MODULE 1: Price Action & Your Trading Edge

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LESSON: What is Price Action in Forex?

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What is price action?

Price Action trading is the skill of being able to read the price and make trades on any chart, in any market, in any time frame, and without the use of any indicators at all.

Price Action is everything that price is doing on any trading instrument, being represented on a chart for a trader to see.

In very basic terms, Price Action illustrates in a way that a trader can see exactly on a chart what a certain pair did for a particular time frame.

This basic explanation of Price Action is not subjective. What I see on my chart is exactly what another trader will see on their chart, providing they are using the same charting equipment.

The next question is the important question; how can a trader use Price Action to profit? Humans are very habitual. Traders tend to do the same things and react the same way over and over again when presented with similar circumstances.

If you have watched the charts previously you may have noticed that the same patterns, most of the time, repeat themselves. This is once again because humans are habitual and react the same way given the similar circumstances.

So if we can notice these patterns and human trading habits in the markets, we can start to find a trading strategy and implement it to make money off of the other traders, while they carry out their normal trading patterns.

These patterns will continue repeating themselves as long as human’s trade. Like I said, humans are very habitual and most of the time they repeat themselves, over and over again given similar circumstances.

Whilst traders continue to trade the market there will forever be opportunities to make money in the markets. Humans are ruled by what are call universal emotions. These are emotions that every single trader has and cannot escape, such as greed, fear of missing out and the tendency to compare with other traders.

These universal emotions that all traders have create mistakes and that is when the trading opportunity presents for the savvy trader to make trades and take advantage.[/text_block][/op_liveeditor_element]