Price Action Forex Trading Explained – By Nial Fuller

Hello, and welcome to this trading lesson on Price Action Forex Trading.  I am sure many of you newer readers will “REALLY” benefit from today’s article which talks about several important concepts.

Today’s Article Covers …

• 1. What Is Forex ‘Price Action’ Trading ?
• 2. How do You Apply it to Forex Trading?
• 3.  Trading with Messy VS ‘Clean’ Forex Charts
• 4. Quick Examples of My Forex Price Action Trading Methods.

• What exactly is price action forex trading?

Price action trading is the art and skill of making all of your trading decisions off of a stripped down or “naked” price chart. This means no lagging indicators outside of maybe a couple moving averages to help identify dynamic support and resistance areas. All financial markets generate data about the movement of a security over varying periods of time in the form of price charts. Price charts reflect the beliefs of all participants trading the given market during the specified period of time.

All economic data that leads to price movement within a market is first turned into a belief in the human mind about how this data will affect the market and this belief is then turned into an action from a trader which reflects itself via price action on a price chart. In this way price action trading reflects all variables of any market for any given period of time. This is also the reason why using lagging price indictors like stochastics, MACD, RSI, and others is just a flat waste of time. Price movement provides all the signals you will ever need to develop a profitable and high-probability trading system. These signals collectively are called price action strategies and they provide a way to make sense of market movement and predict its future movement with a high enough degree of accuracy to consistently profit over time.

• How do I apply price action to the forex market?

Price action forex trading can be used to trade any financial market; however the forex market has the deepest liquidity and lowest startup costs as well as widest accessibility of any financial market, for these reasons and more it is the most popular market today among retail traders. My philosophy of price action trading is that you only need to master a few solid setups to be consistently profitable. In fact, having a simple trading method consisting of minimal setups will work to reduce confusion and stress and allow you to concentrate more on the psychological aspect of trading which is what separates the winners from the losers.

The first step you need to take to apply price action trading to the forex market is to setup a clean “naked” price chart, take off all indicators. Next, master a few solid price action setups; I mainly use the pin bar reversal, the inside barsetup, and my proprietary price action setup, the fakey. You can make money consistently from mastering just one of these setups, I suggest you work on one at a time, master it, and then move on to the next. In this way you will develop a price action “tool box” which will provide more then enough tools to take advantage of quality price action signals everyday in the forex market.

• Messy charts vs. clean “naked” price action charts

If you have been trading for a while you are probably using numerous lagging forex indicators on your charts that are no doubt confusing you and are one of the main reasons why you are still unsuccessful and found your way to my price action trading website. For all you newbie traders take a look at the two charts below and ask yourself which one seems more logical and less stressful to make trading decisions from?

A messy chart with the some of the most popular lagging indicators.

    A clean price action only chart.

Doesn’t it seem a little silly to use a messy chart when you could learn to trade off a clean price action only chart? Trading is hard enough with out a messy chart full of lagging indicators, stop fooling yourself by believing they are helping you. Price action setups are the best predictor of future price movement, all markets operate in “future time”, this means market participants enter trades based on what they believe will happen to a certain security in the future.Price action is the best indicator of the aggregate belief of all market participants. What happened in the past is the past, lagging indicators only analyze past data and display it to you in a second-hand format that is less clear and less precise than price action. The bottom line is that there is just no logical explanation for using lagging indicators. Price action analysis takes into account all market variables.

• My price action setups

As mentioned previously I stick to three basic and time tested price action setups. They work in all market conditions and provide a unique market perspective that allows you to develop a highly profitable forex trading plan. Price action trading is the only way I trade the markets and I have been trading these price action action setups successfully for years. My price action forex education course goes into great detail in regards to exactly how I trade using price action. I have recently also added a beginning trader introductory forex trading course in addition to my advanced price action trading course.

Categories: Price Action Forex Trading Strategies Explained by Nial Fuller