The Price Action Trading Strategy Guide

Price action trading is a methodology that relies on historical prices (open, high, low, và close) lớn help you make better trading decisions.

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Unlikeindicators, fundamentals, or algorithms… price action tells you what the market is doing — và not what you think it should vì chưng.

Now, this isn’t the Holy Grail. But, if you devote time to lớn learning price action trading, you’ll trade with cleaner charts, and can pinpoint your entries và exits with better precision.

That’s why I’ve sầu written 2873 words in today’s post, teaching you the secrets of Price Action Trading.

Here’s what you’ll discover…

Are you ready?

Then let’s get started…

This is an extensive sầu post and I would encourage you lớn tải về the PDF tệp tin below, so you can reference it in future.

The truth about Support and Resistance nobody toàn thân tells you

First, let’s define what’s Support & Resistance so we’re all on the same page.

Support– A horizontal area on your chart where you can expect buyers khổng lồ push the price higher.

Resistance– A horizontal area on your chart where you can expect sellers lớn push the price lower.

Here are a few examples…

Support & Resistance on EUR/USD Daily:

Support on (USD/CAD):

Resistance on (GBP/JPY):

Also:

Support và Resistancecan swop roles.

This means when Support breaks it can become Resistance. And when Resistance breaks it can become Support.

An example…

Previous Support turns Resistance on (GBP/AUD):

Previous Resistances turns Support on (NZD/USD):

But why does it happen?

Because when the price breaks Support, traders who are long are losing money & in the “red’.

So, when the price rallies baông xã khổng lồ Support, this group of traders can now get out of their losing trade at breakeven — & that induce selling pressure.

And that’s not all because traders who missed the breakout will want to lớn short the markets which increase the selling pressure.

And that’s why when Support breaks it tends khổng lồ become Resistance.

Make sense?

Now you’re probably wondering…

“But how do I draw Support & Resistance on my charts?”

That’s a good question.

So, here are the guidelines I use…

Zoom out your charts (at least 200 bars for me)Draw the most obvious levels (if you need to lớn second guess, then it’s not an important level)Adjust your levels to get the most number of “touches” (it can be body or wick)

Now, if you want a full training on how khổng lồ draw Support & Resistance, then kiểm tra out this video below…

Next…

Dynamic Support & Resistance

According lớn Classical Technical Analysis, Support và Resistance are horizontal areas on your chart.

This is useful when the market is in a range or weak trkết thúc.

But in strong trkết thúc markets, it won’t work well & that’s where you need lớn rely on dynamic Support & Resistance.

What the hechồng is dynamic?

It means Support and Resistance “move along” with the price instead of being static.

For example:

The 20-period Moving Average can act as dynamic Support in svào trending market…

Or the50-period Moving Averagecan act as dynamic Resistance in a healthy trend…

Pro Tip:

Dynamic Support và Resistance can also be in the size ofTrendlineor Trkết thúc Channel.

Market behaviour secrets: How the market really moves…

Here’s the deal:

The markets arealways changing(I’m sure you’d realize this by now).

It can in an uptrkết thúc, downtrkết thúc, range, low volatility, high volatility, etc.

But, if you take a step baông xã and look at the big picture, you’d realize the market tends to lớn be in 1 of 4 stages…

AccumulationAdvancingDistributionDeclining

I’ll explain…

Stage #1: The Accumulation Stage

The Accumulation stage occurs after a decline in price, and it looks like a range market in a downtrend.

Here are the things to look for:

Occurs after the price have sầu fallen over the last 5 months or more (on Daily timeframe)It looks like a range market with obvious Support & Resistance areas — in a downtrendThe 200-day Moving Average is flattening out

Here’s an example…

Stage #2: The Advancing Stage

The Advancing Stage is an uptrover with a series of higher highs & lows.

