Price action trading strategy is a very effective way to trade the CFD market with strong confidence. People who have strong knowledge about Japanese candlestick patterns usually take their trades in the retail trading industry with great accuracy. They don’t have to trade with high risk even though the lot size of each trade is pretty high. This is due to the fact that they can trade the market with a very tight stop loss. But even after all the pros of price action trading strategy, most of the retail traders are struggling with the price action trading method.
The retail traders suffer because they keep on making the same mistake in the CFD market. In order to establish yourself as a professional trader, you must learn about the frequent mistakes and avoid them at any cost. Let’s get into the details.
Trading in the lower time frame
Rookie traders love to trade in the lower time frame. By selecting the lower time frame, they get many price action confirmation signals and eventually they start overtrading the market. On the other hand, the professionals rely on higher time frame data. And finding the price action confirmation signals in the higher time frame is a bit harder. In fact, you might have to wait for weeks to find one good trade signal. But at the end of the day, you will be confident with your actions and you won’t have to lose too many trades. So, avoid taking the trades in the lower time frame.
Getting addicted to trading
The new price action traders easily get addicted to the trading profession. By winning a series of trades, they start daydreaming. To them, overtrading is the only way by which they can become a rich trader. But if you read more about the professional trader’s approach, you will realize that professional traders never overtrade the market. They always take their trades after assessing the overall dynamics of the market. To avoid getting addicted to this market, you should be taking the trades during specific hours. Try to maintain a trading journal so that you can maintain strict discipline at trading. Never get confused or get puzzled by your actions. If you do so, you will keep on losing money most of the time.
Trading the high impact news
After learning about the price action trading strategy, the rookies start trading the major news. Price action trading strategy is not designed to trade the high impact news. Though you can find some quality trade signals right after the major news you must learn to evaluate the fundamental factors. If you try to trade the news based on the technical data only, you are bound to lose money most of the time. So, to protect your trading capital, you must develop a simple way that will help you to trade the major news with a high level of precision. Once you have a news trading strategy, you may integrate the price action trading process.
Taking too much risk
The inexperienced traders often become overconfident after learning price action trading strategies. They keep on trading the market with high risk and earn a significant amount of money within a short time. But all of a sudden they lose all their profit from one big losing trades. To avoid such problems, you should be trading the market with low risk. Follow the standard risk management rules so that you can deal with the losing trades in a much more effective way. Never expect to become a millionaire by taking the trades with the high leverage account.
Lower down the leverage and expect to have some negative results from the very best trade signals. Once you train your mind to accept the losing trades, you should be able to build strength endurance which will help you to trade with managed risk no matter how good the trade signal is.