The foreign exchange market will always be able to incite emotions inside you. In your career, you will experience everything from head dropping depression to mind numbing elation. Both these emotions and all other emotions between them are dangerous when it comes to trading on the foreign exchange.
However, you can counter these emotions by making sure that your choice and implementation of forex trading systems is good. If you have already chosen price action based fx trading systems then you have taken care of the first aspect and now only have to ensure that you implement them properly.
In order to implement a price action strategy, here are some things that you should consider very seriously.
The first thing you should look at is which time frames you are using to conduct your analysis of forex rates. Ideally, your price action forex trading systems should focus on the daily chart time frame. Once you have analysed this time frame, you can intensify your focus and start looking at smaller time frames as well.
Your choice of currency pair is also going to have a major impact on how successful your price action forex trading systems are going to be. You can choose between major pairs or go for exotic pairs which are more volatile in nature. Your choice should depend on your own risk tolerance levels while taking into account external factors.
Price action forex trading systems only work in specific market conditions. While it is possible to modify your systems to cope with unique market conditions, you need to be mindful of this to truly implement it. Therefore, you need to always keep an eye on the prevailing market conditions so that you can make modifications as and when they are required.
Support and Resistance
Regardless of how good your price action forex trading systems are, if you are not using support and resistance levels then you are making an elementary mistake. Moreover, you have to always be extremely conscious of support and resistance levels because sometimes they can show things that you would otherwise not spot in the market.
Clarity of Price Action Signal
It is true that there will always be opportunities in the market to profit from. In fact, more often than not, there would be more than a single opportunity that you can avail. However, all opportunities are not alike. You need to be able to differentiate between a good opportunity and a mediocre opportunity.
The clarity of your signal that your price action fx trading systems give should be what you should base your assessment on. The clearer the signals are the more attention you should pay to a particular opportunity.
Verifying Price Action Signals
It is also important for you to verify the signals that your price action forex trading systems have yielded. There are various ways you can do this and your choice of ways depends entirely on your strategy. However, you should never follow a signal without verifying it properly.