Price Action Trading Best 100% Successful Strategies used by Investors.pdf

What is meant by price action?
The movement of a security’s price plotted over time is known as price action. All technical analysis of a stock, commodity, or other asset chart is based on price activity. Many short-term traders base all of their trading choices solely on price movement and the formations and trends that can be drawn from it. Since it employs previous prices in calculations that can then be used to advise trading decisions, technical analysis as a practice is a derivative of price action.
A method for speculating on the financial markets called “price action trading” involves analyzing the fundamental changes in price over time. It is frequently used by institutional traders, hedge fund managers, and a large number of retail traders to forecast the future direction of the price of securities or financial markets.
In other words, price action trading is a ‘pure’ form of technical analysis because it doesn’t use any indicators that are derived from previous prices. The only data a market generates about itself that price action traders are interested in is price movement over time.
Price action analysis enables a trader to comprehend market price movement and offers explanations that help the trader create an image in their minds of how the market is currently structured. A market’s ‘gut feel’ and the experience of seasoned price action traders are frequently cited as the main drivers of their trading success.
A trader can attempt to interpret the human thought process underlying a market’s movement using the price action of the market. As they trade, each participant in a market leaves ‘clues’ in the form of price action on the price chart of that market. These clues can be analyzed and used to try to predict the next move in a market.
What Can You Learn from Price Action?
Charts that show price changes over time can be used to observe and interpret price action. To better identify and understand trends, breakouts, and reversals, traders’ use various chart compositions. Since candlestick charts show the open, high, low, and close values in the context of up or down sessions, they aid in the better visualization of price movements and are popular among traders.
Price action can be visually interpreted using candlestick patterns like the Harami cross, engulfing pattern, and three white soldiers. Many more candlestick formations can be created based on price action to predict what will happen next. Other chart types, such as point-and-figure charts, box charts, box plots, and others, can use the same formations.
Many technical analysts calculate technical indicators using price action data in addition to the visual formations on the chart. The objective is to uncover order in a price’s occasionally seeming random movement. For instance, the price action indicates that bulls have attempted a breakout on multiple occasions and have gained momentum each time, so an ascending triangle pattern created by applying trend lines to a price ac

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Whatismeantbypriceaction?
Themovementofasecurity’spriceplottedovertimeisknownaspriceaction.All
technicalanalysisofastock,commodity,orotherassetchartisbasedonprice
activity.Manyshort-termtradersbasealloftheirtradingchoicessolelyonprice
movementandtheformationsandtrendsthatcanbedrawnfromit.Sinceit
employspreviouspricesincalculationsthatcanthenbeusedtoadvisetrading
decisions,technicalanalysisasapracticeisaderivativeofpriceaction.
Amethodforspeculatingonthefinancialmarketscalled“priceactiontrading”
involvesanalyzingthefundamentalchangesinpriceovertime.Itisfrequently
usedbyinstitutionaltraders,hedgefundmanagers,andalargenumberofretail
traderstoforecastthefuturedirectionofthepriceofsecuritiesorfinancial
markets.
Inotherwords,priceactiontradingisa‘pure’formoftechnicalanalysisbecause
itdoesn’tuseanyindicatorsthatarederivedfrompreviousprices.Theonlydata
amarketgeneratesaboutitselfthatpriceactiontradersareinterestedinisprice
movementovertime.
Priceactionanalysisenablesatradertocomprehendmarketpricemovement
andoffersexplanationsthathelpthetradercreateanimageintheirmindsofhow
themarketiscurrentlystructured.Amarket’s‘gutfeel’andtheexperienceof

