Trading price action signals is basically trading the movement of price on the stock. It’s used by all different types of forex traders, trying to foresee the next movement in price level.
Price action trading is looking on the movement associated with price, trying to estimate the subsequent mobility coupled with strength of a price. You can use this strategy in any markets or stock. Of course, I would say keep with substantial liquidity trading markets.
So, we look at history of price movement and don’t really care about the news as much. Instead of looking at RSI or other second-hand indicators, our main focus is price.
This is pure-bred technical trading here. No fluff. Instead of going crazy with the indicators, we deal with first hand data and price movements around different stocks.
This allows us to try and make a prediction on where the price will go next. Although, predicting too much is a bad thing. Profitable trading for swing trades focus on their gut feeling and understanding of how price action works.
These type of traders use past movements and levels of the stock to predict the future movements. This price history includes swing highs and swing lows in a market, as well as support and resistance levels.
You can use price action analysis to see if the stocks have tight stocks and go hard and fast in either direction. There are clues for the price action included in the movement of price and how the bars look.
Dumb it down
Being a price action trader, you do need any indicators to understand the next price bar.
This is different than most traders, because we’re not waiting on news. Why worry about news and other events when the price will move based off those events anyway. Therefore, the implication is that it’s much simpler to just analyze a market and trade from its price action, rather than trying to decipher and sort the many different variables affecting a market each day.
Price Action Trading Strategies (Patterns)
There are price action signals or bars that show an indication of what COULD happen next.
The following diagrams show examples of some simple price action trading strategies that you can use to trade the market.