What is Price Action Trading? This is a method or a strategy that is used by traders. This relies on historical prices (open, high, low, and close) to help traders make better trading decisions.
Price action tells you what the market is doing without the need or help of too many indicators or algorithms that make your charts look like a drawing pad scribbled by nursery children.
How does Price Action benefit beginner traders?
Price Action trading is the most basic form of trading strategy that teaches traders about how to read trends and historical prices. This also helps in timing your entries and exits with precision. Price Action Trading has sub-strategies that would greatly help in in your trading decisions. These sub-strategies consist of the following: support and resistance, candle patterns and more.
Identifying trends is one of the basic skills that a beginner trader should master.
A trend is the movement of prices in a certain direction over a period of time. Trends can be long term or short term in an upward, downward or sideways movement. This is very important because once you master reading trends, you will be able to position yourself for a profitable entry and exit points.
Trends are usually noted by higher highs(HH) and higher lows(HL) in an UPTREND
While Trends in a DOWNTREND are noted in lower highs(LH) and lower lows(LL)