What Is Market Structure in Forex and How to Read It?

What Is Market Structure in Forex and How to Read It?

Market structure in forex is also sometimes referred to as price action. As a reminder, market structure, by definition, is the simplest form of price movement in the forex market, and it is vital to be able to read it. 

So, we call it the market structure because that is how the whole forex market moves. 

If you are a forex trader, then it is vital to know what price action is in forex. 

It is important to note that all financial markets create data regarding the movement of market prices over varying time periods – and this data is shown on price charts. 

It is no secret that economic data, among other factors, play a very important role. Since they are the catalysts for price movement in a market, there is no need to analyze economic data or other world news in order to trade the market successfully. 

According to some traders, price movement provides all the forex price action signals you will ever need in order to come up with a profitable and high-probability trading system.

Market structure in forex and traders 

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It is desirable to remember that the above-mentioned signals are collectively known as price action trading strategies.

Thanks to price action trading strategies, it is easier to understand what is happening in the market. 

Now, you know why it is so important to learn more about the market structure in forex. It is important to understand all details.

To cut a long story short, price action is the footprint of money. As we all know, financial markets are where money is exchanged between market participants. Interestingly, this exchange of money leaves a trail. 

The above-mentioned trail is a market’s price action. It is possible to observe the price action on a price chart. Without exaggeration, it is crucial to learn how to define and trade from the clues left behind from price actions. 

What makes price action so important?

People, who aren’t familiar with the forex market might ask, “Why trade currencies with price action?”

To make a long story short, price is the essence of any financial market. As a reminder, if you don’t know how to read the price action of a market, then you are unlikely to know how to make sense of what a price chart is telling you.

Unfortunately, not all forex traders understand the importance of price action. In order to undertone its significance, it is vital to comprehend that there is no easy way to make money in this world. 

Forex trading basics for beginners

The forex market is the largest financial market in the world. So, it is crucial to learn as much as the world’s largest financial market. If you are an inexperienced trader, you need to pay attention to various details. 

It is important to gather more information about various currency pairs. Moreover, you need to create your strategy. Also, it is vital not to forget about risk factors. 

You will also need to create your trading style. For example, you may choose day trading. 

Let’s take a look at trading strategies. 

Have you heard about trend trading strategy? 

The above-mentioned strategy is quite popular among forex traders. What’s interesting is that trend trading strategy involves using technical indicators in order to spot the direction of market momentum and going long or short correspondingly.

The basic postulate of the above-mentioned strategy is that forex markets are often expected to behave in a certain way – and historical trends, as well as movements, can help with future forecasts. Nevertheless, it would be best if you didn’t rely only on historical trends. It is vital to have  

a good risk management strategy in order to reduce the risk.

We need to mention moving averages (MAs), average directional index (ADX), and relative strength index (RSI) when it comes to popular technical indicators used to identify trends in forex. 

Range trading strategy

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Let’s focus on the range trading strategy. The strategy mentioned earlier is quite popular among novice traders, as the range trading strategy is one of the less elaborate plans. 

When a market constantly moves between two price levels, it is considered to be in a ‘range.’ Within the above-mentioned range, you could then spot certain upward or downward trends. 

When utilizing the strategy mentioned above, you will go long or short depending on the position of the price within that specific range. 

Forex brokers 

As stated earlier, the forex market is the largest financial market in the world.

It is vital to find a trustworthy forex broker. Hopefully, there is no need to read numerous reviews about forex brokers. Our team worked really hard in order to find some of the best forex brokers in the world. 

In our opinion, CMC Markets (CMC) is a great option. The broker mentioned earlier was founded in the 1980s. Without exaggeration, CMC is a highly-respected, publicly traded forex broker based in the United Kingdom. Moreover, the company demonstrated its ability to adapt to the ever-changing environment numerous times. The company mentioned earlier is listed on the London Stock Exchange.

The company is an ideal platform for all types of traders. Moreover, its fees are competitive within the industry.

As you can see, CMC Markets is a good forex broker. However, even CMC Markets has its disadvantages. As in the case of the vast majority of forex brokers, it doesn’t accept U.S. clients. 

What do we think about London Capital Group (LCG?) 

It was founded more than 20 years ago. The company remains one of the market leaders even after so many years. Interestingly, it rebranded in 2016 with the launch of LCG Trader.

The company provides access to various CFDs as well as spread betting instruments across a number of asset classes.

Its fees are competitive within the industry. Moreover, it is famous for its customer service. London Capital Group is a great option for inexperienced as well as experienced traders. 

As a reminder, London Capital Group doesn’t accept traders from the United States. 

Is it hard to learn more about price action? 

market structure in forex

First of all, you don’t have to be a financial guru in order to understand all the details. 

First of all, there is no necessity to learn several trading strategies at the same time. It is better to focus on one strategy. To cut a long story short, you need to learn one price action forex trading strategy at a time.

Furthermore, it makes sense to learn as much as possible about successful price action traders.  

The most efficient way in order to become a successful trader is actually to learn from a successful price action trader. So, why should novice traders learn from the most well-known forex traders? 

It is a great idea to read articles about famous traders and their strategies. 

Just imagine; you can significantly reduce your learning curve. Moreover, it is possible to avoid various mistakes. As you can see, it is very important to learn how to read price action. 

To sum up, if you want to trade forex successfully, knowing how to trade price action and how to use price action forex trading indicators is essential. It is important to understand all the price dynamics within the markets.