Forex trading has never been as popular as it now today. In the past, only the large banks and institutions have access to the online trading world but due to recent advancement in modern technology retail traders have gained the access to this vast financial market. You can simply trade the different financial asset from a single trading account and make a decent income in every single month. It’s easy to do but hard to do in real life.
Not many traders are successful in forex. To master the art of trading you need a valid trading strategy to deal with the dynamics of price movement. Many people use many different trading strategies as it depends on the trader’s personality. To be precise every single day more than thousands of new different trading strategies are being evolved. Though many people will say that different people might have the same trading system but it’s absolutely wrong. No human beings are same and for this reason, no can trade the market in the same way.
Though there are many ways of executing trades in the online trading world a group of professional traders prefers price action trading strategy. This system is nothing but the study of the raw price data of the financial market. Every single candle stick has a different story to tell and if you can accurately interpret the formation of the price action setup then making a profit is not at all tough. Let’s see a class trade setup using price action confirmation signal.
Figure: Price rejecting 61.8% Fibonacci retracement levels and shooting up
From the above figure, you can clearly see that the price has formed a nice bullish pin bar several times at time 61.8% Fibonacci retracement levels and the professional traders went long on the pair. Most of the time the Fibonacci retracement tools are used to trade in favor of the market trend. But if you look at the professional traders then you will they are using this same tools for identifying the length of each corrective pattern in the market. Many often use it to find the key trading point also. The same tools are used by many traders in a different way. Even some experts in the financial industry use it to find the change in the trend of a certain currency pair. For instance, if the price breaks below the 61.8% support level then we can easily come to a conclusion that the asset is undergoing bearish trend reversal.
Though we can trade the market by using different trading system there is no guarantee that we will make a profit on every single trade. Price action trading is often considered to be the most reliable trading system in the world yet the professional traders always follow proper money management in each trade. So why do they do so? The answer is pretty simple. They know that losing is just a part of the trader’s life and without managing the risk they will never succeed in this industry. You need to focus on proper money management in every single trade and aim for high-risk reward ratios setup.
As long as the number new traders join this market, there will be ma y new different trading strategy. Each individual has their own way of looking at the chart. So similar trading system will never exist rather a new system will evolve over the period of time.
FinmaxFX is one of NAFD (National Association of Forex Dealers) initiators.
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