Three different price action strategies for forex trading

Price action is the closest thing to order flow in forex and is used across all the markets. It offers the speed of buying and selling, shows you when there is support and resistance from a breakout, and where the reversals are occurring. The indicators are tracked according to the order flow of price action to form the charts that allow you to interpret the trading trends. There are 3 main elements of the price action trading strategy that you will have to follow, namely the Impulsive/Corrective, Pips Gained/Pips Lost, and Counting Candles. Here they are in detail: 

 Impulsive Moves vs. Corrective Moves  

 In the forex market there are two different moves that you get as outlined by the Elliot Wave Theory. These are the impulsive moves and the corrective moves. Impulsive moves are shown on the candlestick chart as longer, bigger candles in any one timeframe. This move is normally followed by smaller candles moving in a certain direction characterized by a close at the top of the first candle. This impulsive move is also completed by a close towards the bottom of the candles. Impulsive moves are usually created when buyers come in with a specific direction in mind at a specific level and introduce large amounts of capital. Another scenario is that the move is created due to the removal of defenses on either side of the support and resistance levels, thus forming a price cascade from tripping up the larger stops. Finding these impulsive moves are a great way to capitalize on trading opportunities as these moves are controlled by the larger markets and are usually consistent in their set direction. 

 The corrective moves, on the other hand, are the congested moves that typically follow an impulsive move, and are basically the inverse of this move. In these moves, the candles indicated are smaller and do not have specific openings and closings. These up and down candles generally have no bias or perhaps very little if any. These are important to look out for as they signal the next impulsive. The corrective move can occur in a number of ways. The first is just after an impulsive move of profit taking with little buyer/seller action challenging the previous move, or secondly when there is a mixture of buyers and sellers at the same place making it a potential reversal area. Corrective moves offer traders little bias and are often only 50 percent in the order books, meaning that the tilt towards your trade is not all that favorable. 

 Pips Lost and Pips Gained 

 By looking at the pips gain and pips lost for a currency pair, one can analyze the trends and market valuations as well as interpret future ups and downs based on previous buying and selling. The pips gained vs. pips lost will give you a clear indication as to where the order flow is most consistent for any pair. Using the pips gained vs. pip lost method you can keep track over long periods of time, but more importantly during every day trading how your pair is doing. You should be careful of making any major moves if the pips gained vs. pips lost are against you instead of for you, however. 

 Counting Candlesticks 

 It is highly useful to count the candles on any particular leg of a move when trading in forex. It will not only give you a detailed timeline (week, day, hour, or minute) that a stock pair has been sold off or bought up, but it can accurately predict where a clear buying and selling pattern is likely to continue if you are looking at the charts over a year period. The candles also indicated in intraday trading how much percentage you are gaining or losing. If for example you have 56 blue candles and 59 red candles for a specific pair over a year, this means that you have a 50 percent chance of making any money if you enter or exit at the beginning and end of each day. By using the pips gained vs pips lost method in combination with this, you would be able to deduce if the 50 percent was weighted more towards the downside, indicating that you should sell, or the upside, indicating that you should buy, to make money each day.