2. seasonedpriceactiontradersarefrequentlycitedasthemaindriversoftheir
tradingsuccess.
Atradercanattempttointerpretthehumanthoughtprocessunderlyinga
market’smovementusingthepriceactionofthemarket.Astheytrade,each
participantinamarketleaves‘clues’intheformofpriceactiononthepricechart
ofthatmarket.Thesecluescanbeanalyzedandusedtotrytopredictthenext
moveinamarket.
WhatCanYouLearnfromPriceAction?
Chartsthatshowpricechangesovertimecanbeusedtoobserveandinterpret
priceaction.Tobetteridentifyandunderstandtrends,breakouts,andreversals,
traders’usevariouschartcompositions.Sincecandlestickchartsshowtheopen,
high,low,andclosevaluesinthecontextofupordownsessions,theyaidinthe
bettervisualizationofpricemovementsandarepopularamongtraders.
PriceactioncanbevisuallyinterpretedusingcandlestickpatternsliketheHarami
cross,engulfingpattern,andthreewhitesoldiers.Manymorecandlestick
formationscanbecreatedbasedonpriceactiontopredictwhatwillhappennext.
Othercharttypes,suchaspoint-and-figurecharts,boxcharts,boxplots,and
others,canusethesameformations.
Manytechnicalanalystscalculatetechnicalindicatorsusingpriceactiondatain
additiontothevisualformationsonthechart.Theobjectiveistouncoverorderin
aprice’soccasionallyseemingrandommovement.Forinstance,thepriceaction
indicatesthatbullshaveattemptedabreakoutonmultipleoccasionsandhave
gainedmomentumeachtime,soanascendingtrianglepatterncreatedby
applyingtrendlinestoapriceactionchartmaybeusedtoforecastapotential
breakout.

3. Atrader’schartsdonotcontainanyindicators,andtheirtradingdecisionsarenot
influencedbyeconomicnewsorevents,asisthecasewiththesimple,
stripped-downmethodofpriceactiontrading.Priceactiontradersbelievethata
market’spriceactionaccuratelyreflectsallthefactors(newsevents,economic
data,etc.)thataffectamarketandcauseittomove.Theirsolefocusisona
market’spriceaction.Theconclusionisthatit’smucheasiertosimplyanalyzea
marketandtradebasedonitspriceactionthanitistotrytounderstandand
organizethenumerousdifferentfactorsthatinfluenceamarketeachday.
StrategiesforPriceActionTrading
Priceactionistypicallyviewedasthedatasourceoffwhichalltradingtoolsare
built,ratherthanatradingtoollikeanindicator.Inordertopredictbreakoutsand
consolidation,swingtradersandtrendtraderstendtoworkmostcloselywith
priceaction,eschewinganyfundamentalanalysisinfavorofconcentratingonly
onsupportandresistancelevels.
Howdoyouanalyzesupportandresistance?
●SupportandResistanceasReversalPoints
Whenthepriceapproachesasupportorresistancelevel,itoftenexperiencesa
reversal.Traderslookforpricepatterns,candlestickformations,orindicators
signalingpotentialreversalstoentertradesatfavorableprices
●SupportandResistanceasEntryandExitPoints
Supportandresistancelevelscanserveasentryandexitpointsfortrades.
Tradersmaybuynearsupportlevelswiththeexpectationofanupwardprice
movementorsellnearresistancelevelswiththeanticipationofadownwardprice
movement.

4. 2.IdentifyingSupportandResistanceLevels
Accuratelyidentifyingsupportandresistancelevelsiscrucialforeffectivetrading
decisions.Tradersemployvariousmethodstoidentifytheselevels,including:
●HistoricalPriceDataAnalysis
Byanalyzinghistoricalpricedata,traderscanidentifysignificantpricelevels
wherethepricehaspreviouslyreversedorconsolidated.Theselevelsoftenact
assupportorresistanceinthefuture,asmarketparticipantsrememberandreact
tothem.
●ChartPatterns
Chartpatterns,suchasdoubletops,doublebottoms,andheadandshoulders,
canprovidevaluableinsightsintopotentialsupportandresistancelevels.These
patternsindicatepricereversalsandoffertradersopportunitiestoenterorexit
trades.

