In order to trade Price action you need to Understand what is Price action trading ?
What is Price Action Trading?
Price action trading is the art of trading a financial instrument or stock on the basis of seeing certain chart patterns and trends. Its is gaining momentum and has become a popular strategy among many forex traders, commodity, equity traders.
Types of Price Action Trading
Some of the famous price action trading strategies
1.Pin bar
2.Trend Trading
3.Inside bar
4.Supply and Demand Zones
Let’s Discuss Each in Detail
1.
What is Pin Bar trading?
A Pin bar pattern consists of one single price bar, which depicts a reversal or rejection in price. It is defined by a long tail like a shadow or wick. Pin bars generally have small body in comparison to their tails. The tail of the pin bar shows a rejection; thus, price will continue to move in the opposite direction.
2.
What is Trend trading?
Trend trading is a trading strategy where the trader attempts to capture gains through the analysis of a stock or instruments momentum in a particular direction.
There are three types if trend. Uptrend, Downtrend and Sideways trend.
3.
What is Inside Bar trading?
A Inside Bar trading is a price action trading strategy that is characterised as a 2-bar candlestick pattern. The Inside bar is smaller and within the high to low range of the prior bar.
4.
What is Supply and Demand Zone Strategy?
A Supply and Demand Zone trading strategy is a Price action trading strategy that identifies institutional footprints. Certain patterns are created by Big Institution’s and banks on the charts. A supply and demand trader will try to leverage on those patterns to make his money.
There are many Price action trading strategies that traders use in the market. I have listed in depth the strategies regarding this Price action trading in my article.
Price action trading has an edge over other strategies, since it does not use any lagging indicators. Most conventional Trading requires the use of Indicators. Indicator based always involves complex adjustments and most indicators are a derivative of price.
Hence, if we logically asses price action is far more superior than the conventional trading analysis.
Price action trading is a very rule-based strategy. If one follows the rules and regulations of this strategy, you can have a 50% to 60% Success ratio. Please do not fall into schemes that sell you 90% success ration in the markets. There is no holy grail in trading.
A little Learning is a Dangerous thing. Way back in 2009 I got bit by the Trading Bug. Little did I know that this journey is going to be long and tiring one. I learnt everything about Conventional Trading like RSI, Bollinger Bands, even Trading related software's and N Number of courses related to Trading. All lead me to only one thing - Heavy Losses and Disappointments. I am sure you too have faced this reality in Trading. These lessons have compelled me to search for the Holy Grail in Trading.
But there are no such things as "Holy grail" in Trading. If every strategy worked then we all would be Millionaires by now . That's when I realized I needed a rule based Strategy which gave me a perfect win-loss ratio of at least 50% . In the Year 2010 I started my Trading Journey with Supply & Demand Strategy ( Price Action ) . In the beginning I learnt the Strategy and put it in use . Again I was in Losses, but that's what I learnt "A little Learning is a Dangerous thing". That's when I realized, you need to delve deeper and learn the finer nuances of Supply & Demand Trading. Armed with that thirst for Knowledge I set out to dig deeper into understanding why price moved and what factors made it move that way. Supply & demand Trading gave me that edge, to Identify Institutional Demand & Supply Zones. I Learnt that when Price Comes to a Particular Zone it reacts to that Zone or Level that were created by the Institutions. Now the Question is How do I Identify these Patterns or Zones? There are more than 2000 patterns in the Market. Is it even Practically possible for me to Trade all these 2000 patterns and Make Money? The Answer is NO.
So what Do I need to do Make Money? I only Needed 4 Price patterns to identify a Supply or Demand Zone Level. That's when I noticed, I did not need 10 Indicators on my chart telling me when to buy or not to Buy. Nor Do I need any Moving Averages on my chart.
This is how I traded the Stock Market 10 years ago, I am sure Some of us can relate to this chart. Can you make any Sense looking at this Chart ?
After 10 Years learning the Supply & Demand Strategy, this is how my Charts look. See the Difference
Learning how to Trade with a Simple Rule Based strategy is the key to become a successful Trader. Keeping in mind all my learnings and past mistakes WE have designed a "A Complete Course on Supply & Demand Strategy ". If you wish to learn this Price Action Strategy you can visit us at Course - MAK Trading School
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