How to Approach Price Action Trading?

Welcome to Episode 2 of Price Action Trading Series from MarketSecrets.

In this episode we are go to learn “How to Approach Price Action Trading“

To watch all the episodes, please use this link: https://www.youtube.com/playlist?list=PLRpfTFEfJ27Y9rFMjQZgXPRjxiA3dPhOP

How to Approach Price Action Trading:

As mentioned in the first episode, this episode is only about trading psychology on “How to Approach Price Action Trading”, so let’s begin.

Wherever focus goes, energy flows. When you focus on something continuously for a long period of time, something magical happens. You start getting insights. You are not going to blame others for any mistakes; you won’t give any more make excuses.

You are going to see trading and life as a great adventure, as an opportunity to really reach inside of yourself and say how good of a trader you are going to be in a few year’s time.

I believe you will progress your trading much faster by starting at episode 1 and working straight through to the final episode. Get into your own ‘bubble’ for as long as it takes to complete the episodes IN GREAT DETAIL. Once you have done it REPEAT this whole process. And after it repeat it once more.

Do not try to keep abreast of the latest trade setups and forget what trades i am taking on a daily basis until you fully comprehend all the rules. It will otherwise only distract you. You will be caught in a never ending loop of trying to keep up to pace but without a STRONG FOUNDATION on the rules and the trade setups. While it is only natural wanting to do as many things as possible to learn it is quality over quantity that makes the difference.

Go at your own pace and learn the episodes in chunks (blocks). Lock yourself away in your own “little world’ until you have absolute clarity and knowledge about each rule of the strategy and become an expert on where no doubts exists.

Once you are at this stage in your learning you will reel the pack in very quickly and soon the pack will turn to you for advice. Note any questions you have and ask it in the comments section, so that others who have similar question can get the answers easily.

See each lesson as unique subject matter. Create your own exercises for every lesson and upload them in Google drive and share the link in comments section of the video so that we can evaluate and help you to verify whether you understand the core set of rules.

Believe me, it will help you a lot.

IMPORTANT: Work on your patience and wait, otherwise you will be blowing up your account very fast. Create and use a professional attitude and mind-set. Do not take any advanced or counter-trend setups if you have not been profitable for 12 months in a row. Until then, stick to basic set-ups.

These rules have been created over a long period of time, they are based on thousands of samples not just a few. These rules will give you an edge based on probabilities over a long period of time and a big number of samples. The fact that you see a few or a bunch of scenarios working when you were expecting price to retrace means absolutely nothing in a huge sample.

If you visit a casino and bet 10k every time, there is a high change you will mostly lose your money. Why? Because the casino has an edge over you, odds are set-up in the favour of casinos.

Likewise when you take some trades which are against the rules, but it works and gives you profit, you are only taking a few samples into account, you should take into consideration a big sample of the sample scenario. So stick to the rules.

If you take 1 setup based on these set of rules, the odds may not be on your side. You might even lose your first trade. If you take 10, you could have a few winners if the markets conditions are very bullish or bearish, and you might think everything seems to work.

But if next 2-3 trades fail, you will be fearful again. So first step is to believe in the rules. These rules are made for all kind of scenarios, not just a clear bullish or bearish trend. So first believe it then follow it.

Let’s see the Difference between Trading & Gambling.

Trading is not gambling. Gambling is not trading

There are aspects of trading and gambling that relate with each other, and there are some important things we can learn from expert gamblers.

Why are we interested in learning how to trade supply and demand? Why do we have to make a trade plan? Why do we follow a set of rules to trade?

The answer to all of this is “to have an edge”. To be able to identify the buy and sell signals in the market and execute the trades systematically to enable consistent results in our trading.

To be more precise ‘having an edge” means having probability on our side. Notice the word “probability”. It’s very important to understand that no edge can give us guaranteed success, it can help only with probability. The trader’s edge is to think in probabilities and to understand this, it is best to look at the gambling industry. The gambling industry is based on probability, with an edge in favour of the operators.

Have you ever wondered how it is possible that the biggest and shiniest hotels are in Las Vegas?

It is the Casino that provides the profit to make these “dream hotels” come true. Not only do they want you to live there so they have you close, but they also provide you with free drinks so that you do not even leave the constant lure of the gambling possibilities.

Let’s look at a roulette wheel. It consists of (pockets) with numbers from 1 to 36 and a 0 (in American roulette even of a second (00) pocket. 18 pockets are in black, 18 pockets are in red with the green 0(00) numbers in green. If you bet on red it is not a 50:50 change to win. Actually it is the 2.7% additional edge (roulette with one “0”) that the casino has over you because, if the 0 falls the casino wins as well. So in fact your chance to win is (47.3:52.7) and hence the Casino has the edge.

Is the Casino concerned when you win against the odds a million? No because the Casino knows that after thousands of spins the Casino makes the money back and some more. It has the edge over you and all the gamblers.

Like expert gamblers, or for that matter also the casinos, the best traders think of trading as number game and trade probabilities to produce consistent results. The word probability suggests inconsistency, but it can produce consistent results over a large sample of trades if the edge is good enough and if it is applied consistently, just as with the example of the casino.

So, the Take away from this episode is to “Take it slow, everything will happen automatically as we have an edge over market in the form of Price Action”.

Also, before we begin technical, I reiterate this: Read/Watch the episodes several times, take your time. Do not rush! Each time you read/watch a lesson you will learn and discover something new.

Now, Gear up & get Ready, Technical’s starts from next episode.