What is Price Action?
Price action in Layman’s term is the happenings in the market that affect the price of a particular equity or a commodity. It is nothing but a visual representation of Greed & Fear of the people who are Trading at that moment and this culminates into the Price Value of that particular equity or commodity.
If one master the technique of Price Action trading then it will be easier to read and grasp the stock movement and to take trading positions with conviction and confidence. This will help you to ‘Cut the Losses short’ and to ‘Ride the Profits’ like a professional trader.
Price action is the only thing which will show you what is happening in and around the market at any point in time with an extremely high degree of clarity and to ascertain where the price is headed. This is based on the fact, “The Market rises or falls, based on people’s Greed and Fear.”
Trading with realistic psychology
A popular saying goes, “Professional traders miss more than half of the great moves in the market” to which they agree as well.
Don’t go behind every trade that are generating false signals. Develop your own strict rules to enter and exit the trades even if that results in missing 5-10 trades per month or 5-10 points of profit.
Don’t let your emotions take over your Rules.
If you are lucky enough, your strategies might work for a month or more, but the model might end up failing in future and wipe out your gains.
In the market, there are educators and bloggers, seldom a trader that blogs theory and skips the foundation of market analysis, fails to teach the dynamics of the market, along with price action.
When you see any trader or mentor, don’t seek a fixed rule of trading because there is a high possibility that the same profitable trade wouldn’t repeat. Each day the market is different and two trade setups would be different as well.
There is no shortcut for developing a constant trading strategy, which is profitable every time, that a retail trader can use. The larger player always has the upper hand. Our aim is to learn how to ride a price action movement that large players create.
A solid trading judgment is the sum of years of screen time and trading experience.
Remember the core of the Trading activity remains the same, but the traders and markets do change. Be a student of the Market and always be ready to learn every day. Accept your losses with dignity, get up, dust yourself and move on. Never bog down. That’s the secret to be in this game forever. There’s always a new day waiting to be conquered. A single win can offset all your losses if you follow proper risk management.