Price action trading strategy is one of the most effective ways to make a profit in the Forex market. You can use the same concept of price action trading strategy to trade the major stock market. However, many price action traders often get confused about this strategy since they lose a big portion of their investment. Many novice traders often say a price action trading system is nothing but a waste of money. If you want to make some big progress, make sure you are not trading the market just like the losers. Let’s learn about the most common mistakes in the price action trading strategy for which the retail traders are losing money.
Trying to scalp the market
Trading the lower time frame is one of the key reasons for losing a big portion of your investment. If you look at the experienced traders you will understand why they are making tons of profit from this market. Never try to use the price action trading strategy in the lower period. For instance, spotting a bullish pin bar in the 5 minutes is not going to make you rich. Most of the time, you will have to lose trades in lower time frame trading strategy. On the contrary, if you trade the market in the daily or weekly time frame, you can improve your win rate without having any hassle. So, stop trading the lower time frame as it can reduce the chances of making a profit.
Getting to confident
Many price action traders become overly confident with their trading strategy. They think they know the perfect way to place a trade. But this shouldn’t be the attitude of the naïve traders. Demo trade the market with the price action trading strategy and try to make a profit without taking too much risk in each. You will often lose trades after following all the basic details of the market. As a currency trader, you should always remember the fact, trading is all about precision. If you take too much risk based on your confidence level, you are not going to succeed in trading. Focus on the core concept of trading and you will never blow up the trading account.
Trading the volatile market
The professional price action traders often try to trade the volatile market based on lower period signals. But such an approach usually results in heavy loss and the retail traders find it hard to make a profit from this market. If you intend to make a profit, make sure you are not taking too much risk for each trade.
Take your time and try to trade the market with proper discipline. Once you get skilled at trading, you are not going to lose a big sum of money. Pushing yourself to the edge is more like taking too much risk in each trade. Trading the volatile market requires a perfect understanding of the key support and resistance level. And for the novice traders, it’s a very tough task. So, always try to trade the market with managed risk and you will not have trouble with the trading profession.
Taking a big risk in each trade
You should never take a high risk in each trade to earn more money. Those who are taking a high risk to earn more money is making a big mistake. Trading is a very sophisticated business and you must learn to trade the market with proper discipline. Once you get skilled at trading, you will slowly learn why we are referring to the trading business as the job for elite class people. Follow the conservative trading method even though price action trading will give you the perfect opportunity to place a trade. Once you develop these skills, it won’t take much time to learn the perfect way to place high-quality trades. Focus on the safety of your investment rather than the profit factors.