How to Trade with Price Action

The term “price action trading” sounds like a secret formula to trading success. But in reality, it is an open and logical form of technical market analysis. It does not promise success, but it does offer unique insights into the market’s behavior.

How to trade with price action?

This is not an easy question. Price action involves so many aspects that it’s impossible to give a concise answer. Hence, what you’ll find here is a resource guide pointing to (almost) everything we have on price action trading.

Hopefully, by exploring these links, you can arrive at an answer that makes sense (and money) for you.

Before we dive in, let’s go through a few aspects of price action trading that makes it so appealing to both new and seasoned traders.

• Increases focus – Less is more. The law of diminishing returns applies here. Each new indicator you add to your chart dilutes your focus. Removing most indicators will enhance your focus.
• Enhances versatility – You can apply price action concepts in most markets and timeframes, empowering you with flexibility in your trading.
• Trains intuition – Ultimately, all technical trading methods are based on market data, of which price data is the main component. Even if you do not trade strictly with price action, getting comfortable analyzing price movement will help you hone your intuition as a trader.

The following resources below will help you learn what price action is and how to get the most out of analyzing it.

Guide Overview

1. Price Action for Beginners
2. Trading Tools
3. Ideas and Perspectives
4. Strategies
5. Chart Examples
6. Beyond This List

#1: Start here: Price Action for Beginners

Are you just getting started? For anyone looking for primers on price action trading, these articles will get you on track.

Everything from its definition to the basic price patterns, you’ll find all you need to kick-start your learning journey.

What is Price Action?

• Price Action Trading Primer – What is it? And what is its origin?
• Why New Traders Should Start with Price Action – Start your learning journey right and save precious time.

How to Proceed?

Each link in this section offers an overview and step-by-step progression.

They also help you to make sense of the many resources that follow.

• 5 Steps to Becoming a Price Action Trader – A step-by-step guide for the confused beginner.
• Learning Price Action Trading for Beginners – Diving into a new trading approach can be intimidating. This link shows you a clear eight-step plan for learning from scratch.
• A Practical Guide to Price Action Trading – Knowing how everything fits together helps you orient yourself to the resources below. If you want a practical overview of price action trading, definitely check out this link.
• How to Lay a Solid Foundation for Price Action Trading – Looking for setups is the first thing traders do when they start learning. However, building a solid foundation has a much better ROI in the long run. Learn how to do so with this step-by-step guide.

Reading Price Action

This is an often overlooked step. Before you jump in looking for trading setups, learn to identify and describe the market’s key price characteristics.

• Beginner’s Guide to Learning Price Action – An essential guide to reading price movement bar-by-bar.
• 10 Bar Patterns You Must Know – Common bar patterns to master for timing your trades.
• 10 Candlestick Patterns You Must Know – Candlestick patterns are similar to bar patterns but with different origins.
• 10 Chart Patterns You Must Know– Classical chart patterns with standard trading rules and chart examples.
• Eight Questions For Reading Price Action – A list of questions to revisit along the way as you practice reading real charts.

Support and Resistance

Support and resistance is a crucial concept. You will find more on this topic throughout this list, but these three links will start you off.

• Trading with Support/Resistance – A primer on drawing and dealing with support/resistance areas.
• Five Ways to Find Support and Resistance – Spotting reliable support and resistance zones is a pivotal trading skill that will serve you well regardless of your trading style. Learn five ways to identify vital price zones with price and volume.
• Finding Support and Resistance with Volume Clues – Use high volume signals to find reliable price pivots.

#2: Price Action Trading Tools

Grasped the basics?

It’s time to move on to learning specific tools – trend bars, trend lines, channels, swing pivots, congestion, and more.

• Price Action Trader’s Toolbox – A review of five essential skills.

Interpreting Price Action

Some traders find price action analysis to be too subjective. Here are the tools you can apply to build a systematic analytical framework.

• Trend Bar: A Simple Way to Look at Price Action – An intuitive concept for reading price.
• 3 Practical Uses of Price Congestion – How do you use the sideways market in your favor to trade better?
• Reading Price Action with Bollinger Bands – You know that price volatility is critical as well, but how do you include it in your analysis? This article shows you how to analyze the market with the Bollinger Bands.
• Reading Price Action with Keltner Channel – Giving up indicators thoroughly to analyze the market can be intimidating. There’s a middle ground. Learn to interpret price movement with the Keltner Channel.
• Uncovering Price Patterns from Scratch – Instead of memorizing price patterns other traders named, why not discover patterns that make sense to you.

