90% of Traders are Trading “Price Action” Wrong

Matt here with FX p.m. and, I want to talk a little bit about the difference between price levels and price action a lot of people call you know what they’re doing trading price action or trading the raw price when in reality they’re trading chart patterns or just normal support resistance which is kind of a form of price action, but you’ll notice the way that we trade we trade raw price movement to summarize it’s how fast and how far the price has moved within a certain amount of time and we’re able to get statistical data on that and take trades based on high probabilities, so you’ll notice a lot of people who would say they’re trading price action would be looking at, let’s say the market has moved up it’s made a high it’s coming back down and it’s approaching to hit this resistance level now a lot of and, let’s say this is a, let’s say a 15 minute chart or one-hour chart whatever it is or it could be a 5 minute chart, let’s do a 5-minute since the the webinar in the training is typically on the 5 minute chart now a lot of people that are trading just normal price levels what a lot of people refer to as price action would sell this area right here this resistance level no matter you know how the price gets up here you know how long it takes or how long it hangs around up here they’re going to take this position and set their stop somewhere up here set their target somewhere down here you know have a good risk reward and all that, but the way that we would trade this level here we wouldn’t necessarily jump in just, because it’s at this level we jump in, if it gets to this level with a certain degree of price action how quickly it moves up, because here’s the thing price is think of it like a rubber band you know a rubber band you stretch it, so far and it wants to snap back and that’s all these waves in the market that’s price extending, and then retracing or range-bound or or vice versa, so a lot of what the software is doing is measuring those movements on a short time frame and giving you a probabilistic area when the market has been overextended now we take that overextended you know, let’s say the price has been going straight up hasn’t taken any breaks or any retracements it’s giving us that overextended it’s in a red zone, and then we see it’s at a resistance level, so we combine those two things to take the trade and that’s really the main difference between what I guess a lot of typical traders do is they may take look at like a comment you know where the price comes up it kind of ranges goes up, maybe you know forms a bullish flag or something in here and, let’s say your resistance levels right here you know though some people will put pending orders in the market no matter what how to you know sell at this level no matter what well what’s happening when the price is ranging right before a level like this is typically this is we’re gaining steam to go break through this and either continue and break out or you know do what would commonly happen is a false breakout and, so this price action right here this raw price movement of you know on a five-minute chart that’s probably like 30 40 pips you know in one in one solid move would be about average for, let’s say you’re a dollar or pound dollar this would be a trade where we would take it you know after it broke out, if we’ve got some levels some Fibonacci levels up here we would sell it outside of this resistance area, because it was building momentum building steam you know kind of like a sleeping giant or whatever you know and it’s getting ready to break that resistance level same thing for you know support level as well, so there’s nothing wrong with looking at you know flags and wet is in all these chart patterns and by using our system by no means do you completely get away from that you can use it as a supporting factor for your trades to, maybe hang on to a trade or have an idea as to whether your trades going to work out on a longer term picture, but by combining this price action method how far you know getting into a price that’s moving quick you know a price that’s running fast, and then it hits this level it’s likely to retrace for two reasons one is it’s overextended the rubber band is stretched and two we’re at this resistance level, so you combine those two things it’s very unlikely that the price is just going to keep going you know forever now, there are a couple exceptions there’s news there’s speeches there could be other unannounced things like that that you know sometimes it’s very rare, but sometimes they’ll catch you off-guard typically you’ll see that come across a news reader or, if you’re subscribed to any news services you’ll see that come across and by then, maybe you’ve taken a loss, because you’ve jumped in front of something that was moving very erratic, but the point is and what the takeaways are from this kind of conceptual theory with our strategy is that when you combine price action real price movement price action with good support and resistance levels you’re going to increase your win ratio probably you know pregnant double your win ratio when you’re talking about you know you’re about to hit a level is that price is the rubber band stretched you know, if you can ask yourself that question every time you’re getting ready to enter a trade, if it’s, if the price is stretched out then you know you’ve got a good chance that that resistance level or support level is going to hold, if we’ve been working our way up there slowly and it’s been inching its way up to your level you might be better off to wait see, if it breaks through worst case scenario you’re going to you’re going to miss a trade, but you know you didn’t take a lot, so that’s today’s lesson is kind of differentiating these two and explaining how we use that with our strategy, so I hope you learned something, let me know, if you have questions and we’ll see you in the next video.

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