5. ●PsychologicalFactors
Supportandresistancelevelsarenotonlybasedontechnicalfactorsbutare
alsoinfluencedbypsychologicalfactors.Theselevelsrepresentareaswhere
marketparticipantshaveshowninterestinbuyingorselling,creatingself-fulfilling
propheciesastradersactbasedontheselevels.
4.ApplyingSupportandResistanceinTradingStrategies

6. Tradersutilizesupportandresistancelevelsinvarioustradingstrategies,
including:
●BreakoutsandPullbacks
Breakoutstrategiesinvolveenteringtradeswhenthepricebreaksabovea
resistancelevelorbelowasupportlevel.Pullbackstrategies,ontheotherhand,
involveenteringtradeswhenthepriceretracestoasupportorresistancelevel
afterabreakout.
●TrendReversals
Supportandresistancelevelscanindicatepotentialtrendreversals.Tradersmay
lookforpricepatterns,suchasdoubletopsorbottoms,combinedwithsupportor
resistancelevelstoidentifytrendreversalopportunities.

7. Whatisthebestwaytotradeusingpriceaction?
Whentrading,priceactionisusedtoanalyzetrendsandpinpointentryandexit
points.Manytradersplothistoricalpriceactiononcandlestickchartsbefore
plottingpotentialbreakoutsandreveringpatterns.Tradingprofessionals

8. frequentlyreviewasecurity’shistoricalpatternstobetterunderstandwherethe
pricemaygonext,eventhoughpastpricebehaviordoesnotpredictfuture
outcomes.
Abarchartorlinechartisacommongraphicalrepresentationofpriceaction.
Whenexaminingpriceaction,twogeneralfactorsshouldbetakenintoaccount.
Thefirststepistodeterminetheprice’sdirection,andthesecondistodetermine
thevolume’sdirection.
Ifthepriceofasecurityisrisingwhilethevolumerises,thisindicatesthatthe
marketisveryconfidentbecausemanyinvestorsaremakingpurchasesatthe
risingprice.Iftherehadbeenlowvolume,ontheotherhand,thepriceaction
mightnothavebeenasconvincingbecausefewinvestorsarechoosingtoinvest
atthecurrentpricinglevels.
CandlestickPatterns:ReadingPriceSignals
Candlestickpatternsareapopulartoolusedintechnicalanalysistointerpret
pricemovementsinfinancialmarkets,suchasstocks,forex,and
cryptocurrencies.Theyprovidevisualrepresentationsofpricedataovera
specifictimeperiod,typicallydisplayedascandlestickcharts.
Candlestickpatternsareformedbyindividual“candles”onthechart,which
consistofabodyandsometimeswicksorshadows.Eachcandlerepresentsthe
opening,closing,high,andlowpricesforagiventimeframe.Theshape,size,
andpositioningofthecandlescanrevealvaluableinformationaboutmarket
sentimentandpotentialpricereversals.
Herearesomecommoncandlestickpatterns:
1.Doji:Adojioccurswhentheopeningandclosingpricesarevery
closeorvirtuallyidentical,resultinginasmallornonexistentbody.It

