Introduction to Forex Price Action Trading

Put Price Action Trading to use via the FXCM platform: http://bit.ly/IT-forex-demo Looking for more price action material? See the price action section of InformedTrades University: http://www.informedtrades.com/f386/ Find the full notes and discussion on the Informed Trades forums: http://www.informedtrades.com/1574920-video-introduction-price-action-trading.html Key Points: What is price action trading? The basics of reading charts Support and resistance Basic set-ups and stop placement (Video only:) Two examples of trades from the forex market What is Price Action? Okay, to begin with, what is price action? Price action is a particular methodology employed by traders, based on the observation and interpretation of price action, usually through the use of candlestick or bar charts. The price action style of trading is usually characterized by clean charts, without indicators, with the explanation that indicators are themselves interpretations of the historical movements of price, which don't contain any information or predictive power that isn't available from the charts themselves. Nonetheless, some traders include basic indicators, such as exponential moving averages or average true range to augment their charts or to provide confluence. The attitude of the price action trader is that the interpretation of price movements can provide an edge, a possibility of being more right than wrong in their predictions about the future behavior of price. This edge is possible from making trades that are informed by the observation of key price levels (demarcated as support and resistance lines), the recognition of common, reliable price action patterns, the use of trading orders with built-in stop loss levels, and a systematic trading strategy. The basics of reading candles and charts: Since candlestick and bar charts are the fundamental interface of the price action trader, the most basic unit is the candle or bar itself. Candles sum up the price action over a set period of time: on a 5 minute chart, each candle represents 5 minutes of price behavior, whereas on a daily chart, only one candle is produced per day. The body of the candle constitutes the range between the open price and close price, whereas the wicks or shadows of the candle indicate the high and low over that period of trading. Various color schemes are used to determine whether the price movement represented by the candle is bullish (increasing in price) or bearish (decreasing in price); bullish candles are usually white, blue, or green, whereas bearish candles are usually black or red. Longer candle bodies demonstrate strong momentum and decisive market behavior in the movement from open to close; longer shadows, however, demonstrate increased volatility, since some prices were reached during the time period but ultimately excluded from the range between open and close. Smaller candles can indicate the market's indecision, disinterest, or a balance between bullish and bearish forces Similarly, a candle that is almost all wick implies that, regardless of the range of prices occurring in the time period, the open and close were extremely close; these candles are referred to by the Japanese term, doji A doji or small candle with a very long wick in one direction is referred to as a pin bar, which is often interpreted as a sign of potential trend reversal By contrast, a marabuzo candle has a large body, and almost no wick, implying that price action has been more definitive There are two important, rudimentary patterns that play out over at least 2 candlesticks: An outside bar is a bar with a higher high and a lower low than the previous candlestick, often with a body that also encompasses the price range of the previous bar's body; an alternative variation is the engulfing bar, which simply has a higher open and a higher close, regardless of the candle's shadows or wicks. By contrast, an inside bar is a bar, or series of bars, with a high and low encompassed by the preceding candle; in this case, the variation is the harami, a bar or series of bars with an open and close within the range of the bar preceding it Basic Terms for Price Behavior: Trend: 2 successively higher tops and bottoms (uptrend) / 2 successively lower tops and bottoms (downtrend) Other names for a positive trend: run up/bull run/rally Other names for a negative trend: run down/bear run/decline Trading range: the market moves up and down within a consistent range without establishing a definitive trend in one direction Consolidation: the range of price's movement constricts as the market becomes directionless Reversal: the market moves in the opposite direction from the previous trend, implying the end of that trend Retrace: the market moves some amount in the opposite direction from the previous trend before the trend is eventually reinstated CONTINUE READING: http://www.informedtrades.com/1574920-video-introduction-price-action-trading.html

Comments

1. This is a good video.  Valuable information.  Enjoyed it.
2. Wtf is wrong with ur voice fucking annoying
3. this is very, very helpful and very well put together! thank you much!!!
4. This is a good intro to price action. 
5. This video is one of the most helpful ones that I have seen that discusses a seemingly complex trading strategy. Thank you for this. It made me understand the topic well. :)