What is a Price Action Trading? Key Features of Price Action

You must have seen so many times that people share their price action screenshots on their social account, websites, blog etc. And if you are new to forex, stocks then you must be surprised how this method works. Mostly we see that many traders use a lot of indicator’s on their chart, they make it very hard for them to understand the market behavior as well as the big market players scenario. We would like to tell you that using too many indicator’s on chart can also cause a lot of problems. Thats why you must have seen that most of professional forex, stocks, traders don’t use so many indicator’s on chart.

Trading with price action has so many advantages for the traders those we will discuss later. Personally we also do trade with the price action based methods and we would suggest trader’s to go with the same. In starting phase a new trader has full freedom to test differ types of trading methods but as far we know at the end people like to go with Price Action. Especially when they have a long years of trading experience in an financial market.

Though for a new traders its not very easy to understand the Price Action Trading Method, it requires a certain amount of practice and experience to deal with it wisely.Though all types of trading methods required a lot of skill and understanding, The term Financial Market has a wider place and we need a long term experience to do mastery in this business. and Lets talk about the Price Action Method.

Price Action Trading: Price action is another type of technical method in which we just concentrate on support and resistance. In this method we just try to understand and read the price movements. Its important to understand that the price is the main and essential element of trading. It does not matter what you are using to calculate or understanding it. Its only the price movement which would give you a profitable or losing trade in forex, stock etc because market has only two directions up and down. Either the price will go up or the price will go down.

Price action trading method does contain a very serious understanding of the price movement, here we also try to understand the psychology of big market players. They are the people whol drive the market up or down.By using Price Action Trading method properly you can also understand the psychology of big market players. Though there is no benefit to do trade if you don’t have a idea of market buyers and sellers because trading is an practical thing, this is a market where real activity is happening. You can’t do some kind of luck trading or betting here. This is a business where you have to make a series of smart decisions.

The other helpful tools those you can use in price action trading would be Fibonacci, Trend lines, etc. Even you can use one indicator on chart which wouldn’t make your trading chart that much messy to understanding. Furthermore keep in mind that this is a market of understanding the big players its not a market of betting or luck trading. Even so many trader’s do trading they earn some money but they does not know that what are market players they just try to rely on some kind of indicator, tool etc. Which is a wrong kind of trading approach. Let’s talk about some of the features of price action trading.

Key Features of Price Action Trading:

  • The first key feature of Price Action Trading is that it doesn’t make your trading charts so messy or hard to understand. Due to less use of indicator’s you can easily see the market direction and you can make a good trading analysis for you. While trading with too much indicator’s would give you a bad scenario of the market to analyze the circumstances.
  • This trading method does also helps trader’s to understand the market support and resistance wisely. Chart is always clean and you have to just draw a line above and below of your support and resistance area. But during the use of so many indicator’s some time you got so many support and resistance ideas on mind and it can move your trading approach in wrong direction.
  • Trading with big market players is one of the biggest task to do in any financial market, big market players are the people or firm who decide that in which direction they have to move the market. We would like to tell you that big market players are Big centeral banks, Big firms, Hedge Fund Managers, etc.
  • Trading with Price Action Trading method would make it clear to undrestand that what is the current direction of market trend for now. During the use of price action method you can use trendline with it on your chart and you can find out the direction of trend for you. Furthermore you can also add 200 Day Moving Average on your naked Price Action Chart to understand the trend.
  • As we know that most of indicator’s doesn’t work well in sideways market. During the sideways market situation most of indicator’s provide false trading signals.For example Moving average. This indicator does work well in trending market but during sideways market it doesn’t work well. But in Price Action Trading we can do trade well even in sideways market condition, where you can use simple support and resistance analysis.
  • The use of technical analysis and clean market understanding does make this method very powerful and insane. It doesn’t matter what market conditions we have whenever there is a market buy and sell approach, price action trading always provide’s a quick entry and exit in trading. Meanwhile so many indicator’s provide late trading signal which can create some problems like early exit, less profit, loss etc.

Bottom Line

Trading with price action has its own advantages for traders, but as we had discussed above for new trader it would not be that much easier to do trade with price action. There are a few steps those you should follow before using an price action trading method. First of all you should have a good understanding of market technical analysis, you can only adopt this method if you have a good knowledge of Support and Resistance Trading. Price action is also an technical method and in the absence of Support and Resistance or Technical anaysis this method would not bring any satisfactory result in your trading. Means to say that Support and Resistance is the main basic need for this Price Action Trading.

After getting a good idea and experience of support and resistance you can start to use price action as your primary trading method, along with it you can concentrate on Trend lines as well. Master your trend lines and use them along with the support and resistance. Keep in mind that for a trading success you need a good mindset, a good management and a good strategy. A trading strategy or a trading method is just a part of our success. Trading Psychology is the most and essential one to do mastery, professional trader’s always say that mastery in trading psychology would give you a 70% of success chance in trading.

Leave a comment