Price action trading strategy is one of the most popular trading systems in the world. Starting from the novice traders ending with the most experienced ones, everyone’s uses the Japanese candlestick pattern to understand the language of the market. Those who are new to the investment industry might not understand the proper way to trade this market. But the experienced professional knows the perfect way to decipher the language of each candlestick setup. As a new trader, you might get confused by seeing too many reliable trade setups, but there is nothing to worry. In today article we will discuss top four candlestick pattern which will significantly improve your winning edge.
The pin bar
The long-tailed candlestick is very popular among the retail traders. The pin bar has a very small body and the wick or tail is at least three times of its body. The long which usually suggest the buyers or sellers are getting exhausted and major reversal is going to take place in the market. If you spot the pin bar right at the key support level, you must wait for a bullish price action confirmation signal to execute long orders. On the contrary, if you find the pin bar right at the resistance, you must way for a clear sell signal to execute short orders. Though the pin bar trading strategy is extremely profitable yet you should never risk more than 203% of your account balance. Spread betting is all about managing your risk exposure. If you fail to manage your losing trades, you might lose a significant portion of your investment.
The engulfing pattern
Engulfing candlestick pattern is major reversal pattern and usually, you will spot such setup at end of a market trend. The experienced traders in the UK financial spread betting community often consider this pattern as the most reliable price action trade setup. However, you must use the fundamental factors of the market to trade this pattern since you will be trading against the market trend. Most of the time the new traders don’t give enough importance to the fundamental data. They are always taking a huge risk based on the technical factors of the market. Unless you synchronize fundamental and technical data, you will never be able to find the best trades in the market.
Continuation candlestick pattern is widely popular among the long-term position traders. It helps them to ride the market trend without increasing the risk factors. Being a new trader you should not execute a trade without having a clear confirmation signal. You have to wait for a major breakout to trade the continuation. The aggressive traders will not use any confirmation signal to trade the breakout and thus their risk exposure level will be high. On the contrary, the conservative traders will always wait for the confirmation signal to execute fresh orders.
Morning and evening start
Morning and evening start is often known as complex candlestick pattern. Usually, you will find bullish morning start at the bottom of a downtrend. The experienced traders will execute long orders once the pattern is completed on the higher time frame. On the contrary the bearish even start is seen at the end of an uptrend.
Being a price action trader you will have a very clear knowledge about the support and resistance level of the market. But this doesn’t mean you will be taking a huge risk to make a profit. You have to understand the importance of the proper money management spread betting profession. Those who trade with a huge risk always blow their trading account within a very short period of time. So learn the perfect way to manage your losing trades. And always try to trade with the market trend since it will significantly improve your win rate.