Price action allows to analyse the Forex Market with out using indicators.
What is Price Action?
- Price action trading allows you to analyse the Forex market without using indicators.
- Instead of indicators you use candles, support and resistance, and other chart analysis to make trading decisions.
- Price action is perfect for scalp trading because it allows you to make quick trade decisions.
- I won’t cover price action basics here, if you want to learn the basics, check out my free price action strategy.
- The point is that price action analysis allows you to predict with a high degree of accuracy what price will do next by understanding who has control of price, buyers or sellers.
- If buyers are in control, you want to buy. If sellers are in control, you want to sell. It all seems very simple right? Well, some newbies make price action a lot more difficult than it needs to be.
- So let me tell you a secret that will help you be a better price action trader.
Who’s in control of price?
- Who’s in control of price?
- Those five words are vital when trading price action.
- If you ask yourself that question every time you look at a chart, you will be a better trader.
- I do most of my trading on larger time frames, and even on those larger time frames I constantly ask myself “who’s in control of price?”.
- That one simple question keeps me profitable and it keeps me from making mistakes.
- And here is why.
- The question only had three possible answers.
- Buyers are in control.
- Sellers are in control.
- Price is undecided.
- If you spot a short trade which you want to enter and you ask yourself “Who’s in control of price?”, would you enter if the answer is buyers?
- No, of course not, if buyers are in control you do not want to sell yet.
- Asking yourself “who’s in control of price” forces you to think about price objectively.
- It forces you to properly analyses price. Instead of making a hasty decision, you are forcing myself to make an informed decision.
- Now, if I ask myself that question when trading 12 hour charts. Imagine how much more important it is when I am price action scalping a 5 minute chart; when I only have about 30 seconds to make a trading decision.
- So, if you want to trade my Forex price action scalping strategy, memorise that question.
- Who’s in control of price?
- Being able to answer that question quickly and effectively is vital. And, it is also very stressful, which brings me to my next point.
Scalp Trading & Price Action
- So why do scalp trading and price action work so well together?
- Price action trading is about being in tune with what price is doing right now, so you can predict with a high degree of accuracy what it will do next.
- Scalp trading is about the same thing.
- A scalp trade normally only lasts 5-30 minutes. So, to scalp effectively you need to analyse what price is doing right now, and what it will do for the next 30 minutes or so.
- So, what about indicators?
- Most traders use indicators for scalping, which is a bad choice. The problem with indicators is that they lag behind.
- Scalp trading and lagging behind just don’t mix well together. Scalping requires quick analysis, quick decisions, and quick trading.
- And at it’s core, price action trading is all about speed and efficiency.