3 Price Action Trading Strategies to Profit From Trapped Traders – Trading coach (2024)

FAQs

What is the 3 8 trap trading strategy? ›

The document describes a trading strategy called the "3x8 Trap" which uses 3 and 8 day exponential moving averages to identify consolidation patterns within trends on daily stock charts.

3% Rule: This suggests risking no more than 3% of your trading capital on any single trade. This helps limit the potential loss from any one trade and protects your overall capital. 5% Rule: This rule applies to the total risk exposure across all your open trades.

Clear guidelines: The 5-3-1 strategy provides clear and straightforward guidelines for traders. The principles of choosing five currency pairs, developing three trading strategies, and selecting one specific time of day offer a structured approach, reducing ambiguity and enhancing decision-making.

One of the simplest and most widely known fundamental strategies is value investing. This strategy involves identifying undervalued assets based on their intrinsic value and holding onto them until the market recognizes their true worth.

The 3-5-7 rule in trading is a risk management guideline that suggests limiting the amount of capital you put into any single trade. According to this rule, you should not risk more than 3% of your trading capital on any one trade, no more than 5% on any one sector, and no more than 7% on all trades combined.

It consists of three price swings with three swing points, suggesting a change in market direction. Trading the 123 pattern involves entry at the breakout of point 2, stop loss placement below (for bullish setup) or above (for bearish setup) point 3, and setting a profit target by measuring the pattern itself.

The 90 rule in Forex is a commonly cited statistic that states that 90% of Forex traders lose 90% of their money in the first 90 days. This is a sobering statistic, but it is important to understand why it is true and how to avoid falling into the same trap.

Cut your losses quickly: Never let a loss get out of control. Trade with the trend: Follow the market's direction. Do not trade every day: Only trade when the market conditions are favorable. Follow a trading plan: Stick to your strategy without deviating based on emotions.

The 3 Cs of trading in a crisis are: Capital. Conviction. Courage.

Indicator-Based Directional Trading

This strategy uses an indicator to determine the direction of the trade. The indicator provides a clear signal when it's time to enter or exit a trade, making it easy to work with. Traders who use this strategy can expect to see consistent results and high success rates.

What is the best strategy for price action? ›

The head and shoulders reversal trade is one of the most popular price action trading strategies as it's relatively easy to choose an entry point (generally right after the first shoulder) and to set a stop loss (after the second shoulder) to take advantage of a temporary peak (the head).

The defining feature of day trading is that traders do not hold positions overnight; instead, they seek to profit from short-term price movements occurring during the trading session.It can be considered one of the most profitable trading methods available to investors.

Trend trading strategy. This strategy describes when a trader uses technical analysis to define a trend, and only enters trades in the direction of the pre-determined trend. The above is a famous trading motto and one of the most accurate in the markets.

'Trap' trading is the way of creating trap of artificial way of making market move in any break out or break down so that people would be trapped in and they can enjoy the benifit. This is not possible for a single person to do such act but group of people mostly called 'operators' are doing this.

The 9:20 AM short straddle strategy offers traders a dynamic approach to capturing potential profit from market volatility in the early trading hours. By selling both a call and a put option with the same strike price and expiration date, traders position themselves to profit regardless of the market's direction.