Price action trading is about understanding the imbalance between buying and selling pressure so that you can identify trading opportunities and make a profit.
As a price action trader, price is king—everything else is secondary.
Price action trading is not a strategy but a framework for trading in different market conditions.
Price action trading is not the holy grail, and it has its downsides. For instance, it’s impossible to perform an accurate back test, it takes a lot of time to validate a trading strategy, and there is subjectivity is involved.
The pre-breakout technique allows you to enter a breakout before it occurs by identifying price rejection (at support or swing low) on the lower time frame.
There are three categories of trends: strong trends, healthy trends, and weak trends.
You want to avoid trading in the direction of the trend when the price is far from the mean.
Pay attention to the trending and retracement moves because this gives you clues to the strength and weakness in the markets.
The average true range (ATR) gives you an idea of how much the market can potentially move in a day.
Not all markets are the same. Some will exhibit trending behavior while others will exhibit mean-reverting behavior.
You can refer to the market structure on the higher time frame to help you better manage your trades (to determine whether to capture a swing, ride a trend, or adopt a hybrid approach).
The market moves in volatility cycles, from periods of low volatility (and vice versa)
Source: Price Action Trading Secrets Book
Please FOLLOW US, SUBSCRIBE and SHARE this article with your friends. Learn and Grow with us.
If you have any queries feel free to contact us.
Thanks and Regards