Understanding Price Action Trading in the Market

Trading on the market is all about following a pre-defined set of rules and correctly interpreting market trends in real-time.

However, there is another mode of trading that does not follow this conventional wisdom – it is known as ‘price action pattern’ trading.

Price Action Trading

What is price action trading?

Price action pattern trading is often executed by experienced traders; it is a class of trading that relies heavily on price changes in the immediate and recent past.

The term defines a class of trading method in which a trader reads the market trends, compares them to the recent trends, studies predictive trends and actual price movements, and then trades.

As such, price action trading debunks traditional methods of trading that use oft-used technical indicators.

Is it all played by ear?

Price action trading is not a result of smart guesswork; it certainly skims past technical factors, but it also employs analysis in the trading process.

Price action patterns make use of recent trading data and price trends. Thus, the trading system needs to use technical analysis systems encompassing price bands, upswings, and downswings, etc.

Before making the final trade. The trader also has to keep a constant eye on market volatility.

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