What is Price Action?
The most simple definition of price action would be ‘price’s movement over time on any time frame and chart’. If price moves one tick on a tick chart, that movement is price action. If price moves 10pips on a daily chart, that is also price action. But this does not tell us what price action really is.
Price action is the product of the order flow in the market, or all the buy and sell transactions executed. The total sum of these transactions is called order flow, and how the order flow plays out is called price action.
Therefore, by learning how to read price action and getting into the ingredients of it, we getting an inside look into order flow and this is critical because we do not have access to order flow. But this is what moves the market. The amount of buying and selling, the speed in which the market was bought and sold, where institutional traders are positioned, etc., all have a great impact on how price moves.
Thus, learning to read price action is critical for us as traders so we can do the following;
Identify the trend
Find key support and resistance zones
Understand whether the market is moving Impulsively or Correctively
Where the market is rejecting price advances or declines
When the market will reverse or continue trending
By learning to read price action, you can pick up all this information listed above and thus give yourself the greatest advantage to trade successfully.
Advanced Price Action Trading
There are actually many systems you can learn to read and trade price action. To mention a few;
Trading Impulsive vs. Corrective moves
Pin Bar Trading
Inside Bar Trading
Of course there are many more, but these are some powerful price action forex strategies which can help you to learn how to read price action and increase your edge.
No matter what system or time frame you trade, by understanding price action and learning to read advanced price action elements, you give yourself the greatest edge in the market, because you understand what it is doing and why. To learn more about how to trade price action, check out the price action course which teaches traders how to trade price action successfully.