Disadvantages of using price action in Forex.

Hello Mary,

Price action is one of the best trading strategies that you can use in a Forex market. This strategy is not only very flexible hence assuring you of constant earnings but also very easy to trade with by following the candlestick charts.

However, like any other trading strategy, certain reasons can make you not use this technique. The problems associated with it still have their solutions.

In this technique, you need to wait until the prices come to a certain level so you can trade. These levels may be the support and resistance ones; however, in such a market, the prices are highly affected by great power; hence the prices will most often not come back to these levels. The effect will be that the market is moving and you will be left on the side.

The size of the reversal candlestick may not necessarily be equal. These candlesticks help to determine whether a certain level is encumbering. When the candlestick is large, the price rejection will be stronger.

The price action technique also makes traders place their stops poorly. You will often find yourself arranging a stop at an apparent position where your dealers can easily guess. This will make you be stopped unnecessarily out of your trade and the chance that the price will later on a favor you are high.  It would help if you placed your stop loss at a pace away from the support and resistance level.

You will most likely not succeed in this market if you are barely patient. You need to wait for approval at the support and resistance level. As you wait, you will most likely miss a trading chance since the price may touch the resistance and support level and rapidly change and go. To overcome this, you need not wait for confirmation. Do your usual analysis of the levels and place your trade immediately.