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Top three common mistakes of novice price action traders

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Joined: 19 Sep 2017
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PostPosted: Tue Sep 19, 2017 2:02 pm    Post subject: Top three common mistakes of novice price action traders Reply with quote

Price action trading is very popular in todayís world. Not only the novice traders but also the professional traders use this system to trade the market. This system is extremely simple and allows the traders to find quality trading signals. Though there are many ways of trading the financial instrument when it comes to price action trading everything can be easily defined with a logical explanation. And as a currency trader, you should always play in the market with logics. If you trade with your emotion then it wonít take the time to lose your entire trading account. However mastering the art of price action trading is not all easy. Even after mastering this skills there will be some mistakes in your trading. In this article, we will focus on the top three common mistakes that every novice price action traders make. Even some expert traders also make this mistake but due to their extensive experience, they are able to make a profit despite the mistake.

Picking the tops and bottoms
Price action trading is an excellent way to pick the tops and bottoms of a market trend. All the professional Swiss traders use the reliable candlestick pattern to identify the trend reversal for a certain asset. But when they trade against the trend they also do extensive fundamental analysis in order to make sure that are trading in favor of the newly formed trend. But this where the novice traders are one step behind in price action trading. They simply trade the trend reversal without doing any fundamental analysis. Fundamental analysis is the study of the economic performance of a certain country. So when you do the fundamental analysis you will get a clear idea about the strength of the trend in the market. For instance, if there is a hike in the U.S interest rate then you can easily assume the U.S dollar will gain strength in near future. So buying the U.S dollar in the global market should be your top priority.

Not using the confirmation signal
Most of the price action traders are aggressive and thus they lose a huge amount of money. But if you look at the professional price action traders in the Forex trading community then you will notice that every single one of them use the confirmation signal before they place any trade. They never trade the with the confirmation candlestick since it increases the risk of trading to a great extent. Itís true that the aggressive price action traders have a better edge in terms of setting the stop loss but the winning rate also decreases. So itís your choice whether you will play safe with price action trading strategy or follow the aggressive method.

Risking too much in single trade
Price action trading is so reliable that many traders often consider it as a bullet proof trading system. This is where they make their biggest mistake in life. They simply risk too much in a single trade and when the trade goes wrong they are at a loss to decide what to do. Most of them try to recover their losing amount by doubling their lot size but ultimate blow their entire trading account. No matter what happens always make sure that you are not risking more than 2 percent of your account capital on any single trade. All the outcomes are random in the Forex market. No one knows which trade will hit stop loss. So without following money management, itís extremely difficult to survive in this industry. And always aim for high-risk reward trades since it is one of the key ingredients to becoming a successful trader.

Summary: Though price action trading is very profitable yet losing trades are inevitable. Always trade the higher time frame by using the price action confirmation signal. If you trade the trend reversal then make sure that you have done the fundamental analysis. Stay focused and trade with proper money management to save your trading capital.
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Joined: 20 Mar 2017
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PostPosted: Fri Sep 29, 2017 10:34 am    Post subject: Reply with quote

Hi, It is really nice that you have figured out these mistakes made by the traders and also I think it would help them in improvement. Actually, I am looking for any good cfd broker if you have any knowledge please let me know.

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