The price action trading strategy is by far the most effective way to trade the critical levels. Those who are trading the market for a long period knows the importance of the Japanese candlestick pattern trading strategy. Every candle has a different story to tell. The professional traders analyze the different candlestick patterns and find sweet trading spots. But to learn about the price action trading method, the traders need to work hard. Even after memorizing all the basic details, it becomes really hard to find the best signals even in the higher time frame. You might be wondering price action trading is only for skilled professionals. But don’t worry, we have a simple solution.
To trade the price action signals, the naïve traders should rely on special kinds of EAs. EA stands for expert advisors and it is nothing but a bunch of codes. Being a new trader, you can use a custom made EA that can analyze the candlestick pattern along with the key support and resistance level. Even if you fail to predict the reliable pattern, the EAs can create push alerts and let you know about the potential trade setups. Let’s find out some of the key reasons for which every price action traders should use EAs.
Problem of overtrading
The first thing for which you should rely on the forex EA is related to overtrading. After learning the reliable candlestick patterns, the traders start to trade more often. They switch to the lower time frame to get more price action confirmation signals. Eventually, they end up overtrading the market. If you want to succeed at trading, you must learn to trade this market with a high-quality trade setup. And for that, you must limit the number of trades that you can execute per day.
Program your EA in such a way so that it disables the manual trading options for 24 hours once two trade is executed. However, the time frame is just a place holder to show how you can protect yourself from the problem of overtrading. If you are good at analyzing the price pattern, you can set the freezing time for 6 hours and thus you will be allowed to open one trade-in every 6 hours.
Detecting the reliable patterns
For the untrained professionals, it’s really hard to predict the reliable pattern when the market is trending or the volatility is high. At times, the inexperience price action users often miss the golden trade setups. But this problem can be easily solved by using the EA. The EA can automatically detect the patterns and alter the traders about the potential formations of the pattern. Usually, the patterns generated by the EAs are highly accurate since it calculates the opening and closing price of the candles. However, you should analyze the reliability of the signals generated by the EAs before you start placing the trades in the real market. No matter how good your EAs are, you should never blindly follow its signal.
Being a human being it’s very normal to miss the minor details of the market. But missing minor details might result in a big loss and cost us a fortune in the investment business. You might be a skilled price action trader, still, you may not notice the important formation of the candlestick pattern that can create a big difference in your monthly profit factors. But if you have the perfect price action signal generator or the EAs installed in your trading platform, you don’t need to monitor the price chart. The trading bots will do all the hard work and you can relax without thinking about the golden opportunity.
Adjustment of the stop loss
The price action trading strategy allows the traders to trade the market with a very tight stop loss. And only for this reason it has become extensively popular among the professional traders. But the naïve traders often forget to scale the lot size while using tight stop. They often take a high risk by seeing their past performance. And when the trade goes wrong, they lose a big portion of their capital. To avoid such complicated issues, you can rely on risk management EAs. The EA will suggest you the lot size based on your account balance. Though its use is a little bit complex you can learn to use this tool like a pro trader by using the demo account.
You might be a great trader and know all the details of the price action trading strategy. Still, you need to be careful about the trade execution process since no one knows the outcome of the trade. Being emotional, it’s good for the traders to rely on the EAs when it comes to managing the risk factors while trading the market with the help of the price action signals. Though you feel uncomfortable with such an approach but using the trading bots to manage your risk factors to reduce the risk at trading.