PRICE ACTION TRADING

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Price kích hoạt trading is a methodology for financial market speculation which consists of the analysis of basic price movement across time. It’s used by many retail traders và often by institutional traders and hedge fund managers to make predictions on the future direction of the price of a security or financial market.

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Put simply, price action is how price changes, i.e., the ‘action’ of price. It’s most easily observed in markets with high liquidity & volatility, but really anything that is bought or sold in a free market will generate price action.

Price kích hoạt trading ignores the fundamental factors that influence a market’s movement, và instead it looks primarily at the market’s price history, that is lớn say its price movement across a period of time. Thus, price kích hoạt is a form a technical analysis, but what differentiates it from most forms of technical analysis is that its main focus is on the relationship of a market’s current price lớn its past or recent prices, as opposed lớn ‘second-hand’ values that are derived from that price history.

In other words, price action trading is a ‘pure’ size of technical analysis since it includes no second-hand, price-derived indicators. Price action traders are solely concerned with the first-hand data a market generates about itself; it’s price movement over time.

Price action traders make use of the past history of a market’s price movement, most typically focus on the recent price action of the last 3 to 6 months, with a lighter focus on more distant price history. This price history includes swing highs & swing lows in a market, as well as support and resistance levels.

A trader can use a market’s price kích hoạt to try và describe the human thought process behind a market’s movement. Every participant in a market will leave price kích hoạt ‘clues’ on a market’s price chart as they trade their markets, these clues can then be interpreted & used to try và predict the next move in a market.

Price kích hoạt Trading – Keeping it Simple

Price action traders often use the phrase “Keep It Simple Stupid” in reference to the fact that trading is something many people over-complicate by clouding their charts with numerous technical indicators & generally over-analyzing a market.

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Price kích hoạt trading is also sometimes referred khổng lồ as ‘clean chart trading’, ‘naked trading’, ‘raw or natural trading’, in reference to trading from a simple price action only price chart.

The simple stripped-down approach of price action trading, means there are no indicators on a trader’s charts & no economic events or news is used in making one’s trading decisions. The sole focus is on a market’s price action, and the belief amongst price kích hoạt traders is that this price kích hoạt reflects all the variables (news events, eco. Data etc.) that influence a market & cause it khổng lồ move. Therefore, the implication is that it’s much simpler khổng lồ just analyze a market & trade from its price action, rather than trying to lớn decipher and sort the many different variables affecting a market each day.

Price action Trading Strategies (Patterns)

Price action patterns, also called price kích hoạt ‘triggers’, ‘setups’ or ‘signals’, are really the most important aspect of price action trading, because it’s these patterns that provide a trader with strong clues as khổng lồ what price might bởi vì next.

The following diagrams show examples of some simple price kích hoạt trading strategies that you can use to trade the market.

Inside bar pattern

An inside bar pattern is a two-bar pattern, consisting of the inside bar và the prior bar which is usually referred to as the “mother bar”. The inside bar is contained completely within the high to low range of the mother bar. This price kích hoạt strategy is commonly used as a breakout pattern in trending markets, but it can also be traded as a reversal signal if it forms at a key chart level.

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Pin bar pattern

A pin bar pattern consists of a single candlestick and it shows rejection of price và a reversal in the market. The sạc pin bar signal works great in a trending market, range bound market và can also be traded counter-trend from a key support or resistance level. The sạc bar implies that price might move opposite from the direction the tail is pointing; as it’s the tail of the pin bar that shows rejection of price and a reversal.

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Introduction lớn Price Charts

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Introduction to Price ChartsA price chart displays the price of a particular market over a period of time. You can change between different time frames on any ... Continue Reading