9. indicatesindecisioninthemarketandsuggestsapotentialreversal
ortrendchange.
2.Hammer:Ahammerhasasmallbodynearthetopofthecandle
withalonglowerwickorshadow.Itsuggestsapotentialbullish
reversalafteradowntrendasbuyersstepintopushtheprice
higher.
3.ShootingStar:Theshootingstarhasasmallbodynearthebottom
ofthecandlewithalongupperwickorshadow.Itindicatesa
potentialbearishreversalafteranuptrendassellersbecomeactive
andpushthepricelower.
4.EngulfingPattern:Anengulfingpatternoccurswhenalarger
candle“engulfs”theprevioussmallercandle,indicatingapotential
trendreversal.Abullishengulfingpatternformswhenagreen
(bullish)candlecompletelyengulfsthepreviousred(bearish)
candle,suggestingashiftfrombearishtobullishsentiment.The
oppositeistrueforabearishengulfingpattern.
5.Harami:Aharamipatternconsistsofasmallcandle(the“baby”
candle)insidetherangeofthepreviouslargercandle.Itsuggestsa
potentialtrendreversal.Abullishharamioccurswhenthebaby
candleisgreenandformswithintherangeofapreviousredcandle,
indicatingapotentialshiftfrombearishtobullish.Theoppositeis
trueforabearishharami.
6.MorningStar:Themorningstarpatternisabullishreversalpattern
thatappearsafteradowntrend.Itconsistsofthreecandles:alarge
redcandle,asmallcandlewithagap,andalargegreencandle.It
suggestsashiftinmarketsentimentfrombearishtobullish.
7.EveningStar:Theeveningstarpatternisthebearishcounterpartof
themorningstar.Itappearsafteranuptrendandconsistsofthree
candles:alargegreencandle,asmallcandlewithagap,anda
largeredcandle.Itsuggestsapotentialshiftfrombullishtobearish
sentiment.
Thesearejustafewexamplesofcandlestickpatterns.Tradersusethese
patterns,alongwithothertechnicalindicators,toidentifypotentialentryandexit
points,confirmtrends,andmakeinformedtradingdecisions.It’simportantto
considerthecontext,timeframe,andconfirmationfromotherindicatorswhen
analyzingcandlestickpatterns.

10. Understandingcandlestickpatternscanprovidevaluableinsightsintomarket
sentimentandpotentialpricereversals,helpingtradersanticipateandcapitalize
onmarketmovements.
BullishPriceAction

11. Bullishpriceactionisasignthatthepriceofasecurityislikelytoriseinthe
future.Moreprecisely,abullishtrendisfrequentlycharacterizedby“higherhighs”
and“higherlows”thatformanascendingtrianglepattern.Thisindicatesthata
security’spriceactionrecentlyoutperformedahighpricewhilecontinuingtobe
higherthanarecentlowprice.
AdvancedPriceActionTechniques
MultipleTimeFrameAnalysis
Multiple-timeframeanalysisinvolvesassessingpriceactiontradingacross
differenttimeframes.Byanalyzinghigherandlowertimeframes,tradersgaina
comprehensiveperspectiveonmarkettrendsandmakemoreaccuratetrading
decisions.
Multipletimeframeanalysis,alsoknownasmultipletimeframeanalysisorMTFA,
isatechniqueusedintechnicalanalysistogainacomprehensiveviewofprice
movementsandtrendsacrossdifferenttimeframes.Insteadoffocusingsolelyon
onetimeframe,analystsexaminepricedataandpatternsonmultipletimeframes
simultaneouslytoobtainamorecompleteunderstandingofthemarket.
Therationalebehindmultiple-timeframeanalysisisthatdifferenttimeframes
providedifferentperspectivesonmarketdynamics.Eachtimeframerevealsits
owntrends,patterns,andlevelsofsupportandresistance.Byanalyzingmultiple
timeframes,traderscanbetteridentifytheoveralltrend,assessthestrengthof
supportandresistancelevels,andmakemoreinformedtradingdecisions.
Here’showmultipletimeframeanalysisistypicallyconducted:
1.PrimaryTimeframe:Selectaprimarytimeframebasedonthe
trader’stradingstyleandgoals.Thiscouldbealong-term
timeframe,suchasadailyorweeklychart,forinvestors,ora

