In the previous section, we discussed the importance of reading market sentiment and the mental preparation required in forex trading. Now, let's talk about one of the effective and simple arts in forex trading: the price action method.
Art is the free expression of feelings, without rigid boundaries. Similarly, in forex trading, reading and understanding charts should not be limited by strict rules, as the market is always dynamically moving. One of the free methods that can be applied to all market conditions is price action.
Price action is a flexible approach that applies to all market conditions. Experienced traders, as described by Jack Schwager in his book "New Market Wizards," do not solely rely on mechanical strategies. They follow changing price movement patterns with an objective approach.
The price action method allows traders to respond to price movements more quickly and accurately than mechanical systems. For example, if we are trading in an uptrend, we wait for confirmation from candlestick formations like a pin bar to open a position.
Moreover, price action provides signals that precede price movements before fundamental news is released. By understanding price movement patterns, traders can open positions before news is released and still consider fundamental factors that may affect the market.
To become a 'price action artist,' traders must understand the basic principles of price movement patterns and master its fundamental concepts. This is similar to learning to play the piano, where we must understand the basics of keys and chords before we can produce beautiful music. Similarly, in trading, understanding the fundamental principles will help traders make the right decisions and generate consistent profits.
With a flexible and objective approach, as well as a deep understanding of price action, traders can develop the skills necessary for success in forex trading. This demonstrates that trading is not just a science, but also an art that requires intuition and sensitivity to dynamic market movements.
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