Price action

Price action is a trading approach where decisions come from price movement itself: candles, levels and market structure, with few or no indicators.

How it works

You look at a clean chart: where price turned before, what candles look like at levels, whether the market is making higher highs and higher lows. Indicators, if used at all, play a supporting role.

The main tools are support and resistance, trendlines, market structure, candle patterns (pin bar, engulfing, inside bar) and chart patterns. The logic is that every indicator is calculated from price and lags, while price itself shows what is happening right now.

Price action works on any market and timeframe, from crypto to forex. The downside is subjectivity: two traders will mark levels and swings differently. That is why you need written entry and exit rules and should test them on history.

Example with numbers

EUR/USD is rising and pulls back to old resistance at 1.0850, which has turned into support. A pin bar forms there with a long lower wick to 1.0835. The trader buys at 1.0860 with a stop at 1.0830 (30 pips) and a target at the last high of 1.0950 (90 pips).

Common mistake

The mistake is thinking that no indicators means no rules, and trading on gut feel. Without clear criteria every pin bar looks like a signal. Write down which levels count, what candle you need to enter and where the stop goes, then follow it.

Questions and answers

What is price action in simple terms?

It is trading from a clean chart: candles, levels and how price behaves around them, without a pile of indicators.

Is price action good for beginners?

Yes, it is a solid foundation because it teaches you to read charts. But without written rules and stops it easily turns into guessing.

Do you use indicators in price action?

Not necessarily. Some traders add one moving average or volume, but the main decision comes from price.

Price action

How it works

Questions and answers

Related terms

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