subject: Price Action Analysis: The Best Method For Trading The Forex Market [print this page] The forex market is a highly liquid market that lends itself wonderfully to simple price action setups. Due to the high volume and contrarian nature of the forex market specific price patterns tend to re-occur over time on all the forex currency pairs. The speculative nature of forex means that prices tend to be volatile yet predictable; usually moving strongly in one direction and then correcting back to the average or mean price level. This provides for strong and easily tradable trends in forex that often go for weeks or months.
Due to the round the clock nature of the FX market and a daily volume of better than 3 trillion dollars there are many more price action opportunities for traders to take advantage of. Where as stock and futures traders only have 1 session with solid liquidity to trade off of, forex traders have the ability to spot price action setups any time of the day, allowing them to profit off of breaking news in Asia, Europe, Australia, and the U.S. The currency markets are usually quite volatile during the European session so there is a tremendous advantage in being able to trade the spot FX market around the clock as opposed to only during the U.S. trading hours.
Price action analysis is a great method to trade forex with because there is almost always a great setup forming any time of day. Due to the high liquidity and sheer volume of the foreign currency market many more price patterns get completed than in the stock or futures market. This means more opportunities are available for the retail forex trader, especially for those using price action analysis. Currency pairs tend to move up or down with equal ease due to the inherent nature of simultaneously buying one currency and selling another. Stock markets tend to be much more bullish in nature; this means the downward moves are difficult to take advantage of due to increased regulations and fees on short selling. The ability to profit from dramatic up moves as well as dramatic down moves is another reason why price action analysis works well in forex. Generally these moves are tipped off by a simple price action setup. Once you know what to look for in a price setup, trading the forex market will be a simple routine you look forward to.
Price action analysis is the best method to trade forex with because you will almost always have a great opportunity waiting for you; all you need to know is what exactly you are looking for. Forex trading has never been easier for the retail trader and can now be done entirely over the internet with very little start up cost. When you combine price action analysis with ease of use of the forex market it really is one of the cheapest, most profitable, and least stressful businesses to get into. As long as you employ a simple yet effective and flexible method and manage your emotions you will have no trouble profiting from the forex market.
