Price Action Method in Crypto Trading

Price Action Method in Crypto Trading

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In a bid to understand and gain from the crypto and financial markets, traders have studied and developed several helpful techniques for approaching these markets. Fundamental, sentimental and technical analyses are always employed when approaching these markets. All together, these analyses have been developed so much to include tools like on-chain metrics, technical indicators, etc. which provide information that make the trading process more bearable. Interpreting trading signals can also involve the use of something very basic such as Price Action.

Understanding to Price Action in Crypto Trading.

An asset's price does not just come up arbitrarily. In reality, the price behavior of an asset is displayed on visible charts where the price is plotted against a chosen timeframe. The study of these charts brings about the concept of technical analysis in general. These charts provide historical and current data on price and volume of assets that help technical analysts make proper trading decisions.

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It simply involves the studying charts and making proper trading decisions with very little use of technical indicators. As the name implies, traders who use this strategy depend so much on the price charts when making trading decisions.

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The price action technique has proven to be very effective due to the fact that the charts are basically a graphical representation of the market psychology. What this means is that when certain conditions are met, a particular outcome is expected to take place and this can be identified and exploited on the charts. For example, the psychology of traders have prompted the adoption of chart patterns like pennants, flags and wedges which when identified influence the decision of traders.

Conclusion

There are different ways of approaching the market as a technical analysts. Price action is a very effective method because it reduces noise whilst still delivering enough data to the trader. This method does not make crypto trading any less risky and so should be used with caution. Personally, I prefer to back it up with technical indicators.

Regards

@maqbool12