What is Price Action?
Price Action Trading (PAT) is that the trader makes all his decisions about trading only based on the price chart (without any indicators, experts, etc.).
This means that no delayed indicators such as mowing origins are used to determine the dynamic levels of support and resistance. (Support and resistance levels are divided into two categories: static and dynamic. As a result, it is constant with respect to time, but at dynamic levels the values of support and resistance to time change, such as mooring origins, one of the uses of which is to use them as levels of support and resistance.)
In all financial markets, price information is plotted based on time periods. In this way, the types of price charts are available based on a time frame of one minute to a month.
The price chart reflects all the expectations of market players, including banks, investment firms, micro-investors, and even computer experts (trading robots) over a period of time (one minute, one hour, and five), and these expectations of these traders. It visualizes the market in the form of charts and price movements.
In fact, it can be said that price movement is nothing but the visualization and objectification of the expectations of the actors in that market.
Announcing periodic economic information such as indicators, political changes, and natural disasters such as floods, wars, earthquakes, etc., although such as catalysis, accelerates price movements, but you do not need to analyze them to be successful in the trading market. Of course, the reason is very clear, because such events will ultimately affect the price.
Since the price chart is a reflection of all the variables affecting the price movement in a given time period, the use of delay indicators such as stochastic, MACD, RSI, etc. will only be a waste of time.
Price Action will give you all the signals you need to have a successful and profitable system. These signals are issued by Price Action Trading Strategies and help the Trader visualize the price movement (what has happened so far) and help predict the future price with high accuracy.
A simple chart versus a crowded chart full of indicators
To illustrate the difference between a simple Price Action chart and a chart with some of the most popular indicators, consider the following two charts, for example. There are no indicators in the first chart and Price is pure action. And at the bottom of the chart are the Stochastic, MACD, ADX and Blinger Band indicators.
It is important to note that a chart with more indicators, by occupying part of the chart, will reduce the price of the indicator and this will reduce the trader’s attention to the net price movement. So not only is there less space on your monitor screen for price movement, but your attention is not focused on the spirit of how the price is moving as it should be, and perhaps not completely.
If you look closely at both charts and want to choose one that is easier to analyze and trade, which one will you choose?
All low chart indicators and in fact all indicators are based on price movement. In other words, every time a trader adds a new indicator to his chart, he adds a new variable to his set of variables, which will not only cause better price analysis and forecasting, but will also confuse the trader even more. .
Examples of my favorite Price Action strategies
Note that the chart below is selected in such a way that there are also faulty signals (fail). Because the strategy is not supposed to accurately predict all market situations. And the issuance of incorrect signals by the best strategies is inevitable. So my goal is to consider the safest and most realistic mode.
How to identify market trends
One of the first steps in learning to trade with Price Action is to identify the trendy market from the suffering market. Process tracking strategy is one of the most likely strategies to succeed. And if you want to make money from this market, you have to learn it well.
The chart below shows how we use market movement to determine trends.
We call the market ascending if higher always higher and higher levels are formed. (HH, Hl) and the declining market is called if lower highs and lower lows are formed (LH, LL).
In the image below, the uptrend is well observed.
In the image below, the downward trend in the market (lower highs and lower lows) is well known.
Trending market versus suffering market
As mentioned earlier, Price Action, or Pride based on Price Action Analysis, is the analysis of price movement over time.
The results of this analysis will tell us whether the market has a trend or is in a state of suffering.
So with a simple Price Action analysis, you can tell if the market is up or running.
With the above examples, we have shown how to understand that the market is in a trendy state. Now, it is very easy for a market that does not have a trend (ie, the HH, HL rule in the uptrend and the LH, LL rule does not apply in the downtrend).
In the diagram, pay attention to how the Price Action area is fluctuating between support and resistance levels. There is no HH, HL, or LH, LL in this area, and we are in an area of suffering.
The following example shows how the market enters from an area of suffering to an area with an upward trend.
How to trade in the market with Price Action Trading Strategies
Now we want to see how you can trade Price Action in Forex.
As has been repeated many times, the nature of market players and their reluctance to react to macroeconomic variables make price movements in certain patterns tend to repeat themselves.
These patterns are known as Price Action Trading Strategies. Each strategy is used in different ways.
These price reversal patterns or price movements reflect market excitement, which may indicate a continuing trend or a change in direction. In slang, by learning the instant patterns of Price Action, you can go with the price to the next place where the price will move.
The first thing you need to learn in Price Action is to get rid of anything superfluous on your chart, including any indicators, experts, and و, and only have price bars on your chart.
I prefer to use candlesticks because I feel that candlesticks convey market information dynamically and effectively on the chart.
In my opinion, black and white charts (as shown in the figure below) are the best.
Once you’ve cleared all the unnecessary indicators and variables from your chart, you can start drawing key levels and then look for the Price Action patterns in your chart.
The image below shows examples of key levels of support and resistance in this chart.
How to trade using points of intersection in Price Action.
The next important step in Forex trading using action jumping is to draw the key levels of the chart and search to find the different points to use them for trading.
In the chart below, a support level and 50% Fibonacci retracement and a PIN bar in the USDJPY currency pair are clearly matched at one point. This tripartite intersection has caused prices to rise sharply.
All economic variables cause price movements to be easily seen in the price chart. Thus, the impact that fundamental news has on prices (the announcement of periodic economic indicators, political events and developments, and unexpected events such as war and natural disasters) has had an impact on price movements and is easily seen by the price index.
So instead of analyzing millions of economic variables each day (which, of course, is still impossible if a lot of traders work together), you just need to learn Price Action, because that way your trading will be able to break down the market. And analyze and use all the variables in the market very easily to do your business using Price Action. Because all these variables are included in the price movement chart.
The last point
I hope this introduction to Pride Action has helped you clear the way.
It doesn’t matter what system or strategy you use. Understanding the basics of Price Action can make you a better trader.
If you like simplicity like me and want to be a trader who only trades with Price Action, then first delete all unnecessary variables from your chart.
Published and authored by FalconProfit.com