Price-action-trading-strategies-#chapter-04

Chapter 4: How to Protect Against the Head Fakes

I could not leave you hanging with the feeling trading is impossible.

There are many ways you can protect yourself against head fakes. For starters, always have a stop in place to protect yourself against loss.

Next up, do not go hog wild with your capital in one position. Make sure you leave yourself enough cushion, so you do not get antsy with every bar that prints.

Again, let time play to your favor. I know there is an urge in this business to act quickly. However, there is some merit in seeing how a stock will trade after hitting a key support or resistance level for a few minutes.

If you think back to the examples we just reviewed, the security bounced back the other way within minutes of trapping traders.

Chapter 5: Price Action Traders

Price action traders are the Zen traders in the active trading world.

These people believe the human brain is more powerful than any machine.

Please do not mistake their Zen state for not having a system. The price action trader can interpret the charts and price action to make their next move.

Benefits of Price Trading

For starters, there isn't as much information to process, so you can focus on the chart action.

Secondly, you have no one else to blame for getting caught in a trap. Don't bother emailing the guru with the proprietary trade signal that had you on the wrong side of the market.

The biggest benefit is that price action traders are processing data as it happens. There is no lag in their process for interpreting trade data.

Challenges

Price action traders will need to resist the urge to add additional indicators to your system. You will have to stay away from the latest holy grail indicator that will solve all your problems when you are going through a downturn.

The real challenge is it's extremely difficult to trade purely on price. It's not something you can just pickup and start doing right away.

You need to think about the patterns listed in this article and additional setups you will uncover on your own as stages in your trading career.

First learn to master one or two setups at a time. Learn how they move and when the setup is likely to fail.

This my friend takes time; however, get pass this hurdle and you have achieved trading mastery.