Here are the things to look for:

Occurs after the price breaks out of Resistance in an Accumulation stageYou see a series of higher highs & lowsThe price is above the 200-day Moving AverageThe 200-day Moving Average is starting lớn point higher

Here’s what I mean…

Now here’s the thing…

No market goes up forever. It eventually gets “tired” và that’s where it enters stage 3…

Stage #3: The Distribution Stage

The Distribution stage occurs after a rise in price, & it looks lượt thích a range market in an uptrend.

Here are the things khổng lồ look for:

It looks like a range market with obvious Support and Resistance areas — in an uptrendThe 200-day Moving Average is flattening outThe price whips back và forth around the 200-day Moving Average

It looks something lượt thích this…

At this point, the market is still in equilibrium with both buyers và sellers on equal footing.

However, the tide is turned if the price breaks below Support và that’s where we enter the final stage…

Stage #4: The Declining Stage

The Declining Stage is a downtrkết thúc with a series of lower highs & lows.

Here are the things to look for:

Occurs after the price breaks out of Support in a Distribution stageYou see a series of lower highs and lowsThe price is below the 200-day Moving AverageThe 200-day Moving Average is starting khổng lồ point lower

An example…

And if you have sầu any trouble trying khổng lồ identify the direction of the trend, then go watch this training…

Now you might be thinking…

“What’s the point of learning the 4 stages of the market?”

Here’s the thing:

If you can recognize the current stage of the market, then you can adopt the appropriate trading strategy khổng lồ trade it.

Here’s how…

If the market is in an Advancing stage, then you want khổng lồ be a buyer (not a seller).

This means you can look to lớn buybreakouts or pullbacks.

Or…

If the market is in a Distribution stage, then you know there’s a huge potential downside if the price breaks below Support.

This means you can look to short the breakdown of Support or wait for the breakdown to occur, then sell on the pullbaông chồng.

Now once you understand the 4 stages of the market, then you’ll know which Price Action Trading strategies lớn use in a given market condition — và you’ll never be “lost” again.

The secret to lớn reading Candlestiông chồng Patterns — How khổng lồ time your trading entries with deadly accuracy

At this point:

You’ve sầu learned the big picture of Price Action Trading.

You know where to enter your trades (Support and Resistance) and what you should bởi in different market conditions (the 4 stages of the market).

But there’s still one part of the puzzle missing, & that’swhen to enter a trade.

So, that’s wherecandlestiông xã patternscome into play.

Let’s dive sầu in…

What is a candlestiông xã pattern and how does it work?

A candlestiông chồng pattern has 4 data points:

Open– The opening price

High– The highest price over a fixed time period

Low– The lowest price over a fixed time period

Close– The closing price

Here’s what I mean:

For a Bullish candle, the open is always below the cthất bại.

And for a Bearish candle, the open is always above the cthất bại.

Next, you’ll learn a few powerfulcandlestick patternslớn help you better time your entries…

Bullish Engulfing Pattern

I’ll explain…

Hammer

AHammeris a (1- candle) bullish reversal pattern that forms after a decline in price.

Here’s how khổng lồ recognize it:

Little khổng lồ no upper shadowThe price closes at the top ¼ of the rangeThe lower shadow is about 2 or 3 times the length of the body

And this is what a Hammer means…

When the market opens, the sellers took control & pushed price lowerAt the selling climax, huge buying pressure stepped in và pushed price higherThe buying pressure is so strong that it closed above sầu the opening price

In short, a hammer is a bullish reversal candlestiông chồng pattern that shows rejection of lower prices.

Now, just because you see a Hammer doesn’t mean the trkết thúc will reverse immediately.

You’ll need more “confirmation” lớn increase the odds of the trade working out & I’ll cover that in details later.

Moving on…

Bullish Engulfing Pattern

A Bullish Engulfing Pattern is a (2-candle) bullish reversal candlestichồng pattern that forms after a decline in price.

