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Price Action Trader Mistakes
Investing in the Forex market can be quite exciting and there are many options that can generate amazing profits. Unfortunately, many traders enter the market without the knowledge they should have and they often make common mistakes that can lead to unnecessary losses. Making mistakes while trading is part of the learning process, but there are some mistakes that can easily be avoided. For those that are price action traders, there is not as much information available online, so common mistakes are often made because traders cannot find the right information to help them conduct these tyupes of trades. Here, we discuss the top three price action trading mistakes that are made.
The first mistake that many will make is assuming that all pin bars are formed for the same reason. Pin bars are price action patterns that will be seen on charts and many traders will think that all pins will cause a reversal in the market. This thought process is due to the fact that traders have been told that pin bars will all be formed for the same reason. If traders are using pins as a strategy when trading, they should avoid pins that form after large movements have occurred.
Another mistake is when traders assume that a higher high or lower low will signal a reversal of a trend or a continuance of a trend. Many traders will use the Dow Theory when they are trading and if this is being done, one should wait until the market has broken through any recent low or high and has flattened out. The Dow Theory is a method of analyzing the market to determine trends and determine when the market has changed direction.
Finally, traders performing price action trades often think they should always trade in the direction of any long term trend. This can lead to many losing trades, but so many traders place their trades in line with any trend that is long lasting. The problem with this is that there is a high chance of the trend continuing, but there are many times when the market moves against these trends, resulting in some massive losses. To avoid losses, trade in the direction of the trend on a time frame and only trade when a momentum change has been noted.
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Investing in the Forex market can be quite exciting and there are many options that can generate amazing profits. Unfortunately, many traders enter the market without the knowledge they should have and they often make common mistakes that can lead to unnecessary losses. Making mistakes while trading is part of the learning process, but there are some mistakes that can easily be avoided. For those that are price action traders, there is not as much information available online, so common mistakes are often made because traders cannot find the right information to help them conduct these tyupes of trades. Here, we discuss the top three price action trading mistakes that are made.