What is price action? Application of price action in trading.
Updated
⚡️Price Action is a trading strategy that uses fluctuations in the price of a stock. This method requires investors to carefully monitor and make accurate assessments to find appropriate entry and exit points. In this article, join me in learning the concept and how to trade with Price Action!
⚡️ What is Price Action?
- Price Action is a trading method based on the analysis of price movements of a vote. Accordingly, the consultant reviews price chart changes to evaluate the price behavior of buyers and sellers in the market. From there, determine the next trend of price and make appropriate investment decisions.
-The Price Action method uses special price patterns or zones for support and resistance. Investors often ignore technical indicators or other analytical tools.
⚡️Price Action Strengths and Weaknesses
⚡️Strength⚡️
-⚡️ Simple and easy to use: Price Action is a simple analysis and trading method. Investors do not have to use technical indicators that require complex calculations. Instead, they just need to observe and make decisions based on changes in price charts on the chart. Furthermore, Price Action signals can be easily recognized and traded.
⚡️No latency: this method uses price charts, a tool that is continuously updated daily and hourly. Therefore, investors can quickly anticipate trends and make reasonable decisions.
⚡️Stimulating thinking: when using Price Action, investors can proactively evaluate and decide to invest instead of depending on indicators and using it mechanically. Investors can demonstrate their ability to observe, analyze and evaluate the market.
⚡️weakness⚡️
⚡️Subjective: Price Action can be an advantage for experienced investors but a disadvantage for beginners. Because every decision depends on the investor's perception.
⚡️Accuracy is not absolute: with a volatile market, relying solely on price fluctuations to make decisions will easily lead to mistakes. If there is price manipulation, investors will easily be confused and face losses.
⚡️More time consuming: this method requires spending more time to monitor and capture market fluctuations. This causes disadvantages for many investors.
⚡️ What is Price Action?
- Price Action is a trading method based on the analysis of price movements of a vote. Accordingly, the consultant reviews price chart changes to evaluate the price behavior of buyers and sellers in the market. From there, determine the next trend of price and make appropriate investment decisions.
-The Price Action method uses special price patterns or zones for support and resistance. Investors often ignore technical indicators or other analytical tools.
⚡️Price Action Strengths and Weaknesses
⚡️Strength⚡️
-⚡️ Simple and easy to use: Price Action is a simple analysis and trading method. Investors do not have to use technical indicators that require complex calculations. Instead, they just need to observe and make decisions based on changes in price charts on the chart. Furthermore, Price Action signals can be easily recognized and traded.
⚡️No latency: this method uses price charts, a tool that is continuously updated daily and hourly. Therefore, investors can quickly anticipate trends and make reasonable decisions.
⚡️Stimulating thinking: when using Price Action, investors can proactively evaluate and decide to invest instead of depending on indicators and using it mechanically. Investors can demonstrate their ability to observe, analyze and evaluate the market.
⚡️weakness⚡️
⚡️Subjective: Price Action can be an advantage for experienced investors but a disadvantage for beginners. Because every decision depends on the investor's perception.
⚡️Accuracy is not absolute: with a volatile market, relying solely on price fluctuations to make decisions will easily lead to mistakes. If there is price manipulation, investors will easily be confused and face losses.
⚡️More time consuming: this method requires spending more time to monitor and capture market fluctuations. This causes disadvantages for many investors.
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⚡️ Price Action analysis tools.Based on 1 candle
In a Japanese candlestick chart, a candle can provide information about the opening price, closing price, highest price, and lowest price during the trading session. Furthermore, the color of the candle, the length of the body and the candle wicks can all reflect the trends of the buying and selling sides in the market.
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⚡️ Support and resistance🔼 Identifying support and resistance areas on the price chart helps investors find the price range at which the price shows signs of reversing or slowing down before continuing the trend. In the Price Action method, investors often choose these areas to trade.
🔼 When the price rises to the resistance area, the price will reverse and decrease or level off. Investors can consider selling shares.
🔼 When the price falls to the support zone, the price will reverse and increase or level off. Investors can consider buying.
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⚡️ Candlestick pattern🔼 Investors can observe candlestick patterns to have stronger information about the behavior of parties as well as predict price trends. Some candlestick patterns can predict price reversals, helping investors make timely decisions and avoid losses. For example: Doji, Hammer, Shooting Star, Pin bar candlestick patterns,...
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⚡️Price model🔼 When combining many candles in a certain period of time, investors will have price models. Based on that, investors can determine market sentiment and predict future price changes. For example: head and shoulders pattern, cup with handle, 2 tops 2 bottoms,...
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Effective Price Action trading strategy.1. Breakout Strategy
The Breakout strategy is used when the price breaks resistance or support zones. The steps to implement this strategy are as follows:
🔼 Step 1: Observe and identify support and resistance areas on the price chart.
🔼 Step 2: Find the price point that breaks the support or resistance zone to enter the order:
- If the price rises sharply out of the resistance area, investors can start buying the stock.
- If the price falls and breaks the support zone, investors can consider entering a sell order.
🔼 Step 3: Start placing an order at the closing price of the candle that breaks out of the support or resistance zone.
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⚡️ It's true that PriceAction is here to help you find the right solution. When the barrier is broken (support and resistance), the market will easily trigger a bullish mentality such as greed to buy more or fear to sell. The nature of Price Action, if you are observant, can be said to be a variation of Theory .Dow.⚡️ Now you can use Forex Exchange to help you. Fx Markets is here to help you find a way to help you (MT4) for you. But it is simply a banking service, or a business's purchase and sale of goods through payment. Now Forex can help you find the right way to do this.
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⚡️Retest Strategy🔼The Retest strategy also uses resistance and support zones but at a safer level. According to the boat, investors will wait for the price to return to retest the breakout zone. This strategy helps investors avoid risks when the price only breaks one candle and then returns to the support and resistance zone. To implement the strategy, investors go through the following steps:
🔼Step 1: Identify support and resistance zones on the price chart.
🔼Step 2: Wait for the price to retest after breaking the support or resistance zones before entering the order.
If the price breaks the resistance zone, returns to touch the breaking zone and then continues to increase, investors can enter a buy order.
If the price retests after breaking the support zone and continues to decline, investors can enter a sell order.
🔼Step 3: Investors should note that they set their stop loss point at the nearest bottom if placing a buy order and at the nearest peak if placing a sell order.
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⚡️Pullback trading strategy🔼The Pullback strategy is used when the price touches resistance or support areas but turns back. The steps of this strategy are as follows:
🔼 Step 1: Identify support and resistance zones on the price chart.
🔼 Step 2: Observe price action at support or resistance zones.
🔼 Step 3: Enter a sell order if the price touches the resistance area and reverses downward. To be more certain, the candle shape needs to shorten or bearish candlestick reversal patterns appear.
🔼 Enter a buy order if the price touches the support zone and reverses to the upside. At this time, you also need shorter decreasing candles or bullish reversal candlestick patterns to confirm.
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⚡️ Trading strategies with price patternsPrice models can forecast price trends to determine reasonable entry points. The strategy is implemented with the following steps:
🔼 Step 1: Observe the price chart to identify price patterns
🔼 Step 2: Classify the price pattern as a reversal or continuation
🔼 Step 3: Wait for the price to break out of the model and start placing orders. Decisions to enter orders and cut losses need to be flexible according to each model.
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⚡️ConcludePrice Action is a useful strategy if used properly and at the right time. But to make a profit, investors need to consider flexibly using many analytical tools. And don't forget to follow DNSE for more useful investment information!
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