Many forex traders are likely to try to analyze several variables at the same time, especially traders who do not have a specific strategy and method to be applied in day-to-day trading. They often combine multiple technical indicators as well, see some currency pairs in different time frames as well as the development of a variety of fundamental news reading. This way is clearly not effective. They intend to understand the movement of the market price is too broad coverage so confusing and tend to over-analysis.
This article deals with the concept of 'specialization' in forex trading, price action is a method in which one part. Forex trader is a profession, and as well as other professions in general, specialization is always more profitable. General practitioners are often found and for the lucky ones income can be very good, but a specialist is more rare than general practitioners are certainly going to get better income as they master the specials that are not owned by a general practitioner. A forex trader who has a particular method that has been tested is a specialist in trading.
The main advantage of price action trading method is the method can be used with simple. We just need to focus on what the market price movement patterns and the presence of levels of support and resistance. Technical indicators used are minimal, usually only the moving average indicator for confirmation. The method can be applied to the price action throughout the currency pairs and time frames usually used trading daily or 4-hour. If at one time frame has been established price formation in the action setup, it should not be compared again with a time frame greater or smaller. By using the familiar method of price action in the discipline in trading, traders will not hesitate when trying to open a position as a trading signal generated is usually quite valid.
Here exemplified by the price action trading methods on the EUR / JPY daily. You can develop a method of price action with your own strategy, especially in determining entry and exit points as well as the risk / reward ratio. Here exemplified EUR / JPY as the pair is quite popular, liquid and predictable (predictable).
The first time is to determine the market conditions, trending or ranging (sideways)
Having in mind the market is uptrend, then we define the key levels of support and resistance:
We use the exponential moving average indicator (ema) 8 and 21 ema as confirmation of price action setups were formed. As is known in the setup price action pin bar there, fakey bar and inside bar. In the chart of EUR / JPY looks fakey setup bar by rejection (rejection) of ema8 as dynamic support level, and if the setup is correct (confirmed) price will move in the direction of the uptrend
The main characteristic of the formation consists fakey bar inside bar, followed by a bar 'false break' were formed and closed at inside bar range. Entry point for long positions can be determined when the top level penetrated inside bar, the stop loss level is set at a low level of fakey bar formation (a 'false break').
Finally we specify the risk / reward ratio. Can 1: 1 or 1: 2 according to the money management strategy that we agreed upon. We can also maximize profits by using a trailing stop facility, averaging techniques or pyramiding.
