What is Price Action Trading?

Price action refers to the movement of a security’s price over time. This price movement can be tracked and analyzed on a naked chart; or indicator-free price chart, in which case it is called pure price action analysis trading. Price action as it relates to the forex market is a popular form of trading that has caught on heavily amongst both retail and commercial FX traders due its effectiveness and simplicity. There are different ways to implement price action trading into your trading routine as essentially all technical and chart pattern analysis requires having some back ground in price action analysis.

Price action trading works well in the forex market because of the dense liquidity of the major forex pairs as well as the forex markets 24 hour a day 6 day a week accessibility. Trading forex price action is a relatively low-stress way to trade because there are no complicated indicators to concern yourself with and it is not very expensive to obtain forex price action trading information. Learning to accurately interpret a forex currency’s price action on the daily or weekly charts can be a great alternative to short-term trading for those traders who still want to make extra money in the markets but don’t want to commit a lot of time to price action forex trading.

Another big advantage to forex price action trading is that you are trading off the most relevant and accurate reflection of current market conditions. This allows you to make the most informed decision regarding the possible direction of any given forex currency pair. This is in comparison to those traders who try to analyze numerous lagging indicators or use forex trading software which is just a different and arguably more difficult way to interpret price movement. Trying to learn how to trade forex off of lagging indicators or trading “robots” instead of price action is analogous to trying to learn how to drive a car in dense fog when instead you can learn to drive on a clear and sunny day. There really is no advantage to not taking the time to learn how to trade off price action because all other forms of technical analysis are simply a derivative of price action concepts.

Trading with price action can greatly enhance and simplify your forex trading experience. Most professional traders employ simple methods that make use of core trading concepts like simple analysis of price movement. This is because pro traders understand that there is no need to over complicate your trading strategy when the bigger part of trading success is dependent on money management and trading psychology. Many beginning traders end up confusing themselves and making trading much more difficult than it needs to be by employing overly complicated trading strategies. This in turn influences their trading mindset in a negative manner and pushes them further away from their goal of consistent trading profits. Learn forex price action trading and you will give yourself a great chance at finding the results you desire as a forex trader.