PRICE ACTION TRADING – LEARN TO TRADE LIKE A MASTER TRADER
For those who missed the Live Forex trading event, we are writing a short article to give you an overview of Supply and demand levels and the fx term to trade these levels is called Price Action Trading.
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When you have a complete understanding of supply demand trading strategy, it becomes really easy for you to realize one of the important aspects of Forex trading. As a matter of fact, understanding of supply and demand becomes the cornerstone of your trading strategies. Strategies like pin bar and inside bar good examples of such trading strategies. As a matter of fact, success in trading depends to a great extent on the right identification of real areas of better supply and demand for successful trading. These are the levels at which big banks and financial institutions are buying and selling currencies and making big profits
WHAT ARE SUPPLY AND DEMAND LEVELS IN FX
What could really become the true meanings of the terms supply and demand? Supply to a market could only result in selling, whereas demand in the market simply results in buying. As these are only the simplest explanations of the frequently used terms for the sake of understanding, bigger supply to the market only brings higher selling pressure. As a matter of fact, the selling pressure makes the price fall rapidly. On the other hand, the increase in demand means an augmented pressure for buying. When there is increased buying of a product, it makes the prices in the market rise even higher.
WHAT IS PRICE ACTION TRADING IN FOREX?
The balance between supply and demand is always changing. The ever-changing market brings movements or fluctuations in the price moves, which is familiar as price action. As supply goes up, the price in the market would tend to decline and when the market has more demand, it would make the price rise even higher. A technique call scalping is applied in trading and this is based on major Supply and demand levels by day traders. This strategy is also used by day traders in the stock market to buy and sell stock. In our article today we will stick to trading currencies.
HOW TO TRADE USING PRICE ACTION TRADING METHODS AND ITS IMPACT ON THE FX MARKET
Broadly speaking, price action helps in making a structured low-risk Forex scalping strategy for short-term traders. To add to it, price action even gets included in the technical analysis and trading analysis of forex. It makes attempt to find an order in apparently indiscriminate price movements.
HOW TO IDENTIFY KEY SUPPLY AND DEMAND LEVELS IN FOREX TRADING
The most useful way to do translations of the concepts of demand and supply in the forex trading chart is to change the way the trader thinks about the two terms. When a day ends, an increase in demand needs an area of support. In the same way, an area of supply could mean an area of resistance.
Technically speaking, in Forex trading price action traders call these as support and resistance levels. These major trading levels on the chart could give vital hints about buying and selling opportunities.
Let’s know who would make use of supply and demand trading rules ? As price action trading is an approach to price predictions or speculations, this gets mostly used by retail traders, speculators, arbitrageurs, and even the trading firms that employ traders.
The forex price action trading is really useful in a trading wide range of securities like equities, bonds, forex, commodities, and derivatives.
HOW DOES PRICE ACTION PLAY A CRITICAL ROLE IN FOREX TRADING?
Literally speaking, price determines everything in business. Forex trading is not an exception. Price action is a vital aspect of the foreign exchange market. It simply means everything that a security price could do. But like any other thing, it is purely subjective. Of course, there are different ways, you could apply price action ideas in the Forex market. There are effective tools like candle-stick and price bar for making an analysis of price action. Those help traders in visualizing price movements.
This is an example of how our Methodology works in action with a trading opportunity. Everything is clear and set out in front of you.
HOW TO TRADE USD/JPY USING OUR SUPPLY AND DEMAND TRADING METHOD AND RULES
Technical Point of View on the USD/JPY
From the daily chart, we can see a triangle formation is in play. We are now looking for a major reversal of a simultaneous touch on the triangle and supply level.
USD/JPY FOREX TRADING STRATEGY
Trade Entry: Short USD/JPY @ 112.70 with a 40 pip stop loss with a target of 111.20
Key Technical Levels on the USD/JPY
- 110.00 – Long-term Buying Level
- 111.00 – Long-term Buying Level
- 112.50 – Short term Selling Level
- 113.00 – Long-term Selling Level
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