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Forex Support And Resistance Draw Support And Resistance Support And Resistance Benefits Of Price Action Price Action Trading Is Simple Breakout Trading
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Breakout Traps
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Forex Support and resistance levels are proven price areas where buyers and sellers find some form of equilibrium and generally a shift of power between buyers and sellers occur that creates the ‘price reversal’. Therefore Support and Resistance are the key turning points in the market. Price doesn’t move in straight lines as you are no doubt well aware of. The more often price does this stop and reverse action at a specific level, the ‘stronger’ or more’ significant’ that particular S/R level becomes. 3
Nearly every single technical trading system will rely on you the trader having the ability to correctly draw support and resistance levels on your chart. Mapping out support and resistance is really the most important core skill any serious traders will need to have a good grasp on. If you can’t draw your support and resistance then your trading as a whole will implode on itself. 4
Support and resistance levels are proven price areas where buyers and sellers find some form of equilibrium and generally a shift of power between buyers and sellers occur that creates the ‘price reversal’. Price doesn’t move in straight lines as you are no doubt well aware of. Price swings up and down, creating new swing lows, swing highs or re-tests existing ones. The more often price does this stop and reverse action at a specific level, the ‘stronger’ or more’ significant’ that particular S/R level becomes. 5
Price action trading doesn’t require anything special to get set up. You can trade using any trading platform you like, from any location in the world. These are just some of the many benefits of price action trading. Getting started isn’t a hard task either. All you really need to do is load up the candlestick chart, clear off all the indicators, and you’re ready to begin. 6
The concept of price action trading is simple to understand. A lot of people truly believe to become a professional trader, you need to have some high level commerce, mathematical or economic degree. This is due to a huge misconception that Forex trading is complicated.
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Breakouts can produce price explosions that generate rapid returns. There is however a flaw with more traders approach to breakout trading. Traders generally try to anticipate breakouts before they happen. They become the da Vinci predictors of Forex trading and enter ‘ALL IN’. Trying to be one step ahead of the market like this only ends up with the trader crying tears of regret.
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Breakouts can really go two ways here, you catch a breakout and your trade quickly hits its profit target, great! Or, you could be triggered into a breakout trade, everything looks good so you walk away and go have some lunch. When you return you notice your trade is falling into the negative after the market turned around on itself and is driving price in the opposite direction. One of my favorite strategies is to wait for a breakout trap to occur and use it to my advantage. Breakout traps are magnets for weak traders. 9
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