Price Action System in Indices Trading

Price action trading is the use of only price charts to trade Indices, without the use of technical chart indicators. When trading with this price action strategy, candlestick charts are used.

Price Action System in Indices Trading

The best use of this price action strategy is achieved when the price action signals generated are combined with other indicators so as to provide extra confirmation. This is then used a trading system.

The trading system includes price action trading together with indices indicators trading so as to create a trading system or a trading strategy based on these two methods of technical analysis.

Price Action 1-2-3 Break Out Strategy

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

Price Action System in Indices - Price Action System Example

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

RSI and Moving Averages to Create Price Action System in Fore

Good indicators to combine price action trading with are:

• RSI

• MA Indicator

Stock traders should use these two technical indicators to confirm if the direction of breakout price action signal is in line with the trend direction shown by these two chart indicators.

If the direction is also the same as those of these indicators then stock traders can open a trade in direction of the price action signal.

If not stock traders should not open a trade as there's more likely a chance that this price action signal may be a indices trading whipsaw.

Just like any other chart indicator in Indices Trading, stock price action also has whipsaws and there is a requirement to use this price action strategy with other indicators as a combination with other signals from these indicators as opposed to just using this price action strategy alone.

Price Action Strategy - Price Action System Example