A Checklist for Forex Price Action Traders
If you want to succeed as a Forex price action trader, there are certain things that you HAVE to do. This brief Forex trading lesson contains a checklist of things that you need to do or know before you can start trading profitably. Refer back to this article as often as you need to make sure you are doing what it takes to succeed long-term in the markets.
Master price action trading strategies.
The first thing that you will need to do if you want become a successful Forex price action trader, is master price action trading strategies. This might seem pretty obvious to you, but I am always somewhat surprised at how many of my students simply fail to truly MASTER the price action strategies that I teach.
If you don’t 100% understand your trading edge, and how to trade it, you cannot become the trader you want to be. So, do not skip out on putting in the necessary time and energy to completely master price action. Perhaps the best way to go about doing this is to master one Forex trading strategy at a time.
Obtain a thorough understanding and practical “working” knowledge of risk reward, position sizing, and money management.
The next thing you’ll need to be on top of is Forex money management. The best trading strategy in the world will be totally useless and will actually probably cause you to lose money if you do not practice proper money management every time you trade.
You will need to be sure to develop not only your understanding of things like risk reward and position sizing, but you must also develop the habit of implementing them correctly on every single trade you take.
Be sure you have mastered daily chart trading first.
I get a lot of emails from students and potential students asking me about trading the lower time frame charts. It’s almost as if most traders don’t even consider that the higher time frames might
be a better time frame for them to learn on than the fast-moving and whip-saw heavy lower time frames. I literally cringe when I read emails from traders asking me about trading 15 minute or 5 minute charts…or God forbid…1 minute charts.
If you haven’t discovered the value in higher time frames yet, I strongly suggest that you read this article: Trading Higher Time Frames Drastically Increases Trading Success. I will say that I personally mainly trade off the daily charts, occasionally I look at the 4hr or 1hr, but it’s rare and I NEVER go below the 1hr chart. The material in my forex trading course reflects my philosophy on trading higher time frames. Mastering the daily charts first will make your path to consistently profitable trading much smoother and far less stressful. Most traders never go back to the noise-filled lower time frames once they discover the effectiveness and simplicity of higher time frame trading.
Be sure you have mastered trend-trading first.
The trend is indeed your friend. I am always a little bit amazed at how many beginning traders choose to ignore trend trading and instead try to pick tops and bottoms all the time. Trying to constantly trade counter-trend is a fool’s game; counter-trend trading should not even be attempted until you have totally mastered trading with the trend on the daily chart. Trading with the trend is the highest-probability way you can trade; this is because there are both fundamental and technical reasons why the market is trending.