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MASTERING PRICE ACTION TRADING ON QUOTEX: STRATEGIES AND INDICATORS

MASTERING PRICE ACTION TRADING ON QUOTEX: STRATEGIES AND INDICATORS

Learn how to effectively incorporate price action analysis into your trading plan on Quotex, with strategies like breakout and pullback trading and technical indicators for enhanced accuracy.

Content

Price action is an important aspect of online trading on Quotex. I will show you how I successfully incorporate price action into my trading plan on Quotex.

WHAT IS QUOTEX?

Quotex is an online brokerage firm that enables trading in various assets, including currency pairs, stock indices, cryptocurrencies, and commodities. The platform provides a risk-free demo account for practicing trading strategies. When ready, you can open a live trading account with various deposit options, starting as low as 10 USD and with no deposit fees. 

Additionally, Quotex offers attractive bonuses of up to 35% as an added incentive. Their user-friendly trading platforms come with accessible customer support for any assistance.

Quotex
Quotex

INTRODUCTION TO PRICE ACTION

Before I show you how to use price action, you need to understand what price action is and all its different aspects.  

DEFINITION OF PRICE ACTION ON QUOTEX

Price action refers to the price movement of a financial asset plotted over a specific period. It is the foundation for all technical analyses performed on charts of stocks, commodities, or other assets.

I heavily depend on price action, analyzing its patterns and trends to guide my trading choices. Technical analysis is a product of price action, utilizing historical prices in calculations that subsequently influence trading decisions.

IMPORTANCE OF PRICE ACTION IN TRADING ON QUOTEX

I observe and analyze price movement through charts that plot historical prices over time. I employ various chart types to enhance my ability to identify trends, breakouts, and reversals. Candlestick charts are common as they visualize price movements, presenting open, high, low, and close values.

Candlestick patterns, such as Harami cross, engulfing patterns, and three white soldiers, are visual representations of price action and are utilized to anticipate future price movements. I apply these formations to different chart types, including point and figure charts, box charts, and box plots.

Furthermore, I incorporate price action data when calculating technical indicators. By doing so, I aim to find patterns and order in what may appear as random price movements. For example, applying the RSI to a price action chart might reveal a trend reversal. If the inside bar pattern, a form of price action, occurs when the RSI indicates an oversold market, there would be an increased chance of trend reversal.

Oversold market
Inside Bar and RSI

ASPECTS OF PRICE ACTION

Price action is multifaceted. Below, I will focus on the main aspects of price action.

UNDERSTANDING CANDLE STICK PATTERNS ON QUOTEX

Upward and downward price movements form candlesticks. Although these movements may seem random, traders often identify patterns from them for analysis and trading.

These patterns fall into two categories: bullish and bearish. Bullish patterns suggest a potential price increase, while bearish patterns imply a possible price decline. It’s important to note that no pattern is foolproof, as candlestick patterns indicate tendencies in price movements, not certainties. Let me take you through the common candlestick patterns.

  1. The bearish engulfing pattern occurs during an uptrend when sellers outnumber buyers, indicated by a long red real body engulfing a small green real body. It suggests sellers are in control, and the price may continue to decline.
Bearish Engulfing
Bearish Engulfing
  1. On the other hand, the bullish engulfing pattern appears in a downtrend when buyers outpace sellers, represented by a long white real body engulfing a small black real body. It indicates bulls are gaining control, and the price may move higher.
Bullish Engulfing
Bullish Engulfing
  1. The bearish evening star is a topping pattern, identified by the last candle opening below the previous day’s small real body and closing deep into the candle’s real body two days prior. It signals a shift from buyers to sellers and may lead to further selling.

TREND ANALYSIS ON QUOTEX

A trend refers to the price movement in a specific direction over time, whether long-term, short-term, upward, downward, or sideways. Achieving success in forex market investments depends on your skill to recognize trends and strategically position yourself for profitable entry and exit points.

Different types of traders have varying time horizons when approaching the markets. Like position traders, long-term investors focus on primary trends to capture significant price moves and achieve profit goals. 

Medium-term traders, such as swing traders, aim to capitalize on secondary trends that last from days to weeks. Conversely, day traders and scalpers are interested in minor trends for quick profits.

Whatever your trading approach, the key to success often lies in effectively timing trends. Identifying and opening positions as trends develop and closing them before they reverse can significantly enhance your market profitability.

Trend
Trend

PRICE ACTION TRADING STRATEGIES ON QUOTEX

You can incorporate price action into many trading strategies. I will show you some main strategies that help me capitalize on price action and profit from Quotex.

BREAKOUT TRADING WITH PRICE ACTION 

A breakout occurs when a security’s price moves beyond a predetermined support or resistance level with a higher trading volume. You must spot major resistance and support levels through price action to successfully trade this strategy. I spot major resistance levels by locating levels where the price moving up has reversed most times. 

Major support, on the other hand, is the level price moving down reverses the most times. I take long positions when a security’s price breaks above resistance or short positions when it breaks below support. After breaking the price barrier, volatility typically rises, and prices tend to trend in the breakout’s direction. 

Breakouts are essential in trading because they often lead to increased volatility, significant price movements, and potential major price trends in the future.

Breakout Confirmation
Breakout

PULLBACK TRADING WITH PRICE ACTION

A pullback refers to a temporary pause or slight decline in a security’s pricing chart following recent highs while the overall uptrend remains intact. It resembles retracement or consolidation, and we often use these terms interchangeably. Pullbacks are typically short-lived, lasting only a few consecutive sessions before the uptrend resumes.

Pullbacks are opportunities to buy after a security has experienced a significant upward price movement. For instance, a stock might surge following positive earnings news and then undergo a pullback as existing traders take profits by selling some or all of their long positions. Despite the pullback, the positive earnings serve as a fundamental indicator suggesting that the stock will continue its upward trend.

Most pullbacks involve the security’s price retracing to a technical support area, such as a moving average, pivot point, or Fibonacci retracement level, before resuming the uptrend. You should closely monitor these critical support levels because a breakdown from them could indicate a reversal instead of a simple pullback.

Trading pullbacks is simple. All you have to do is identify an uptrend, wait for a pullback then enter the trade as the price continues in its uptrend.

Pullback Strategy
Pullback Strategy

INCORPORATING TECHNICAL INDICATORS WITH PRICE ACTION ON QUOTEX

To make price action more effective on Quotex, I incorporate technical indicators. Here is a list of technical indicators and how I use them with price action.

Moving averages: Moving averages serve to smooth out price changes and recognize patterns. Combining the moving average with price action can help confirm the trend direction and potential entry or exit points. 

For instance, a bullish interior bar configuration above a 50-period moving average that is rising can suggest a potential uptrend that will continue.

Relative Strength Index (RSI): RSI calculates the speed and magnitude of price changes. It indicates the overbought and oversold conditions. When combined with price movement, RSI can indicate the potential for reversals or continuations. For example, a bullish disparity between the price and RSI that produces lower lows and a potential upward return can occur.

BOTTOM LINE

Price action is essential to online trading on Quotex. Price action is multifaceted, and you can apply it to numerous trading strategies. You can also incorporate technical indicators to increase your accuracy.

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The Harami Pattern on Quotex can help you catch market tops and bottoms more accurately. Combine it with indicators for even better results.