To optimize the potential profit in forex trading, many traders are willing to learn and try various strategies. They will look for the best forex strategy. To be able to identify the next movement, there is a simple method that can be relied upon, that is price action technique.
Basically, the price action technique is a simple method of analysis which is done by observing the pattern of price movements. Thus, this strategy does not depend on any indicator. Mostly, they only rely on support lines or Moving Average for the purpose of signal confirmation.
Then, how to trade with the price action technique?
The traders use this technique to monitor the market. Then, you should make a decision based on the actual price movement. You do not need to rely on technical indicators that are lagging.
This startegy is often called the Naked Trading technique (trading without indicators). This is because it avoids the use of indicators or other technical analysis assistive software.
According to Investopedia, the traders who are using Price Action should utilize knowledge of three things, that is : Candlestick patterns, Harmonic patterns, and Support and Resistance. However, you can still use indicators to support or confirm your analysis.
How To Trade With Price Action?
To trade in this way, we must first understand Candlestick patterns, Harmonic patterns, and the concepts of Support and Resistance. Without knowledge of these three things, then we will easily make decisions based on emotions alone, as a result of the uncertainty of price movements in the market.
Read more: Over-Trading, Your Biggest Mistake!