Price Action Strategies

Price Action Strategies:
Complete Guide for

Investors
Price action trading is a strategy that helps predict market
movements by identifying patterns or “signals” of the price
movements of an underlying market.
Source: Bloomberg
Trend Trading Market Forex Market Technical Analysis Macroeconomics
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| Editor,
What can you find on this page?

1. What is price action in trading? 2. What is the difference between price
action, indicators and technical analysis? 3. Why is price action popular
among forex investors?
How to Trade Price Action: Tips to Get Started Top 7 Trading Strategies
with Price Action Signals
What is price action in trading?

Price action trading analyzes the performance of a security, index,
commodity or currency to predict what it might do in the future. If
price action analysis tells you that the price is going to go up, you
can open a long position or, if you think the price is going to go
down, you can choose to open a short position on the asset.
Understanding price action trading involves observing patterns

and identifying key indicators that can influence your investments.
There are a number of methods using price action that many
investors use to predict market movements and make short-term
profits.
What does it mean for price action to be “pure” or “raw”?

Raw price action (also known as pure price action) implies that
you trade based solely on the prices you can see. It's like driving
with the navigator off. Instead of relying on complex formulas and
time-consuming analysis, you conduct your trades using your own
understanding of the market.
What are price action signals?

Price action signals (sometimes called price action patterns or
price action triggers) are easily recognizable patterns in a market
and can be used to predict its future behavior. Experienced
investors can identify these signals at a glance by recognizing
certain patterns or repetitions in past performance.
What is the difference between price

action, indicators and technical analysis?
Price action indicators are flashes of activity on a trading chart that
signal the emergence of a trend. Experienced investors can
quickly spot these indicators and use them to make informed
trades in the market in real time.
Technical analysis uses a series of calculations to predict future

price movements. Instead, price action is based solely on the price
movements of an asset within the time frame of your trade.
In a sense, technical analysis attempts to find order in the

seemingly chaotic world of trading, while price action allows the
trader to take a more traditional instinct-based trading approach by
identifying price action indicators to act on. with them.
Why is price action popular among forex

investors?
The forex market is especially popular among investors who use
price action for several reasons:
 It is very liquid, so it may be easier for investors to open and

close their positions quickly
 The forex market is always moving, but it is not common for

it to experience big ups and downs. This makes it suitable for
beginner investors who want to experiment with small trades
before carrying out larger ones and gaining more
experience.
 Market expiration makes it easy to identify patterns and

recurring trends
How to Trade Price Action: Tips to Get

Started
To start trading price action, you just have to follow the following
five steps:
1. Open an account or log in
2. Identify the market in which you want to operate
3. Create a personalized trading plan
4. Decide if you are going long or short
5. Open and monitor your position
Top Seven Trading Strategies with Price

Action Signals
1. Trade Price Action Trends
2. pin bar
3. inside bar
4. Enter the trend after a pullback
5. Enter the trend after a breakout
6. Trading with shoulder – head – shoulder investment
7. The sequence of highs and lows
Trade Price Action Trends
If price action trading involves the study of price movements, price

action trend trading is based on the study of trends. Investors can
use a number of trading techniques to identify and follow price
action trends such as the head-shoulder reversal pattern.
This is a great trading tool for beginner investors as it allows them
to effectively learn from their more experienced peers by chasing
price action trends as they become visible. In the image below,
you would open a "buy" position to profit from bullish trends in
green, or a "sell" position to profit from bearish trends in red.
pin bar
It is sometimes called a candlestick strategy because of its
distinctive shape, resembling a candle with a long wick. It
represents a strong reversal and rejection of a particular price, and
the “wick” or tail shows the price range that has been rejected.
It is assumed that the price will continue to move in the opposite

direction of the tail, and investors will use this information to
decide whether to open a long or short position in the market. For
example, if the pin bar pattern has a long, downward tail, this tells
investors that a lower price trend has been rejected, implying that
the price could be about to rise.
inside bar
The inside bar pattern is a two-candle strategy, where the inside

bar is smaller than the outside, and is within the high and low
range of the outside candle (or mother candle). Inside candles
usually form during a time of market consolidation, but they can
also act as a red herring and signal a turning point in the market.
Savvy investors can identify this trend at a glance, and should be

