Simple Price Action Basics To Get Your Trades Moving
Price action is one of those things that are easy to learn but not necessarily easy to master
. There are literally hundreds of strategies that you can employ when it comes to trading foreign currency. Some of these are more complicated than others but at the essence of them all are a couple of simple and effective strategies. This stays true for price action strategies as well.
The first thing that you need to understand when it comes to price action strategy is the Swing High. When you look at the simple price action chart, you find quite a number of these. It is basically made up of a combination of bars, three bars actually; in which the middle bar is higher than the bars before and after it.
Alternatively, if there is a swing high in your price action chart; you've also got to have the opposite which is a swing low. This chart shows swing low as three bars just like a swing high. However the two are different in that the middle bar of a swing low is lower than the two bars which are before and after it.
Using these two types of bars, you can actually come up with a very simple strategy. You basically have to remember three essentials. When your price action chart is showing various swing highs in succession, then the market you're trading in is currently trending up. The alternative is again true when it come to swing lows. If however you notice that the trend in your chart doesn't seem to be going in either direction, it could be because the market is in a state of push and pull and is, as such moving sideways.
These three items are the starting point to understanding and therefore creating your own trading strategies. Bear in mind though that you need to take market types into account but once you've understood that a little better, you should be able to create your own price action strategies.