Not all traders on Olymp Trade prefer using technical indicators to analyze price charts. A significant number of them actually trade price action on clean charts and emerge very profitable.
Are you a pure price action trader?
Well, you don’t have to answer that.
And if you are just starting out as a price action trader and don’t know exactly what I’m talking about; saddle tight and hold on to the end of this post because price action for beginning traders is just what this post is about.
7 best price action trading strategies for Olymp Trade.
Price momentum is the action of the price of an asset changing towards a particular direction over a given period of time. Therefore, price momentum towards one direction, and not the other can be utilized to earn profits.
There are no technical indicators to be applied to momentum trading.
You just observe the price to see which direction price momentum is towards. You can then place trades in the direction of price momentum.
Did you know that some assets experience a momentum of even up to 80 – 90% in a very short period of time?
Now imagine if you had tapped in that momentum by entering in a position just at the beginning of the momentum. You stand a great chance to bag reasonable profits.
Support and Resistance.
Support is a level on the price chart where the price has severally reversed upwards. Resistance, on the other hand, is the level of the price chart where the price usually seems to reverse downwards.
Do you have to draw those levels?
Not at all. You can simply see a swing high which is in line with a resistance level and a swing low in line with a support level.
You just observe how the price behaves once it reaches the support and resistance zones.
Time your entry so well so that you enter at the beginning of the price reversal.
Support levels are buy levels while resistance levels are levels where you sell.
As the price proceeds in one direction, you must have noted that it seems to reverse shortly at some points.
It is those short-term reverses which are called pullbacks.
What you need as a prerequisite is a strong trend towards a particular direction.
Once that is met, you can then wait for pullbacks to occur counter-trend, after which you can enter the markets.
You just observe the price action without applying any technical indicators.
You have to be sure that that price reverse is actually a pullback, not a trend reversal and so you must wait for the retracement to end.
The retracement ends after you have seen the primary trend resuming.
Trade in the direction of the primary trend.
A price range is where the price trades in a constricted area between an upper level and a lower level.
These don’t necessarily have to be horizontal levels, because they can be diagonal or so forth.
You neither have to draw nor use any technical indicators to identify a range. Just observe them.
As long as it is a kind of channel within which the price trades without breaking upwards or downwards, it is a range.
Ranges are traded similarly to support and resistance levels.
You buy at the lower level and sell at the upper level because the price tends to reverse upon hitting either level.
Be sure to wait for the retesting of all levels before you enter a trade.
It might be a trap before you are caught up in a breakout, and be sure, you will lose.
We hinted on breakouts while talking about range trading.
Sometimes, when you expect the price to be trading in a confined range, it will disappoint you by breaking out of the range.
Do you then get all angry and let the price run away from the range as you watch helplessly?
You can trade that breakout like a pro.
Just observe the price action and let the price break out of the range peacefully.
After the breakout, allow the price enough time to retest the level it has broken successfully without breaking back into the range.
You can then trade in the direction of the breakout and bag your profits.
Traders can analyze candlesticks to generate sure trading signals.
One common signal generated by candlestick analysis is the candlestick price rejection.
These rejections usually occur at the end of uptrends and downtrends to suggest a trend reversal.
Do you need any technical indicator to see a price rejection? Definitely not.
Just observe with your naked eye the price action and make a decision.
Did you just observe candlesticks with small bodies preceded by an uptrend, followed by others with long upper wicks?
Then the trend is about to reverse downwards.
It’s time to trade down.
Spotted a downtrend, then small-bodied candlesticks followed by candlesticks with long lower wicks?
You already know that the downtrend is tired enough to reverse upwards.
Bag the profits by buying.
Candlesticks are known to form patterns that are useful to traders in making trading decisions.
There are more candlestick signals generated on the charts. Just by observing groups of candlesticks, you can choose when to trade and when not to.
You do not need a technical indicator to see a hammer candlestick pattern, or a dark cloud cover candlestick pattern or any other.
You can just observe candlesticks and price action to see candlestick patterns form.
Here are common bullish candlestick patterns which usually occur towards the end of downtrends to hint at an upward trend reversal:
- Morning Star.
- Three white soldiers.
- Piercing Line.
- Inverse hammer.
- Bullish engulfing.
Common bearish candlestick patterns which occur at the end of uptrends suggesting a downward trend reversal include:
- Hanging man.
- Shooting star.
- Evening star.
- Dark cloud cover.
- Three black crows.
- Bearish engulfing.
Looking for online business ideas? Here are 15 ways to earn money online in Kenya in 2020. In fact,...
Here is a million-dollar question: is it possible to make a million shillings in a month working...
Today, just about every app has found a way to monetize its platform using virtual currencies....