In the last posts you learnt three important aspects of price action trading:
The first aspect is the market trends: you know how to identify the market trend using multiple time frames analysis. You know how to differentiate between trending markets, and range bounds markets. And you understand how each market moves.
The second aspect is the level: you learnt how to draw support and resistance, and how to draw trend lines, this skill will help you better enter the market in the right time.
The third aspect is the signals: you have seen different candlestick patterns, you understand the psychology behind its formation, and the message they send you.
These three aspects which are the trend, the level, and the signal are what we will use in our trading approach to make money trading any financial market.
I mean that when you open a chart, you will try to answer three important questions:
1-What the market is doing? Is it trending, consolidating, or is it a choppy market?
If it is trending, you know how to identify if it is an uptrend or a downtrend.
If it is a ranging market, you will see that it is trading horizontally between two boundaries. And if it is a choppy market, you close your chart and you stay away.
2-What are the most powerful levels in this market?
If the market is trending up or down, or it is ranging, you will try to find the most important support and resistance levels.
These levels are the best zones where you can buy and sell the market.
3-What is the best signal to enter the market?
The best signal to enter the market means the right time to execute your trade.
And this is what you will learn in the next post.