Here’s how to recognize it:

The first candle has a bearish closeThe body of the second candle completely “covers” the body toàn thân first candle (without taking inkhổng lồ consideration the shadow)The second candle closes bullish

And this is what a Bullish Engulfing Pattern means…

On the first candle, the sellers are in control as they closed lower for the periodOn the second candle, svào buying pressure stepped in and closed above sầu the previous candle’s high — which tells you the buyers have sầu won the battle for now

In essence, a Bullish Engulfing Pattern tells you the buyers have overwhelmed the sellers & are now in control.

And lastly, a Hammer is usually a Bullish Engulfing Pattern on the lower timeframe because of the way candlesticks are formed on multiple timeframes.

Here’s what I mean:

Make sense?

Shooting Star

A Shooting Star is a (1- candle) bearish reversal pattern that forms after an advanced in price.

Xem thêm:

(The opposite of a Shooting Star is Hammer.)

Here’s how to recognize it:

Little to no lower shadowThe price closes at the bottom ¼ of the rangeThe upper shadow is about 2 or 3 times the length of the body

And this is what a Shooting Star means…

When the market opens, the buyers took control and pushed price higherAt the buying climax, huge selling pressure stepped in và pushed price lowerThe selling pressure is so strong that it closed below the opening price

In short, a Shooting Star is a bearish reversal candlestiông chồng pattern that shows rejection of higher prices.

And one last one…

Bearish Engulfing Pattern

ABearish Engulfing Patternis a (2-candle) bearish reversal candlestichồng pattern that forms after an advanced in price.

Here’s how to lớn recognize it:

The first candle has a bullish closeThe toàn thân of the second candle completely “covers” the body first candle (without taking into lớn consideration the shadow)The second candle closes bearish

And this is what a Bearish Engulfing Pattern means…

On the first candle, the buyers are in control as they closed higher for the periodOn the second candle, svào selling pressure stepped in và closed below the previous candle’s low — which tells you the sellers have won the battle for now

In essence, a Bearish Engulfing Pattern tells you the sellers have sầu overwhelmed the buyers và are now in control.

Now…

What you’ve sầu just learned are some of the most powerfulreversalcandlestiông xã patterns.

But, they are not the only ones out there.

In fact, there are many variations that it’s impossible khổng lồ cover all in one blog post.

But the good news is, you don’t need khổng lồ memorize candlestichồng patterns to understand what the market is telling you.

Here’s how…

Candlestiông chồng patterns cheat sheet: How to lớn understvà any candlestick pattern without memorizing a single one

This is important, so pay attention…

#1: Trending Move

You’re probably wondering:

“What is a Trending Move?”

A Trending Move sầu is the “longer” leg of the trover.

If the candles are large (in an uptrend), it signals strength as the buyers are in control.

If the candles are small, it signals weakness as the buyers are exhausted.

An example of a Trending Move:

#2: Retracement Move

A Retracement Move is the “shorter” leg of the trover.

If the candles are large, it signals the counter-trkết thúc pressure is increasing.

If the candles are small, it’s a healthy pullbachồng và the trover is likely lớn resume itself.

An example of a Retracement Move:

#3: Swing Points

Swing Points refer to lớn swing highs and lows — obvious “points” on the chart where the price reverses from.

Here’s an example:

This is important because it lets you know whether the market is in an uptrover, downtrover, or range.

As a guideline:

If the swing highs/lows move sầu higher, then the market is in an uptrend

If the swing highs/lows move sầu lower, then the market is in a downtrend

If the swing highs/lows are not moving higher or lower, then the market is in a range

Now if you want khổng lồ see the discover the secrets to lớn chart patterns, then clickhereto find out.

Next…

To understvà any candlestiông chồng patterns, you only need to lớn know 2 things…

Where did the price close relative sầu lớn the range?What’s the form size of the pattern relative to lớn the other candlestick patterns?

Let me explain…

1. Where did the price cthua thảm relative sầu khổng lồ the range?

This question lets you know who’s in control momentarily.

Look at this candlestiông xã pattern…

Let me ask you…

Who’s in control?

Well, the price closed the near highs of the range which tells you the buyers are in control.

