• By the word “Price action”, it indicates that, the action of the price of something, we refer here to the price of stocks which is changing with time. To understand the action of the price we refer to a graphical presentation of the price that is – The Candlestick Chart.
• For a particular time period, this chart presents the activity of price which is happened by the activity of buyer and seller in the market. By the price action analysis, a trader can take the decision to enter into a trade or exit(either by booking profit or giving Stoploss) from a trade, without relying on technical indicators or other external factors. The Price Action is based on the belief that “price is the most important indicator of market behavior” and by analyzing price action which lefts a footprint by activity in the past and formed some patterns such as breakouts, pullbacks, and reversals, as well as candlestick patterns, a trader can gain strength into market direction and make profitable trading decisions.

There are several advantages to using price action as a trading strategy. It is simple, objective, and adaptable, and can be used in any financial market. Price action traders also use risk management strategies to minimize losses and maximize profits.

1. Simplicity: Price action trading is based on analyzing the movement of an asset’s price on a chart over a period of time, without relying on complex technical indicators or other external factors. This makes it a simple and straightforward approach to trading.
2. Flexibility: Price action trading can be used in any financial market, including stocks, forex, commodities, and futures. It is also a flexible trading strategy that can be used for both short-term and long-term trading, as well as for day trading and swing trading.
3. Objective: Price action traders focus solely on the movement of the price on a chart, without being influenced by external factors such as news or economic data. This makes it an objective and data-driven approach to trading.
4. Adaptability: Price action traders can adjust their trading strategies based on the changing market conditions and price movements. This allows them to stay responsive to market trends and adapt their strategies to maximize their profits.
5. Risk management: Price action traders use key levels such as support and resistance to manage their risk and determine their profit targets. This allows them to minimize their losses and maximize their profits.
6. Emotional control: Price action trading requires discipline and practice to master, which helps traders develop emotional control and avoid making impulsive trading decisions based on emotions.

Price Action Trading:

Price action trading can provide trading opportunities based on the analysis of the movement of a stock’s price on a chart. Here are a few examples of trading opportunities that price action provides to a trader.

Breakouts:

Price action traders may look for breakouts of key levels, such as support or resistance, which could indicate a potential trend reversal or continuation. If the price breaks a resistance level, this could signal a potential buy opportunity, as resistance flips to support, and while the price breaks below a support level could signal a potential sell opportunity as support flips to resistance now.(Remember, Always Enter into a buy trade from Support and into a Sell trade from resistance.

Support Breakout

Resistance Breakout

Break Inside:

This term seems to be new but by this word, we represent the failed breakouts. When the price breaks a key level but fails to continue the direction of the breakout. eventually, reverse into the previous key level. This situation also provides trading opportunities to a price-action trader.

Trendline Breaks:

Trend line is a line that can be drawn in the chart and have the potential to indicate the direction of the price move. Price action traders may use trend lines to identify the direction of the trend, and finds an opportunity when the price breaks these line. If the price breaks to the upside of a trendline sloping downward, this could indicate a potential buy opportunity, while a break to the downside of a trendline sloping upward could signal a potential sell opportunity.

Candlestick Patterns:

Candlestick patterns are a visual representation of price movements on a chart. Each candlestick represents the price action for a specific period of time, such as a day, a week, or a month. Candlestick patterns are important because they provide traders with information about the behavior of the market. By analyzing candlestick patterns, traders can identify trends, support and resistance levels, and potential trading opportunities. Candlestick patterns can also provide insights into the strength or weaknesses of a trend.

Support and resistance levels:

Price action traders may use support and resistance levels to identify potential buy or sell opportunities. If the price bounces off a support level, this could signal a potential buy opportunity, while a rejection of a resistance level could signal a potential sell opportunity.

Price action signals:

Price action traders may use price action signals, such as pin bars or inside bars, which can provide information about the strength of the trend or potential trend reversal. For example, a pin bar at a key level could indicate a potential reversal of the trend.