo rely on the higher time frame. They know the noise associated
with the lower time frame trading method. Does this mean, price action signals
should never be used in the lower time frame? Of course not. To trade the lower
time frame, you must use multiple time frame analysis. For that, you need to
use a practice account to learn the process of studying different time frame
chart.
Trading the
reversal
Price action trading is not about the reversal trading
strategy. In fact, this should be used to trade along with the trend. Being a
price action trader, you must use a robust trading platform to get accurate
price signals. The importance of having a professional trading platform is paramount.
Read more to learn about the impact of a premium trading environment.
Once you have a premium environment, you should try to trade in favor of the
trend only. In fact, price action signals are mostly used to find the endpoint
of the retracement. Once you learn this technique, you can easily make a big
profit by trading the major trend.
Taking too much
risk
Taking high risk after learning about the candlestick
pattern is very common in trading. Most of the time, new traders get carried away
by seeing the success rates in trading. But if you look at the experienced traders,
you will see a difference. The more you learn, the lower the risk they take at
trading. Due to this strong risk management policy, they manage to survive the most complicated
situation in the market. Though it’s not easy to accept losses in trading, you
can easily learn to do so, by limiting your risk to 1%. Always be prepared to
accept losses from the very best trades. Once you get used to losing trades,
you won’t have to face trouble at trading.
Breaking the rules
Breaking rules and taking aggressive steps to recover
the loss are the criteria of the naïve traders. The elite traders never break
rules even after losing 10 trades in a row. They are good at managing the risk
and they know their risk to reward ratio is going to protect their capital.
Without finding a good risk to reward ratio, you should not be placing any
trade. Prepare a written plan and follow it strictly. Never break the rules of
trading as it can cost you your capital. Be a disciplined trader to ensure your
survival in this business.
Mar 12th
The price action trading system is based on the Japanese candlestick pattern. The Japanese candlestick pattern lets traders know about the direction of the market. Most of the time, naïve UK traders rely on the indicator based trading method and eventually they lose a big portion of their capital. You should never try to use a complicated method since it can make things really worse. You should learn about the price action trading method as it will make you a better trader. In fact, most skilled traders rely on the price action trading method because it allows them to trade with a high risk to reward ratio.
So, it’s obvious that pro traders use the price action trading method to improve their execution process. But this doesn’t mean you are going to make a big profit without facing any difficulties with the price action trading strategy. Today, we are going to highlight some of the key mistakes that can ruin your career even after learning to trade with the price action signals.
Analyzing the lower time frame
Analyzing the lower time frame is the most common problem of rookie traders. After knowing the basic price action pattern they start focusing on the minor details of the market and try to improve their win rate by trading the lower time frame data. But the smart traders at Saxo rely on the higher time frame. They know the noise associated with the lower time frame trading method. Does this mean, price action signals should never be used in the lower time frame? Of course not. To trade the lower time frame, you must use multiple time frame analysis. For that, you need to use a practice account to learn the process of studying different time frame chart.
Trading the reversal
Price action trading is not about the reversal trading strategy. In fact, this should be used to trade along with the trend. Being a price action trader, you must use a robust trading platform to get accurate price signals. The importance of having a professional trading platform is paramount. Read more to learn about the impact of a premium trading environment. Once you have a premium environment, you should try to trade in favor of the trend only. In fact, price action signals are mostly used to find the endpoint of the retracement. Once you learn this technique, you can easily make a big profit by trading the major trend.
Taking too much risk
Taking high risk after learning about the candlestick pattern is very common in trading. Most of the time, new traders get carried away by seeing the success rates in trading. But if you look at the experienced traders, you will see a difference. The more you learn, the lower the risk they take at trading. Due to this strong risk management policy, they manage to survive the most complicated situation in the market. Though it’s not easy to accept losses in trading, you can easily learn to do so, by limiting your risk to 1%. Always be prepared to accept losses from the very best trades. Once you get used to losing trades, you won’t have to face trouble at trading.
Breaking the rules
Breaking rules and taking aggressive steps to recover the loss are the criteria of the naïve traders. The elite traders never break rules even after losing 10 trades in a row. They are good at managing the risk and they know their risk to reward ratio is going to protect their capital. Without finding a good risk to reward ratio, you should not be placing any trade. Prepare a written plan and follow it strictly. Never break the rules of trading as it can cost you your capital. Be a disciplined trader to ensure your survival in this business.
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