Forex Trading Strategy Using Price Action Analysis

NickB’s Price Action Strategy – 2012 Edition

Welcome to the latest edition of the NickB Method (also known as NickB’s Price Action Strategy).

My Forex Trading Strategy revolves around the principles of Price Action Analysis. This page explains my Forex method in more detail so you can understand it and trade it successfully too.

Keeping it Simple

The key principle of my Price Action Strategy is to keep things simple. I am against over complicating trading. In my opinion, the simpler your method is, the more effective you will be.

Some trading strategies are an absolute mess of indicators. This is not the way to trade.

With my Price Action strategy I aim to keep my charts as clean as possible. In fact, the only thing I place on my Candlestick charts are a few Support and Resistance lines. My method is based around reading and understanding Price by reading Candlesticks and using Support and Resistance lines. This means my method is very simple to use and relatively stress free. Here’s a picture showing you my EUR/USD 1hr chart.

Clean and simple. This is one of the benefits of using Price Action Analysis.

Indicators Required For This Trading Strategy

So to trade my Forex Trading Strategy there are no indicators to use. Yes you heard that right, no indicators. I generally don’t like using Forex indicators as I find the data they show you is worthless as they lag current price. If you want to be curent and take action based on what’s happening with your currency pair right now then you can only base it off current Price data so have to use Price Action Analysis.

Currency Pairs This Forex Strategy Works On

My Forex Trading Strategy will work on any currency pair which is free floating and regularly traded. This is because my method is based on Price Action. This means you can use this Trading Strategy to successfully trade any currency pair you find on your Forex trading platform.

That being said, I personally prefer to concentrate on just a few pairs and find it too distracting to try and keep track of too many pairs at once. I believe you should be a Master of what you do so I concentrate mainly on 2 currency pairs. I mainly trade the EUR/USD and the GBP/USD. I generally trade these currency pairs as they are the most predictable and their movement is smoother. You don’t find random jumps unless there’s been some highly unexpected news, which is pretty rare. Also I prefer to trade the London session, which is when these pairs are most active.

This Trading Strategy Works Best on Longer Time Frames

Again, as this Forex Trading Method is based on Price Action you can trade on any time frame from 1HR and above. I mainly concentrate on the 1HR, 4HR and DAILY charts. These are consistently the most profitable as the patterns are easier to spot and lead to more consistent profits.

Types of Price Action Analysis

Primarily, I use two forms of Price Action Analysis:

Support and Resistance lines.
Candlestick analysis.

How to Enter Trades Using My Forex Trading Strategy

Due to the recent economic uncertainty and countries losing their credit ratings etc, currencies aren’t trading as they normally would, so now I exclusively trade reversals. I look for strong reversal setups forming on top of my Support and Resistance areas. Once a pattern forms that indicates a reversal I set up a trigger price and enter the trade. I have several trades trigger each week and so far I have had a 85% win rate.

Trading Strategy Targets and Stops

Targets: I aim for roughly 30 – 50 pips per trade.
Stops: I place my stoploss 15 – 30 pips away from entry.

These targets and stops differ during different market conditions so please check at the bottom of the Taking Trades for the most up to date information.

How to Adjust the Trading Strategy Around News Releases

I use the Forex Calendar from ForexFactory to keep track of Economic data which is due to be released on the pairs I trade. If there’s any high impact (red/orange) news due to be released for the American Dollar, the Euro or the British Pound then I stay out of the Forex Market. I do not want to enter a trade 30 minutes preceding the news or after the news.

As you can see my Forex Trading Strategy is straightforward and will allow you to make pips in any market conditions, with most Forex currency pairs.