1) Identify Areas of Trading Interest
When I consider initiating a trade, the first thing I look for is the price of a certain currency pair at a given place. To put it another way, I don’t trade anyplace.
It’s similar like crossing a street; you wouldn’t want to cross it anyplace. First and foremost, you’re looking for a certain cross lane.
Simple Support and Resistance zones have always appealed to me. I have a basic method for identifying them so that I can achieve a consistent outcome. In A Powerful Way To Draw Support And Resistance Zones, I explain how to do this.
By mentioning “areas of trade interest,” I’m employing a wide term.
In any event, there are two reasons why you should position your transactions in regions of interest:
There will very certainly be increased activity in those regions.
It allows you to enter trades with a better Reward-To-Risk ratio.
However, when it comes to identifying trading regions, keep it simple. It’s not going to help if the chart is cluttered with lines and patterns.
2) Getting A Feel For The Market
Remember how I stated that an effective price action technique is more than just candlesticks?
This is where candlesticks will not be used to obtain a sense of how the market (i.e., your specific currency pair) is moving.
Getting a sense of the market necessitates pausing for a few moments to attempt to comprehend the buyer-seller relationship.
Yes, but in what way?
3) Confirmation (or Not)?
No, you can’t just glance at the preceding criteria for a few seconds and then leap into price action trading without confirmation, expecting the market to behave as you expected.
You must have a sound trading strategy.
However, the more losses we have early in our trading careers, the more concerned and cautious we become as traders. That can make us want to search for ‘confirmation’ in the market unnecessarily.
The fact is that nothing in trading can ever be guaranteed, and it will always be a game of chance.
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