Price Action Trading Book - Summary
The “Price Action” method of trading is all about buying and selling securities by observing price movements. This trading technique closely watches the fluctuations, or “action,” of prices, often displayed in easy-to-read candlestick or bar charts. These charts are crucial for price action traders. Unlike many other traders, price action traders prefer a “naked” chart, which means they do not use additional indicators. They believe that these indicators only provide delayed insights into the market, making the price action itself the most trustworthy indicator available.
Price movement patterns show in real time how supply and demand interact for any security or currency pair. When price changes occur, they reflect shifts between buyers and sellers. For instance, when supply increases, prices drop, while increased demand drives prices higher.
Understanding the Price Action Trading Book
Price Action Trading Book
In our analysis, we observe that the overall trend is downward. There’s a resistance level that the price approaches, and we notice it’s also nearing the 61.8 Fibonacci level, aligning with this resistance. This scenario is called confluence. Confluence occurs when two or more price levels intersect, creating a significant point in the market.
Traders often examine past price patterns and their formations to predict the market’s direction. Price action trading involves using several tools like chart patterns, candlestick formations, trendlines, price bands, market swings (both upswings and downswings), support and resistance levels, consolidations, Fibonacci retracement levels, pivots, and more.
Typically, price action traders do not focus much on fundamental analysis, which involves the underlying causes of market movements. Why is that? They believe that market prices already reflect all the essential information. However, one thing that should not be overlooked is major economic news releases, such as interest rate decisions, Non-Farm Payroll reports, and FOMC announcements. From personal experience, I can tell you, “Economic news can play a dual role as both a supporter and a challenge for your trades.”
You can download the Price Action Trading Book PDF using the link given below.