Trend Lines and Channels

Trend lines and the price channels you can project from them are among the most powerful tools for experienced traders.

Learn how to use them effectively from these posts.

• Swing Trading with Trend Lines
• 4 Ways to Trade a Channel – Experience the versatility of the price channel.
• A Plain and Simple Trend Line Channel Trading Strategy
• Trading Pullbacks with Trend Lines and Channels – Pullback trading is one of the best ways to use trend lines and channels. This detailed tutorial shows you how to build a complete trading approach from the humble trend line.
• Analyze Momentum with Micro Channel Trend Lines – Spotting momentum in the market is fundamental to trading nimbly. This post shows you a simple way to analyze short-term momentum with small channels.

Tracking Market Bias

When it comes to market timing, figuring out the market bias is half the battle.

• Find Intraday Trends with Price Action – Pick up four ways to determine the market bias for day trading.
• Identify the Trend With Moving Average – Relying on only prices might be challenging at the beginning. There’s no need to avoid indicators if they are helping you. Here are three ways to combine price action with a moving average to track the trend.
• How to Find the Intraday Market Bias – One of the hardest parts of day trading is to confirm the session’s bias. Review three in-depth examples that use trend channels to analyze market bias.
• How To Track Price Swings and Market Structure With Moving Averages – Defining the market structure can be a fuzzy process. Learn how to create a consistent method with the help of moving averages.

#3: Price Action Ideas and Perspectives

If you are comfortable with the fundamental technical aspects, perhaps what you need are some perspectives and ideas to propel your performance.

Trading Tips

• 10 Commandments of Price Action Trading – Ground rules!
• A 5-Point Plan for Price Action Traders – Core guiding principles for a minimalist trader.
• 7 Price Action Trading Myths Debunked – It is not the Holy Grail.
• Trading Tips From The Reminiscences of a Stock Operator – Want some timeless nuggets of trading wisdom? The legendary trader, Jesse Livermore, has just what you need to hear.

Trading Techniques

• 8 Practical Ways to Improve Your Price Action Trading Skills – Take concrete steps to trade better.
• Price Action Re-Entry – A simple concept to securing high probability trades.
• Intraday Price Action Trading Techniques – Three ways to stay out of trouble.
• 4 Practical Day Trading Tips for Price Action Traders – Make full use of your price observations.
• Find and Profit from Trapped Traders – The best setups do not follow fixed patterns. Instead, they adhere to broad concepts and guidelines that can manifest in varied patterns. The idea of trapped traders is an example.

Taking a Step Back

Your trading strategy must be consistent with other parts of your trading plan. They include factors like your trade execution, record-keeping, and timeframe selection.

• How to Enter the Market as a Price Action Trader – The implications of using stop orders and limit orders.
• Keeping Records of Discretionary Price Action Trading – Tips for keeping reliable trade records that are indispensable for improving your performance.
• What is the Best Time Frame for Price Action Trading? – A popular question with no simple answer. But let’s give it a shot.
• 46-Point Price Action Trading Checklist – Run through this comprehensive list to see if your trading plan is missing anything.

Exotics

Poke a little beyond the conventional candlestick (bar) charts and see what you find.

• Catching Trends with Heiken-Ashi – A unique type of candlestick that’s excellent for tracking trends.
• Renko Chart Trading Manual – Highlight key trends with this time-independent price chart.
• 10 Price Chart Types for Trading – From the typical candlestick to the exotic Kagi lines.

#4: Trading Setups

Before you feast on the buffet of trading setups and patterns below, make sure you understand that the setup is only one facet of a holistic strategy.

• Price Action Trading Strategies (Beyond Price Patterns)

In this section, you’ll find setups in the following categories:

• Bar Patterns
• Candlestick Patterns
• Chart Patterns
• Price Gaps
• Price With Volume
• Price With Trend Lines
• Price With Indicators

