Characteristics of Price Action Trading
Hey Guys!
I know price action trading can be somewhat a mysterious and confusing style of trading. So I just wanted to jot down the basic characteristics of price action trading to help clarify this ambiguous trading style.
#1 Price action trading only uses price action to make trading decisions. No indicators, fundamental analysis, intermarket analysis, etc... Just price alone will do.
#2 The Price action trader "Reads" naked price ( using candles, trendlines, price patterns, distinct ways that price itself fluctuates) to predict how much future long/short strength there is in a asset and makes trading decisions.
#3 To the price action trader, misanalysis is never the fault of price, fundamentals, or any other analysis method. The fault is always on the price action trader's misinterpretation of price.
#4 Price action trading techniques can be directly applied to any time frame, thus can be used for any style of trading. Long term/Swing/Day Trading. Moreover can be applied to any asset class.(though some techniques must be tweaked somewhat.)
#5 The price action trader does not require a logical understanding of "why" price moves in a given direction. They have the mentality that if it works, there is no reason or need to explain it.
#6 To the price action trader, current price is more valuable than past price in terms of analysis. So what happens closer to current price has more weight in the analysis process. Thus must watch current price and cannot just buy /sell and let a higher power take the wheel.
That's it! Hope this clarifies price action trading a little!
Have a great day guys!
Ken
I know price action trading can be somewhat a mysterious and confusing style of trading. So I just wanted to jot down the basic characteristics of price action trading to help clarify this ambiguous trading style.
#1 Price action trading only uses price action to make trading decisions. No indicators, fundamental analysis, intermarket analysis, etc... Just price alone will do.
#2 The Price action trader "Reads" naked price ( using candles, trendlines, price patterns, distinct ways that price itself fluctuates) to predict how much future long/short strength there is in a asset and makes trading decisions.
#3 To the price action trader, misanalysis is never the fault of price, fundamentals, or any other analysis method. The fault is always on the price action trader's misinterpretation of price.
#4 Price action trading techniques can be directly applied to any time frame, thus can be used for any style of trading. Long term/Swing/Day Trading. Moreover can be applied to any asset class.(though some techniques must be tweaked somewhat.)
#5 The price action trader does not require a logical understanding of "why" price moves in a given direction. They have the mentality that if it works, there is no reason or need to explain it.
#6 To the price action trader, current price is more valuable than past price in terms of analysis. So what happens closer to current price has more weight in the analysis process. Thus must watch current price and cannot just buy /sell and let a higher power take the wheel.
That's it! Hope this clarifies price action trading a little!
Have a great day guys!
Ken
Forex Trader/Forex Trading Education/Weekly Forex Forecasts and Midweek Forex Analysis