able to use their macroeconomic knowledge to predict whether the
inside candlestick represents a consolidation or a reversal in the
prevailing trend. The size and position of the inside candle will
dictate whether the price is more likely to rise or fall.
Enter the trend after a pullback
This is a relatively simple price action strategy where the trader

simply follows the existing trend.
If a price is in a clear downtrend with constant lower highs, the

investor might consider opening a short position. If prices are
rising progressively, with highs and lows that tend to get higher
and higher, then the investor might want to buy.
Enter the trend after a breakout
This trend follows any major movement in the market under the
assumption that after a sudden rise in price, a pullback will take
place. If a market moves outside of a defined support or
resistance level, this is known as a breakout.
Investors can use it as a signal to open a long position if the stock

is trending up or breaks above the resistance level, or a short
position if it moves below the support level.
Trading with the shoulder – head – shoulder pattern
As its name suggests, the head-shoulder pattern represents a

market movement that looks a bit like the silhouette of a head and
shoulders. In other words, prices rise, fall, rise further, fall again,
and rise to a lower high before showing a slight drop.
Trading the shoulder-head-shoulder pattern is one of the most

popular price action trading strategies, as it is relatively easy to
pick an entry point (usually just after the first shoulder) and set a
stop loss ( behind the second shoulder) to take advantage of a
temporary peak (the head).
The sequence of highs and lows
In essence, trading price action is based on a game of highs and

lows. Price action investors can follow a sequence of highs and
lows to chart emerging trends in their market.
For example, if a price is trading at higher highs and higher lows,

this indicates that the trend is bullish. If it is trading at lower highs
and lower lows, the trend is bearish. Traders can use their
knowledge of the sequence of highs and lows to choose an entry
point at the lower end of an uptrend, and set a stop just before the
previous highest low.
Summary of How to Trade Price Action

Price action trading is a strategy that uses
 The price movements of an underlying market to attempt to

predict future movements of the same
 Investors look for price action signals that indicate the

emergence of a trend
 Unlike technical analysis, price action trading focuses on the

actual price, not moving averages.
 It is especially popular among forex investors due to the

liquidity and size of the forex market.
 Investors can use different methods to trade price action in

order to predict market movements and make short-term
profits.
Open an account to start trading
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Price Action Strategies:

Complete Guide for

What can you find on this page?

What is price action in trading?

Understanding price action trading involves observing patterns

What does it mean for price action to be “pure” or “raw”?

What are price action signals?

What is the difference between price

Technical analysis uses a series of calculations to predict future

In a sense, technical analysis attempts to find order in the

Why is price action popular among forex

 It is very liquid, so it may be easier for investors to open and

 The forex market is always moving, but it is not common for

 Market expiration makes it easy to identify patterns and

How to Trade Price Action: Tips to Get

2. Identify the market in which you want to operate

3. Create a personalized trading plan

4. Decide if you are going long or short

5. Open and monitor your position

Top Seven Trading Strategies with Price

4. Enter the trend after a pullback

5. Enter the trend after a breakout

6. Trading with shoulder – head – shoulder investment

7. The sequence of highs and lows

Trade Price Action Trends

If price action trading involves the study of price movements, price

It is assumed that the price will continue to move in the opposite

The inside bar pattern is a two-candle strategy, where the inside

Savvy investors can identify this trend at a glance, and should be

This is a relatively simple price action strategy where the trader

If a price is in a clear downtrend with constant lower highs, the

Enter the trend after a breakout

Investors can use it as a signal to open a long position if the stock

Trading with the shoulder – head – shoulder pattern

As its name suggests, the head-shoulder pattern represents a

Trading the shoulder-head-shoulder pattern is one of the most

In essence, trading price action is based on a game of highs and

For example, if a price is trading at higher highs and higher lows,

Summary of How to Trade Price Action

 The price movements of an underlying market to attempt to

 Investors look for price action signals that indicate the

 Unlike technical analysis, price action trading focuses on the

 It is especially popular among forex investors due to the

 Investors can use different methods to trade price action in

Open an account to start trading

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