What is Price Action?
A lot of traders have a lot of different ideas about what price action actually is. Most traders think that the method they are trading is price action, but the truth is price action is everything on the raw price action chart.
Very basically; Price Action is everything that traders are doing and how they are behaving placed on to a chart for other traders to analyse.
Price Action is everything that price is doing and has done on a Forex pair or trading instrument for a trader to see on a chart. All price represents on a chart is what traders have done and how they have behaved given a certain situation. For example price gets to a support area and price bounces higher. This is traders buying up at a level in the market where they think support is.
Another example of price action at work on a chart is a Pin Bar. Price gets to a certain level in the market before rejecting that level and snapping back the other way. On a chart we see a Pin Bar but that Pin Bar was made up of traders all around the world buying or selling at the same area and rejecting higher or lower prices.
This is a method that has been around for a long time and will be around for a long time to come. Unlike other rubbish indicators or black box systems Price Action trading does not stop working when the market dynamics change.
How can we use Price Action to profit?
Price action trading is the skill of being able to read the price and make trades on any chart, in any market, in any time frame and without the use of any indicators at all.
Traders and humans are very habitual and will do the same given the same circumstances. As traders we can begin to recognise patterns that form on the chart. These patterns will tend to repeat themselves and have the same outcomes. No two trades will ever be the same and no outcomes will ever match a previous trades, but by perfecting these high probability price action patterns we can begin to place trades that over time will give us an edge in the market!
Traders can learn and perfect these trading patterns and begin to implement strategies that will over time give them an edge on the market. An edge is simply something that gives a trader a better chance than 50/50 of placing a winning trade.
What is needed to learn trade Price Action?
If you want to learn how to trade Price Action you need to take of all the rubbish on your charts. Strip all the indicators of your charts and just have the plain price left. The only thing that is needed to trade the Forex markets successfully is raw price action. The price has all the information that you will need to begin making price action trades. Indicators and other rubbish just confuse and hide what is really going on!
Think of it this way if all indicators are based of what price has done, why not get rid of them and learn to trade the price yourself!
Continual education and practise-
Learning to trade Price Action successfully takes continual practice and commitment to perfecting your craft! The more screen time you put in the better and quicker you will pick up price action trading and begin to perfect your method.
An Edge on the market-
As a Price Action trader your edge on the market is going to be the Price Action signals you use to enter trades. These can be found all through this thread. Take your time to learn them and then perfecting them!
Below are two charts showing the type of clear and obvious Price Action setups this thread will help traders learn. One chart is showing two obvious pin bars and the other chart shows a clear and obvious bearish engulfing bar.
Here is a video of how I look to trade the intraday charts such as the 4hr charts. This pattern is a false break pattern that forms over and over again. This is a level that we look to find on the daily charts and then we can trade it on our intraday charts such as the 8hr, 4hr or even the 1hr charts. The 4hr price action in this video is making a false break and then has snapped back lower creating a bearish engulfing bar (BEEB) giving us the signal that price is looking to move lower.
Price Action can be a very rewarding and successful trading method if carried out correctly. Commit to learning the correct processes and then go about perfecting you method!