Now, look at this candlestiông chồng pattern…

Who’s in control?

Although it’s a bullish candle the sellers are actually the ones in control.

Why?

Because the price closed near the lows of the range và it shows you rejection of higher prices.

So remember, if you want khổng lồ know who’s in control, ask yourself…

Where did the price cthất bại relative to lớn the range?

Next…

2. What’s the kích thước of the pattern relative to the other candlestiông xã patterns?

This question lets you know if there’s any strength (or conviction) behind the move.

What you want to lớn vày is compare the size of the current candle to the earlier candles.

If the current candle is much larger (like 2 times or more), it tells you there’s strength behind the move sầu.

Here’s an example…

And if there’s no strength behind the move, the size of the current candle is about the same kích cỡ as the earlier ones.

An example…

Does it make sense?

Great!

Now you have sầu what it takes to read any candlestiông xã pattern without memorizing a single one.

The M.A.E Trading Formula (A simple Price Action Trading system anyone can learn) or Price Action Trading Forex...

At this point:

You’ve sầu learned the essentials of Price Action Trading (Support & Resistance, Market Structure & Candlestick Patterns).

Now, let’s use this knowledge to lớn findhigh probabilitytrading setups — consistently và profitably.

Introducing khổng lồ you, The M.A.E Trading Formula, a proprietary trading technique I’ve sầu developed to lớn help traders get results, fast.

Here’s how it works…

Market structureArea of valueEntry trigger

I’ll explain…

#1: Market structure

Now, I know it can be daunting to be looking at a blank chart.

Because you don’t know what to lớn bởi.

Should you buy, sell, or stay out?

That’s why the first thing khổng lồ do is identify the market structure as it tells youwhatlớn vì.

So ask yourself:

“Is the market in an uptrkết thúc, downtrend, or range?”

(In other words, identify the current stage of the market.)

Once you can identify the market structure, then you’ll know trade along the path of least resistance.

For example:

If the market is in an uptrend, you look to buy only.

If the market is in a downtrend, you look khổng lồ sell only.

If the market is in a range, you can buy và sell.

Next…

#2: Area of value

Now, identifying the market structure alone isn’t enough.

Because you also need khổng lồ knowwherekhổng lồ enter your trade.

Now you’re wondering:

“There are so many places to lớn enter a trade. Which one should I choose?”

Well, you want to lớn trade from an area of value so you can buy low và sell high.

For example:

Support và ResistanceRespected Moving Average

Next…

#3: Entry trigger

At this point:

You know what to lớn vị (identify market structure) và where khổng lồ enter (area of value).

Now the final part of the equation is to lớn knowwhento enter.

Personally, I like to enter when the market has shown signals of reversal — thus confirming my bias.

This can be in the khung of reversal price patterns like:

HammerShooting StarBullish Engulfing PatternBearish Engulfing pattern

Let me cốt truyện with you a few examples of The M.A.E Formula in action…

GBP/USD Daily: Identify the market structure

GBP/USD Daily: Wait for the price to lớn reach an area of value

GBP/USD Daily: Enter on a valid entry trigger

Another example…

T-Bond 4-hour: Identify the market structure

T-Bond 4-hour: Wait for the price to approach an area of value

T-Bond 4-hour: Enter on a valid entry trigger

Can you see how everything fits together now?

So, what’s next?

You’ve sầu just learned what price action trading is all about, & how you can use it & lớn get a “feel” for the markets including price action trading with Forex.

If you learn it well, it will improve sầu your entries, exits & trade management.

Now… it’s time to put these techniques into practice.

The first step?

Cliông chồng on the linkbelow & download TheUltimate Guide khổng lồ Price Action Trading.

Xem thêm: Những Bài Hát Hay Nhất Của The Men, Top 10 Bài Hát Hay Nhất Của The Men

You’ll get a beautiful PDF tệp tin that contains trading strategies and techniques I’ve shared with you (& additional contentthat I’ve no space lớn writehere).