Intraday Forex Strategy -Forex Price Action
Price Action refers to a simple trading practice that allows traders to analyze any financial market without using indicators.
Introduction to Forex Price Action
Understanding price action is a key issue when trading Forex Intraday. There is a great variety of methods and tools available for traders seeking to interpret the daily price action. These tools include Elliott Waves, candlesticks, Chart Patterns, major support/resistance, etc.
Definition -What is Forex Price Action?
Price Action is a trading method that reflects the flow of executed orders within a specific time frame. You may evaluate Price Action via empirical methods but the most reliable way is the use of technical analysis. What really distinguishes trading using Price Action compared to other intraday strategies is the use of naked charts with candlesticks and without any indicators or oscillators.
Price Action and The Simple Use of Candlesticks
A candle is formed by (i) a closing price, (ii) an opening price, and (iii) two price wicks.
- The two price wicks reflect high and low prices within the selected time frame (for example 1 minute chart).
- The body of its candle is determined by the distance between the closing and opening prices and therefore a candle may be bullish or bearish.
Price action should be interpreted according to the current trading conditions of each Forex market.
When a potentially profitable trade has been identified, a trader must decide the portion of his funds that he is willing to risk upon that trade. A critical decision, as large trade sizes can lead to great profits but also to great losses. As it has been mentioned in the past, trading leverage can be your best friend or your worst enemy.