Price action trading strategy might the most effective way to make a profit in the Forex market. The new traders are always looking to develop a unique strategy by using the indicators. But do you think the indicators can give you accurate signals? Those who rely on the indicators are not going to make any profit. You have to consider the indicators as your trade filter tools. But it requires perfect in-depth on indicators. Most importantly, it makes the trading strategy too much complicated. If you want to make some big profit, you must learn a price action trading strategy. This strategy allows retail traders to trade with low risk without any hassle.
The price action traders rely on too many candlestick patterns. Being a new trader, it might be tough to find the best possible signals. For this reason, we are going to discuss the bearish pattern only.
Bearish engulfing pattern
The bearish engulfing pattern is based on two candlesticks. The first candle is a part of the previous bullish trend. The second candle acts as the confirmation candlestick. Usually, the second candle engulfs the first candle. But there is a small twist to the candlestick pattern. Unless the bearish engulfing pattern is formed near the critical resistance level, you are not going to get any good signals. First of all, learn to find the critical resistance level in the major pairs and only then you can take advantage of the bearish engulfing pattern.
Use of the demo account
You need to use the demo account to develop your trading skills. Unless you know the nature of the CFD market, not the trading strategy is going to work. Let’s say you are trying to trade the AUDUSD pair during the FOMC meeting minutes. Chances are high you will lose money on that particular moment. But those who know the details of the market will never execute a trade in the AUDUSD pair during FOMC meeting minutes. You must learn more about the specific trading asset by using the demo account. Try to find the impact of different news on a different asset. Based on that select the trading asset so that you don’t have to lose a big portion of your trading capital.
Once you learn about the selection of the asset, it’s time to use the bearish engulfing pattern to execute short orders. Some of the retail traders are trading against the major trend and losing money by using the bearish engulfing pattern. To trade the major reversal you must use the fundamental factors of the market. Instead of making things complicated try to focus on simple logic. Master the trend continuation trading strategy using the bearish engulfing pattern. Once you get skilled at that, you need to focus on the reversal trading strategy.
Managing the risk factors
You must learn to manage the risk factors even though the bearish engulfing pattern generates high accurate signals. No one can say they can predict the price movement of the asset with 100% accuracy. Since losing trades will be a part of your trading career, you must learn to focus on the minor details of the market. No matter how convincing the trade setup is, you should not risk more than 1% in any trade. Stick to the conservative trading method as it is one of the most effective ways to make a profit from this market. Never forget the fact, trading is all about finding the trade with low-risk factors. So, if you start using the aggressive system, you can’t make a profit by using the bearish engulfing pattern.
The price action trading strategy provides a unique way to trade the Forex market. Being a fulltime trader, you have to think about losing term goals. If you start focusing on short term method by using the bearish engulfing pattern, you are going to lose most of the trades.