Price Action Trading

Price action trading is a trading strategy that relies on analyzing historical price movements to make trading decisions, without using indicators like moving averages or oscillators. Traders who use this approach focus on chart patterns, candlestick formations, and support and resistance levels to predict future price movements. Price action trading is often favored by short-term traders, such as day traders and swing traders, for its simplicity and reliance on market behavior rather than technical indicators.

Example

A trader observes a double-bottom pattern on a stock chart, indicating potential upward movement, and decides to enter a long position based on price action.