Bar Patterns

• Trend Bar Failure – A simple and versatile price pattern from my Day Trading with Price Action Course.
• Two-Bar Reversal Pattern – A standard bar pattern, objectively defined.
• Double Inside Bar Pattern – Think of a double inside bar pattern as a mini triangle formation, and its study becomes much more enjoyable.
• Inside Bar for Day Trading Futures – The classic low-risk bar pattern in the right context works wonders.
• Inside Day/NR4 (ID/NR4) – A low-risk volatility price pattern from Toby Crabel’s “Day Trading with Short Term Price Patterns and Opening Range Breakout.”
• NR7 Trading Strategy – A popular and straightforward low-volatility price pattern.
• Consecutive WR7 Patterns – Sustained bar range expansion is always worth a closer look.
• Pinocchio Bar Trade Setup (Pin Bar) – A fake-out bar pattern that traps traders out of a market reversal. Review these four detailed examples to learn why the context matters.
• Yum-Yum Continuation Pattern – A distinctive continuation pattern that capitalizes the concept of bar range expansion.
• Popgun Bar Pattern – A pattern for finding impulse Elliot waves.
• Swing Trading with Outside Bar – Failure trades are fascinating. Here, we use outside bar failures to trigger a trade.
• Three-Bar Inside Bar Pattern – An adaptation of an inside bar to add context and confirmation.
• Three-Bar Reversal Pattern for Day Trading – Modifying the three-bar reversal pattern for lower frequency but higher probability trading.
• Trading Consecutive Up/Down Bars – An exact price pattern that causes traders’ euphoria (or not).
• Retrace Day Trading Setup – A day trading strategy from Thomas Bulkowski (author of Encyclopedia of Chart Patterns and Encyclopedia of Candlestick Charts).

Candlestick Patterns

• Belt-Hold Candlestick Pattern
• Piercing Line Candlestick Pattern
• Three Black Crows Candlestick Pattern
• Hikkake Trade Setup – A twist on the inside bar to ensnare other traders.
• Engulfing Candlestick with Market Structure – A popular candlestick pattern coupled with price swing analysis.
• Mountains, Rivers, Crows, and Soldiers – A candlestick strategy that uses chart patterns for trading reversals.
• Candlestick with Pivot Points – An intraday trading method using floor pivots.
• Candlesticks with a Moving Average – The classic combination of candlestick patterns with a simple moving average.

Chart Patterns

• 1-2-3 Reversal Setup
• Head and Shoulders Trading Guide
• Bull Flag Chart Pattern

Price Gaps

• Breakaway Gap Trading Guide – A price gap that leads to powerful new trends.
• Exhaustion Gap Trading Strategy for Reversals – A gap trading technique useful for swing traders.
• Trading Continuations with Runaway Gaps – You can use this gap formation to enter the market and project a reasonable target.

Price with Volume

• How to Trade Reversals by Spotting the Big Players – Reversal trading is a high-risk, high-return project, so it makes sense to maximize your odds. This strategy uses extreme volume to spot big players before confirming a reversal with price action.
• Anchor Zones – A powerful method that combines range, gap, and volume to find key support/resistance.
• On-Balance Volume Trading Strategy for Fading Dumb Money – An intuitive volume indicator to clarify the market undercurrent.
• Capture High Profits with Low Volume Pullbacks – A simple observation of price and volume.

Price with Trend Lines

• John Hill’s Trend Line Theory – A unique trend line strategy for trading pullbacks.
• Andrew’s Pitchfork Trading Strategy – A fascinating method for drawing trend lines and channels.
• 50% Retracement Swing Trading Setup
• A Simple and Complete Trend Line Trading Strategy

Price with Indicators

Demonizing indicators is not our objective. It is possible to focus on price action while taking advantage of indicators.

Here are some strategies that play well with price analysis despite using indicators.

• The Floor Trader System – Knowing when to enter a market is good, but knowing when to stay out is better. This classic trading strategy allows an entry only when a stable trend is in place. You can easily augment it with insights from price analysis.
• Jjrvat’s Price Based Trading – A reliable scalping strategy that uses a Hull Moving Average (HMA) to highlight price waves.
• Two-legged Pullback to the Moving Average (M2B, M2S) – A setup from Al Brooks, who suggested this as one of the best setups for beginners.
• Intraday Trend Trading – From a popular trading forum, we get a strategy for Keltner Channel lovers.
• 3-Step Pullback Method – Another application of the Keltner Channel.

#5: Price Action Chart Examples

Once you have a firm foundation, you’ll progress much faster if you review chart examples rather than reading rules.

• Bar-by-Bar Analysis of Three Charts – A demonstration of close price analysis.
• Three Examples of Trapped Traders
• Trading Examples from the Stock Market
• Trading Examples from the Crypto Market

#6: Going Beyond

For those who need more help beyond this massive list, check these out:

• Top 10 Price Action Trading Books
• Day Trading with Price Action Course – Galen Wood’s complete trading framework.

Prefer reading offline? You can also enjoy selected content offline with our TSR Trading Guides [PDF].

The article was first published on 23 April 2014 and updated on 25 November 2020.