Price Action is King
In this weekly video:
00:24 – How price action trading can help you
01:25 – A handful of candle patterns and shapes that work
01:55 – Assess a candle only once it has closed
03:00 – A confluence of events
04:12 – The close of a candle
05:17 – Understanding price action is so important
Price action is king. It really will help you with your trading success. Let’s talk about that and more right now.
Hi, Forex traders. Andrew Mitchem here. The Forex Trading Coach video and podcast number 279.
How price action trading can help you
And I want to talk all about the power of price action trading and how it can really help you to become a profitable Forex trader.
There’s a number of things that you need to understand. Price action is key, and it’s understanding what part of the chart we’re in right now. It’s understanding a few technical base things such as understanding a handful of useful candle shapes and patterns. It’s also understanding what context of the chart we’re in. Are we in areas buying into likely resistance? Are we in areas selling into likely support? Are we at areas we might find struggle to break through either higher or lower? What’s happened prior to the price action that we’re in right now? Are we in a big downtrend and maybe that formed a support level? However, we could also have a big downtrend and a pullback, and then looking for the opportunity to go short again.
A handful of candle patterns and shapes that work
When it comes to candle patterns and shapes, there are handful that I use and I teach in my coaching course. Now, you can go online and find all number of candle patterns and candle shapes, but I found that realistically, there’s only about five that are really useful, and it’s not so much about looking at like the set of overall pattern in terms of wedges and triangles. To me, it’s more about the understanding the individual candle that is just closed.
Assess a candle only once it has closed
Because a practical way of trading is to assess what’s happened once a candle has closed. Why is that practical? Well, a number of ways. If we have some previous indecision, and let’s say we’ve had a downtrend, and then some previous indecision, and then a potential reversal candle. That’s telling me that already, after a downtrend, we’ve seen some indecision in the market, and now we’re getting confirmation that we might be seeing a pullback. It could be a complete reversal. It could just be a temporary pullback, but it’s telling me by looking at just not only the candle that just closed, but also the previous one and the previous trend.
It’s giving me an idea of what’s happened, but you can’t just use that by itself. You have to use a number of other factors. You have to use the bigger picture trend. Maybe that bigger picture is we’re already currently in a trend, so do I want to take that buy trade against the trend, or do I just want to accept that we made … not be seeing a retracement, and then I’m going to wait for that selling opportunity to sell with the bigger trend? There’s a number of factors that you need to add into this.
A confluence of events
So you need a confluence of events. You need to add more things than just purely the candle itself. What part of the chart is it in? What is the price that it’s at? Has it stored and bounced at a level that may previously have bounced back in the past whether that’d be a number of hours, or days, or weeks, or months away? It’s all on … and that depends on what timeframe chart you are trading.
The other benefit of looking at a candle at the close of it as candle is that you know exactly when you need to be at your charts. You see, to me, there’s nothing worse than talking to traders and especially new traders who just say, “Look, Andrew. I’m trading 6, 8, 10, 12 hours a day and it’s not, well” Yes. When you’re learning, it’s good to get some time understanding what’s happening, but you really don’t want to be long-term trading like I’ve been trading 15 years.
I can tell you. There’s nothing worse than sitting, watching your chance all day long because it’s not enjoyable and it’s not realistic. Yes. To some extent, it’s good way of learning, but long-term, that’s not an enjoyable way of trading.
The close of a candle
The beauty of trading at the close of a candle is I know exactly when that’s going to happen. Let’s say I’m looking at the close of a four-hour candle. I know exactly when that four-hour candle closes, so I know when I need to go and have a look at my charts.
If I’m trading a daily chart, I know that the daily chart closes at 5:00 p.m. New York time, Eastern Standard Time, so I know when I need to go and look at the daily chart. Things like that make trading not only less stressful. It makes it more enjoyable. It makes it more practical and a longer term prospect for you, so it also means that you have less emotions within your trading because if you sat there watching every peep move up and down, then realistically, you’re going to be more stressed about your trading. You’re going to be more twitchy on your mouse key … on your mouse. You’re going to be looking at entering more often or closing trades out without the actual thought process of what’s behind that trade. Therefore, you’re likely to go away from your trading plan.
Understanding price action is so important
Bringing all that back to one thing, it’s all about price action and understanding technical analysis correctly, and that is what will make a massive difference to your trading. Look, as I’ve been trading myself for many, many years and it’s how I’ve been teaching thousands of clients and thousands of Forex traders just like yourself all around the world since 2009, if you’d like to jump on board and take advantage of these five-star-rated coaching course, I’m going to put a link below this video. If you’re listening to the podcast, the best thing to do is have a look at my website, theforextradingcoach.com.
Once again, this is Andrew Mitchem, owner and head trader of theforextradingcoach.com. I look forward to seeing you this time next week. Bye for now.