Whilst it’s impossible to know with certainty what will happen in the Forex market, there are certain clues that can help traders determine with a degree of probability what will happen next. These clues help a trader to understand where the market has been, what it’s doing now and potentially what it could do in the future.
How do we get these clues? Price Action!
Learning the language of Price
By understanding some simple price action techniques and methods, it can offer clarity about what price movements are indicating. Learning how to interpret candle formations and chart patterns, as well as how to trade them.
In order to get started on the right path, you need to become selective with your trades and choose only A+ price action setups.
Listen at Closing Time
As a price action trader, the closing price of a candle/bar is how we can determine who has the upper hand, the bulls or bears. Prior to the candle/bar closing the battle is between the two is still taking place and a winner has not yet been determined. The close of a candle/bar is what I consider ‘confirmation’ of who wins the battle.
Let the market talk to you
Instead of trying to guess what’s happening in the Forex market, let it reveal its story to you. You do this by mastering price action and what it’s telling you. This is how you develop a high-probability edge which also helps you to remain patient for the market to tell you to trade. If you’re aware of what to look and listen for, then you’re taking away the need to overtrade because either your edge is present, or it’s not. Overtraders simply don’t listen to the market, instead they follow their mind and emotions. When you look at a chart you should immediately be able to see what price has said, ie, your edge is present, or it’s not. And if in doubt, then don’t take the trade.
When it comes to Forex trading, or any trading for that matter, you NEVER should force a trade. The market speaks very clearly through price action. And these are the times in which you need to listen and act accordingly. It’s you, the trader, who must understand that the best price action traders all but jump off the screen at you. With price action practice, you’ll soon have no trouble listening to what the market has to tell you.
Source: Vantage FX Blog