Incorporating Price Action into a Forex Trading System

Forex market trading has become very popular in recent years. But how difficult is it to achieve success in the Forex trading arena? Or let me repeat this question, how many traders achieve consistently profitable results, trading on the Forex market? Unfortunately very few, only 5% of traders reach this goal. One of the main reasons for this is because Forex traders focus on the wrong information to make their trading decisions and really forget the most important factor: Price Behavior.

Most Forex trading systems are made of technical indicators (crossover moving averages (MA), overbought/oversold conditions on oscillators, etc.) But what are the technical indicators? They are just a series of data points plotted in a chart; these points come from mathematical formulas that are applied to the price of each given currency pair. In other words, this is a price chart plotted in different ways that help us see other price aspects.

There are important implications for the definition of this technical indicator. The fact that

readings obtained from them are based on price action. Take for example a long MA crossover

signal, the price has gone up enough to make a short period crossover MA period

MA produces a long signal. Most traders see it as "the MA crossover makes the price go up,"

but that is the opposite, the MA crossover signal occurs because of the price

go up. Where I try to get here is that in the end, the price behavior determines how an indicator

will act, and this must be considered in every trade decision made.

Trading decisions based on technical indicators without taking price action into consideration will give us less accurate results. For example, again the long signal generated by the MA crossover when the market approaches an important resistance level. If the price suddenly starts to rise again from that important level there is no point in taking this signal, the price action tells us the market does not want to rise. Most of the time, in these circumstances, the market will continue to fall, ignoring the MA crossover.

Don't get me wrong here, technical indicators are a very important aspect of the trade. They help

we see certain conditions that are difficult to see by looking at pure price action. But

when it comes to pulling the trigger, merging price action into our Forex trading system

definitely putting opportunities in supporting us, that will result in higher probability trading.

So, how do you create the perfect Forex trading system? 

First of all, you need to make sure your trading system matches your trading personality; if not, you will find it difficult to follow it. Every trader has different needs and goals, so there is no system that fits all traders. You need to research yourself about various trading styles and technical indicators until you find a concept that works perfectly for you. Make sure you know the nature of any technical indicators that are used. 

Second, combine price action into your system. So you only take a long signal if the price behavior tells you that the market wants to go up, and a short signal if the market gives you an indication that it will go down.

Third, and most importantly, you need to have discipline to follow your Forex trading

strict system. Try it first on a demo account, then switch to a small account and finally

when feeling comfortable and consistently profitable apply your system regularly

account.

How to Choose a Forex Broker?

TopAsiaFx.com helps you compare and choose your preferred Forex Broker. We suggest keeping the following checklist in mind when making your decision:

• Is the Forex Broker regulated?
• Account Details: Ideally, your broker should offer either a selection of account types or some element of customizability. Competitive spreads and easy deposits/withdrawals are good indicators too.
• Number of Currency Pairs offered: The variety of currency pairs on offer, as well as the quantity, should be considered (the more of both, the better).
• Availability of Customer Service.
• Quality of the Trading Platform: look for a platform that is easy to use, straightforward and offers a collection of technical and analytical tools to enhance your trading experience.

Rank	Broker Name	Special Offer	Minimum Deposit	Spread	User Score	Maximum Leverage	Regulation	Start Trading
1	NordFX	55% Deposit Bonus	$10	0.0 Pips	96	1:1000	VFSC	Open Account
2	SGT Markets	Refer a friend $10	$500	0.0	95	1:400	IFSC	Open Account
3	OctaFX	50% Deposit Bonus	$100	0.4	94	1:500	IBC	Open Account
4	Exness	No	$1	0.1	93	1:2000	FCA,CySEC,IBC	Open Account
5	IC Markets	No	$200	0.0	92	1:500	ASIC	Open Account
6	Tickmill	$30 Welcome  Account	$100	0.0	91	1:500	FSA,FCA	Open Account
7	Axiory	$50 Deposit Bonus	$200	0.0	90	1:400	IFSC	Open Account
8	Justforex	100% Deposit Bonus	$1	0.0	89	1:3000	IFSC	Open Account
9	ThinkMarkets	No	$250	0.4	88	1:400	ASIC,FCA	Open Account
10	XM	$30 Welcome Account	$5	0.0	87	1:888	ASIC,FCA,IFSC	Open Account
11	FBS	$50 Welcome Account	$1	0.0	86	1:3000	IFSC	Open Account
12	HotForex	No	$5	0.0	85	1:1000	INC	Open Account