How to Reduce your Risk Percentage by Using Price Action

Every single day the number of novice traders is increasing at an exponential rate in the forex market. Previously trading the live assets was not so much popular among the retail traders as the required forex margin for trading the live assets was extremely high. But now a day’s most of the brokers are now providing a high-leverage trading account to the retail traders which have created a unique opportunity for the normal people like us to trade the live assets in the market. We can easily calculate the forex margin required to execute any trades in the market and easily avoid the forex margin calls.

Figure: Margin call to save your account from negative balance

Basically, the margin calls forcibly close the open trades in the market so that the traders don’t incur more losses than their initial deposit. In this article, we will discuss how to reduce the risk exposure in the market by using price action confirmation signal.

Accurate trade entry: Most of the novice traders in the financial industry fails to achieve success since they don’t work with accuracy in their execution. If you look at the professional traders than you will see every single one of them are highly concern about their trade accuracy in the market. If you trade the live assets with indicators based trading strategy than chances are very high that you won’t be able to execute your trade at the perfect spot. Indicators are either leading or lagging and for this reason, you will take too early or late trade in the market when you use indicators based trading strategy. But if you use price action confirmation signal you will be able to trade the perfect spot in the market since different price action confirmation candlestick is formed on the basis of the dynamic movement of the market.

Retrace price entry: Trading the financial instrument using the price retracement is one of the most advanced forms of trading. If you see the professional traders in the financial market then you will notice that most of them are executing their trade in the minor retracement of the price. By trading the live assets in minor retracement you able to use a tight stop loss in the market which greatly reduces your risk exposure in the market. If you trade the price action signal for a long period of time then you will see most of the time the market gives a second-time opportunity to traders to execute their price at the much better place. Once you find a perfect setup in the market try to switch back to the smaller time frame so that you can execute your orders in the minor retracement. Most of the time the market respects the minor support and resistance level in the market and the professional price action traders use this support and resistance level as trade trigger zone.

Multiple time frame analysis: Multiple time frame analysis is a great way to increase your profit potential in the market. If you are relatively new in forex trading then it will be a little bit difficult for you but if you have the strong passion in the learning the art of trading than over the period of time you will know how to do the multiple time frame analysis perfectly.BY doing the multiple time frame analysis you will greatly reduce the risk exposure in the market. Most of the false signals and spikes in the market can be easily eliminated by this process and every single professional price action traders follow this procedure before executing any trades in the market.

In summary: Price action trading strategy is considered to be the most advanced form of the trading method in the financial world. If you are relatively new in forex trading than by using the price action trading strategy you will be able to execute high-quality trades in the market while minimizing the risk exposure in the market. When finding a possible setup in the market try to execute your orders in the minor retracement since it’s a great way to use a tight stop loss. And try to adapt the technique of multiple time frame analysis since it will help you to filter the false signals in the market.

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Tags: forex, margin, trading

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