2020 Easy Price Action Indicator and Patterns
2020 Easy Price Action Indicator
What Is The Meaning Of Price Action?
Price action is defined as the movement of a security that is plotted over a period of time. Price action is a core component of technical analysis and is used to derive chart patterns and formations from technical analysis. With price action trading, a trader is able to look at previous data and take a position based on where the market will move next. A common price action indicator is the use of price bars. Price bars reveal the open and closing price of a given market, as well as its volatility during that time span.
Looking at historical data and using that data to beat the market is the goal of most price action strategy. In fact, in some ways, price action can be defined as the analysis of all actions that buyers and sellers have partaken in the target time period. By knowing the strategies and behaviors of everyone in the market, traders well-versed in price action trading can make a better-informed decision.
Price Action Forex Trading
Since price action is just the analysis of the participants in an active market, price action trading is not limited to one single market. Price action trading can be used in stocks and shares, cryptocurrency, stock indices, currency futures, and forex. While there is money to be made in all of these markets, the forex market has certain features that make it more lucrative for price action traders.
- Liquidity: Price action traders are able to trade fast. Moving out of a market is as easy as moving into a market and can usually be executed in a fraction of a second.
- Leverage: Forex trading is a leveraged product, which means that you can hold a very large position by only making a small deposit. This method could translate to extremely large gains if you beat the market, but could also lead to large losses. As with all things, it’s up to each individual trader to determine the amount of risk they are willing to take. Please trade responsibly!
- Low spreads: If you choose the correct currency pair, you will have low commission costs for your trades. Taking advantage of these low commission costs over time could help you save a percentage of your gains over the long run.
How Do You Analyze Price Action?
As we discussed earlier, price action trading is just the study of the behavior of all actions in a certain market. There are several ways to analyze price action, but the easiest way is to look at the candlesticks. Candlesticks reveal the opening and closing price of any market as well as the highest and lowest points during that day.
Candles can be categorized as either buyer or seller candles. For example, if the closing price level is below the opening price level then that is a seller candle. Conversely, if the closing price is above the opening price level that means that it is a buyer candle. Depending on whether the sellers or buyers won the market that day, you need to take careful stock of how the market is moving as a whole. Let’s say that that you notice that not only are there several seller candles, but the lows continue to get lower. This may suggest that you want to go into a short position or maintain the short position that you have already gone into. This price action study is one of several ways to analyze candlesticks but is a powerful price action indicator.
How Do You Read Price Action For Daily Intraday Trading?
Intraday trading is the trading of any regulated security that is traded during regular business hours. Intraday is shorthand for something that is traded “within the day”, such as stocks and exchange-traded funds. Intraday trading is unique in that all trading positions are not affected by possible negative news that may have materialized overnight. Just be sure to make moves accordingly when the market opens back up!
There are several Intraday trading strategies that can be used in conjunction with price action:
- Range trading: Comparing support and resistance levels to make buying or selling decisions
- News-based trading: Taking advantage of the volatility that is followed by any large news events.
- Scalping: Taking continual small profits on minuscule price changes while the market is open.
- High-frequency trading: Trading at a high-frequency, usually supported with a robust trading algorithm. Many intraday traders look to exploit market inefficiencies by executing a high volume of trades in a short period o time.
Price action can be used to flesh out any decision made based upon all of these Intraday trading strategies. Even with a large news event that will undoubtedly affect the market price, knowing the previous behavior of the market through price action analysis could give you that edge needed to move faster and more efficiently than your competitors.
What Is The Difference Between Mt4 And Mt5?
MT 4 and MT 5 are two of the most powerful trading platforms used in the industry. MT4 stands for Metatrader 4, while MT5 stands for MetaTrader 5. One common misconception among the trading community is that MT5 is an upgrade or improved version of MT4, while the true answer is a bit more complex. MT4 and MT5 are both automated trading system that are supplemented with advisors who are specialized in the given market. For example, MT4 is specifically engineered for Forex traders, while MT5 is used by traders that are trading Contract For Differences, and stocks and futures.
MT4 was released first and pioneered a very straight-forward and simple to use interface. There were also options to customize your interface so that you could create an optimal trading environment. MT5 followed the success of MT4 and had additional features such as being able to trade futures and stocks. On the surface, the interface and usability are comparable, but the MT5 comes with additional timeframes, services, and other advantages.
The MT5 also has more types of pending orders than the MT4. The MT4 comes with only four types of pending orders while the MT5 comes with six different types of pending orders. The MT5 also comes with partial order filling policies, netting, multi-threading, and fund transfer between accounts. With all of these additional functionalities, it makes sense that many mistakenly believe that the MT5 is the superior product. This is not the case.
The MT4 and MT5 are both tools that need to be tailored to each individual trader. The MT4 is a simpler and more straight forward platform that is excellent for beginners. The simplicity of the MT4 will help guide beginner traders to make smarter trades and feel less overwhelmed. On the other hand, the MT5 is a software that offers more functionalities and is more versatile. The MT5 also comes with features not found on the MT4, but they are not necessary to be an excellent trader. In fact, the added functionalities could even confuse early traders and lure them down complex rabbit holes.
The choice between the MT4 and the MT5 is a personal one, but we highly suggest the MT4 if you are a beginner and the MT5 if you are looking for a more robust software with more versatility.
How Do I Download Mt4 Indicators?
MT4 indicators are a great asset to have. Setting up your MT4 indicators is very simple and can be done in 6 simple steps.
- Go to “File” in the upper left corner and choose “Open Data Folder”
- Once you are in the folder, click on the folder titled “MQL4”
- Inside “MQL4” navigate to the folder called “Indicators”
- Choose the indicators that you want to download and drag them into this folder
- Close all of the windows and close MT4
- Open MT4 and the indicators should be downloaded.
If you are still unable to download your MT4 indicators, double check that your MT4 platform is fully closed and is not running in the background. If you are sure that you correctly restarted MT4, you may need to reinstall MT4.
Price Action, MT4, and MT5
Price action analysis is a skill set that all traders should be comfortable with. Once you have a basic understanding of price action trading, try using these newfound trading abilities on either the MT4 or the MT5 platform.
If you are a new trader that is starting out with price action analysis, try installing the MT4 platform. If you are a seasoned trader who is experimenting with complex price action technical analysis, you are better suited for the MT5 platform. You can check out the functionalities of both platforms before making your decision. Remember, these platforms exist to serve you, and thus neither platform is inherently better than the other.
A disciplined trader equipped with a powerful platform is a trader is in an optimal position for success. Let us know which platform you prefer!
As always, best of luck!