12. shorter-termtimeframe,suchasanhourlyor15-minutechart,for
daytraders.
2.SecondaryTimeframes:Identifysecondarytimeframesthat
provideadditionalinsightsandcomplementtheprimarytimeframe.
Thesecanbehighertimeframes(e.g.,weeklyormonthly)orlower
timeframes(e.g.,hourlyor15-minute).Thechoiceofsecondary
timeframesdependsonthetrader’spreferencesandthespecific
marketbeinganalyzed.
3.TrendAnalysis:Beginbyanalyzingtheprimarytimeframeto
determinetheoveralltrend.Thisinvolvesidentifyingthedirectionof
thetrend(upward,downward,orsideways)andassessingthe
strengthandstabilityofthetrend.
4.SupportandResistanceLevels:Identifykeysupportand
resistancelevelsfortheprimarytimeframe.Theselevelscanactas
significantpricebarriersthatmayinfluencepricemovements.Pay
attentiontolevelsthathavebeentestedmultipletimesandhave
causedsignificantpricereactions.
5.ConfirmationfromSecondaryTimeframes:Movetothe
secondarytimeframesandassessthetrendandsupport/resistance
levelsoneachtimeframe.Lookforalignmentandconfirmationwith
theprimarytimeframe.Forexample,iftheprimarytimeframeshows
anuptrend,itisadvantageousifthesecondarytimeframesalso
displaybullishtrendsorshowsupportivepriceactiontrading.
Byconductingmultiple-timeframeanalysis,traderscanreducetheriskofmaking
decisionsbasedonisolatedormisleadingpricesignalsfromasingletimeframe.
Itprovidesabroaderperspectiveonmarkettrendsandhelpstradersidentify
morerobusttradingopportunities.
It’simportanttonotethatmultiple-timeframeanalysisrequirescareful
considerationoftherelationshipsbetweentimeframes.Whilehighertimeframes
provideabroaderperspectiveonlong-termtrends,lowertimeframesoffermore
detailedinsightsintoshort-termpricemovements.Bycombiningthesedifferent
perspectives,traderscandevelopamorewell-roundedunderstandingofthe
marketandenhancetheirtradingdecisions.

13. Conclusion
Whentradingwithpriceactionsignals,it’simportanttoconsiderwherethesignal
formsonthechartaswellasthesignalitself.Notallpinbars,insidebars,etc.
aremadeequal.Youmightnotwanttotradeaspecificpriceactionsignal

14. dependingonwhereitformsinthemarket,oryoumightwanttotradeit
immediately.
Themostcrucialthingtokeepinmindisthatanytradingforecastsbasedon
priceactionarespeculative.Themoreinstrumentsyoucanusetosupportyour
tradingpredictions,thebetter.Intheend,asecurity’spastpricemovementisnot
aguaranteeofitsfuturepricemovement.Speculativetrades,eventhosewitha
highdegreeofprobability,requiretraderstoassumerisksinordertoaccess
potentialrewards.Themacroeconomicornon-financialfactorsaffectinga
securityarenotexplicitlytakenintoaccountbypriceaction.
FrequentlyAskedQuestions
Canprice-actiontradingstrategiesbeusedin
anymarket?
Yes,priceactionstrategiescanbeappliedtovariousmarkets,includingstocks,
forex,commodities,andcryptocurrencies.
Howlongdoesittaketobecomeproficientin
priceactiontrading?
Thetimerequiredtobecomeproficientinpriceactiontradingvariesforeach
individual.Itdependsonfactorssuchasdedication,practice,andtheabilityto
learnfrombothsuccessesandfailures.
Arethereanyspecifictoolsorsoftwareforprice
actionanalysis?

15. Whilepriceactionanalysiscanbeperformedusingbasicchartingtools,thereare
specializedsoftwareandindicatorsavailablethatcanenhancetheanalysis
process.
ShouldIusepriceactionstrategiesaloneorin
combinationwithothertechniques?
Priceactionstrategiescanbeeffectiveontheirown,butcombiningthemwith
othertechnicalorfundamentalanalysistechniquescanprovideamore
comprehensivetradingapproach.
Ispriceactionsuitableforbothshort-termand
long-termtrading?
Yes,priceactionstrategiescanbeappliedtobothshort-termandlong-term
trading.Theprinciplesofpriceactionanalysisremainrelevantacrossdifferent
timeframes.
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