Price Action Trading

Price action trading is the use of only price charts to trade Indices, without the use of technical chart technical indicators. When trading with this stock price action trading strategy, candlestick stock charts are used. This strategy uses lines & pre-determined patterns such as the 1-2-3 price action pattern strategy explained below.

Traders use this stock price action strategy because this analysis is very objective & allows the one to analyze the stock trading price moves based on what they see on charts market movement analysis alone.

This stock price action strategy is used by many traders: even those that use indicators also integrate some form of stock price action in their indices strategy.

The best use of this stock price action strategy is achieved when the stock price action trading signals generated are combined with line studies so as to provide extra confirmation. These line studies include trend lines, Fibonacci retracement, support & resistance areas.

Price Action Trading

Price action strategy uses three stock chart points to determine the break out direction of stock trading price. The 1-2-3 price action strategy uses a peak and a trough, these chart points forms point 1 & point 2, if market moves above the peak the stock price action signal is long, if it moves below the trough the stock price action signal is to short. The break out of point 1 or point 2 forms the third chart point.

Price Action Trading - Price Action Strategy Intraday Strategies Methods

Series of breakouts on Chart

Price Action Trading - Price Action Strategy Intraday Strategies Methods

traders use stock price action to try & predict where a trend direction might go. The stock market is either trending or ranging.

A trending market moves in a specific direction while a ranging market moves sideways, normally after getting to a support or resistance zone.

Observing the behavior of stock price action provides this data of whether the stock trading market is trending or ranging or reversing its direction.

As with any other Indices strategy this stock price action strategy should also be combined with other confirming indicators to avoid whipsaws. The 1-2-3 pattern setup can give good signals in a trending market but will give whipsaws when the stock trading market is ranging, it is best to determine if the stock trading market is trending or not before you start using this strategy.