Price Action Forex Trading Strategies

Price action is a simple yet very effective way to trade the forex market. Price action is the study of price, how it moves and reacts to areas and levels in the forex market. Generally speaking we don’t use indicators with this strategy, although moving averages are good as acting as dynamic support and resistance.

Price action strategies revolve around candlestick patterns, these include inside bars, pin bars and engulfing bars. My favourite is the pin bar. The pin bar is a reversal bar, it shows us that price moved in a certain direction for a time, but at some point it changed direction and ended up closing near or beyond where it opened. This tells us that during the session sentiment about the market changed. From this we can deduce that the market did not want to go in the original direction, and we can now place trades in the direction of the new sentiment. Or opposite to the direction of the tail which shows us rejection of higher or lower prices.

Pin bar reversals are best taken at strong support and resistance levels, these are the areas where institutions and banks place their orders, when you see a pin bar at support or resistance, we can deduce that the big players bought or sold at this level. We can then assume that price may bounce on this level and continue in the new direction for a time. But remember there are no gaurantees!

My favourite pin bars occur when price breaks trough a key level and then retests it, old support becomes new resistance and vice versa. These are very high probability setups that you really should be learning to spot and trade, because they work!

The best pin bars occur on daily forex charts and on the 4hr. Below this and you start to see price action signals caused by market noise.

I genuinely believe that anyone can learn price action, so long as you are prepared to put in some work and take some time to put these things to use you can make money. If you are fed up of heavy charts where you can hardly see price then this could be the strategy for you. Strip away the indicators and start watching price, soon you will be able to spot patterns and see things you were previously blind to.

So where do you learn this stuff? Well a good book to buy is Martin Pring on Price Patterns, this is a great book about price action. Also you can visit my website which is a free resource for traders.

I must stress here that there is no need to buy expensive trading courses and all sorts of BS. Everything you need to succeed is freely available on the internet, an if its not my site there is plenty of other places to learn like on forums and on you tube.

Price action has made me a confident and profitable trader, and with a bit of determination and belief you can do it to. You don’t need to be a genius, in fact the dumber you are the better! Forget about excel, and programming systems, go look at your charts and learn to read them.