While trading in a market it becomes very critical for one to get to know the direction of the trend to make the accurate move to get desired results. Let me explain>>>
Why do we consider Price action as a Leading Indicator?
When someone enters the market they see a lot of charts and rapid changes in values of a currency or stock or commodity depending on the market it is, so they operate according to their expectation of upcoming events.
In other words, a person trying to profit from the market will try to predict the future of the trend and will go LONG or SHORT in their trades based on several different tools and indicators available in the platform they are using. For a price action trader, it is not important to utilize them as these indicators use data from past events.
Why is it easier to trade with price action?
Many of us might have been fed up with so many indicators and trading strategies and one of the biggest reasons for anyone to consider price action is their only trading strategy because it is going to simplify the whole process for us.
Trading seems to be very much complicated to many of us as it provides us with an enormous amount of data and hence making it all look so difficult while on the other hand if someone uses a price action-based strategy, this is going to affect their portfolio a lot in the green side.
With price action you just have to look at the charts and areas of value over there, once you’ve found it now wait for the price to come around it and when an opportunity pops us then one should enter a trade.
The Mightiest of all
One of the most powerful, simplest, and most effective trading strategies in the world is to trade with the movement of price and by marking key levels of support and resistance, In general, it is said to buy whenever price breaks over a resistance level which was tested a few times and to go short whenever the price breaks below support level which was tested in the past.
Price action signals with key levels define success
When you have a price action signal like a pin bar but you’re not aware of key levels then that trading style might push you to the red zone easily, simply putting into words when you have a junction as such where you have a price action signal at a key level of support or resistance there is a huge winning potential in that trade.
A key Horizontal level can be used in any type of market if it is a bullish market, bearish market, or sideways. There are key levels that act as a magnet for the price as it attracts it before the price pushes away.
So, to what it all concludes?
The overall purpose of this whole article is to make sure one who reads this understands that everyone doesn’t need to depend on indicators for their trades as they can have Price action in their arsenal, something that is going to show exactly what is happening in the market at this very moment and not like a 200 ema (exponential moving average) which utilizes a data from the previous 200 candles. If a trader only focuses on building their fundamentals strong around support and resistance then he is more likely to have a lot more winning trades than those who are based only on Indicators.