Let’s say, you use indicators in your trading like RSI above 60 bullish sign and MFI losing strength below 30, or EMA crossovers fast MA above slow MA, price above 100 MA, as well any xyz indicator shows clear indication to get in the trend for up or down moves, how many times you came up with good profitable trade?
So, if results are not satisfactory you may start making combination of another exclusive indicators may be market profile or volume-based indicators and any fancy indicator costing you good subscription cost monthly or yearly. Now you start wondering what’s going wrong with my trading as I am having the latest and sharpest trade setup and still its giving me discouraging results or guess what I am not even at break-even (no wonder you haven’t added your fancy indicator costs yet).
But as shown in blah blah website or claimed in that super cool video it should work in any market condition and start providing me good money…. fellas what’s missing in this scenario??
“BHAV BHAGWAAN CHE” (PRICE IS GOD)
I heard this line in the beginning of my trading carrier and never thought how much it will make impact on my trading. After losing my good capital and time & after seeing hole in my pocket, I finally started working on price itself.
Since price action trading relates to recent historical data and past price movements tools like technical analysis, charts, price bands, swing high/lows, technical levels (of support, resistance and consolidation), etc. I started taking them into account and started marking imp zones.
Earlier The tools and patterns observed by me were simple price bars, price bands, break-outs, or some complex combinations involving candlesticks, volatility, channels, etc. and when price started coming out of that zones I started making observations till how much it can go, what are upcoming obstacles I can face and is this patterns have higher probability or it produces mix results ?
As price action trading is an approach to price predictions and speculation, it is used by retail traders, speculators, arbitrageurs and even trading firms who employ traders. It can be used on a wide range of securities including equities, indexes, bonds, Forex, commodities, derivatives, etc. so basically all type of traders uses it in all type of instruments. Here Psychological and behavioral interpretations and subsequent actions, as decided by the trader, also make up an important aspect of price action trades.
For e.g., no matter what happens, if a SBIN hovering at 190 crosses the personally-set psychological level of 200, then the trader may assume a further upward move to take a long position. Other traders may have an opposite view – once 200 is hit, he or she assumes a price reversal and hence takes a short position.
So I always suggest students how to read price in a right way and more importantly in different scenarios how to get exact idea what will be more beneficial things to apply and how you can carry the trade as well. Because just gauging with price action reading will not lead to give success but executing trades with proper risk management will.
So, my closing thoughts on this,
Don’t make your setup complex using n number of indicators and lose conviction in good trade
Better start reading simple price action patterns and relate them in your strategy
Trade higher probability patterns with good trade management because as long as I can cut my risk or manage it properly thing will start moving in my way.