Intraday Forex Strategy -Forex Price Action

Introduction to 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. 

Any trading order must be adapted not only to individual goals & strategies but also to the current market conditions.

ONLINE TRADING ORDERS

The selection and placement of a trading order must be compatible not only to individual strategies but also to the current market conditions.

Market conditions matter when selecting trading orders, for example:

  • volatile market conditions require the use of wide trailing-stops
  • ranging market conditions require the use of fixed-stops (below/above major support and resistance levels)

These are some key factors to consider during the selection of trading orders:

◙ General Market Conditions (Volatile, Trending, and Ranging Markets)

◙ Risk Acceptance

◙ Technical Analysis (Price Channels, Support/Resistance, Chart Patterns, Pivots, etc.)

◙ Profit/Loss Ratio

◙ Available Margin

Major Types of Trading Order

Trading orders include market and pending orders:

(1) Market Orders

Market orders are filled at the best current market price available. This order type can prove very risky when trading in volatile markets with high execution-delays.

■ Buy rate (best current available market offer price)

■ Sell rate (best current available market bid price)

Forex traders should prefer ECN Forex Brokers offering minimal latency.

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