What is ‘Price Action’ ?

‘Price Action’ is simply a term used to track the security’s price pattern at that moment of time.

Examples of using the term ‘Price Action’ is, “I think the price action now is heading towards a Bearish / Bullish sign.” Price Action itself is not a strategy on it’s own. It’s merely a word to explain the movement of price. Many short-term traders analyse a security’s Price Action to make their trading decisions.

Technical Analysis is a derivative of Price Action since it also uses past price records to inform a trader of the direction they’re betting on. Unlike Price Action, Technical Analysis encompasses not only Candle Stick Patterns, but also Technical Indicators and Oscillators which is rather complexed when all is put together.

A combination of Technical Indicators - XSPY TRADER
A combination of Technical Indicators


A rather simplistic looking ‘Price Action Manipulation’ Chart - XSPY TRADER
A rather simplistic looking ‘Price Action Manipulation’ Chart

Price Action can be interpreted by selecting the ‘Candle Sticks’ option on your favourite chart provider. Our favourite is ThinkorSwim. You can check it out here.

‘Candle Sticks’ option is chosen instead of Bar or Line Graph, because a Candle Stick helps a trader to visualize the open, close, high and low of the price at the particular period. If you’re totally new to this, check out our article here on Candle Sticks 101. Candle Stick Patterns such as the Engulfing Pattern, Harami, Hanging Man and etc are all examples of visually interpreted price action.

Bullish & Bearish Harami Pattern - XSPY TRADER

Who Practices ‘Price Action’ trading?

Trading with Price Action is usually done by Proprietary Traders or Institutional Traders as analyzing price action allows you to have a ‘Leading’ indicator of what is the futuristic outcome of price of a security. Correct and accurate Price Action Analysis may make the trader and his firm very profitable in the long run.

An example of the use of Price Action would be to identify a ‘Pattern’ or ‘Order’ in a chart which are rather ‘Random Patterns’ for an untrained eye. The goal is to :-

  1. Identify the right ‘pattern’
  2. Apply the appropriate strategy
  3. Determine your Risk to Return ratio
  4. Wait for Confirmation
  5. Execute the Trade on your brokerage platform
  6. Wait until the trade hits your ‘Profit Target’ or ‘Stop Loss’. Strictly NO Micromanaging for Beginners.

Unlike using Technical Indicators which are ‘lagging’ indicators in nature, proper use of Price Action Analysis in your trading may make you a very profitable trader.

Although Price Action Analysis is a rather simplistic approach to trading, it takes a skilled eye to identify a reversal or continuation of the price action in trading. (these are the terms that you will learn in class). It takes a lot of practice and ‘screen time’ (time spent looking at chart patterns) before you can master the art of Price Action Analysis. Imagine going for an art class. Your skill in the drawing will gradually improve ONLY as you keep practicing what you have learnt.


Why is ‘Price Action’ trading so attractive?

Besides it’s ‘Fast-Paced’ and ‘Short-Term’ trading nature, Price Action trading can be very lucrative if done correctly. You are in good hands as our in-house trainer, Alson Chew is a multi-time award winning Proprietary Trader with experience on the desk for 5 years now. (More Alson’s awards & achievements)

The main reason Alson is so successful in his career as a trader is that he has found a way to ‘Trade with the Market Manipulators’. Often time, retail investors will be taken out by market manipulators – because truly, the reason market manipulators are there is to ‘trick’ the general public so that the manipulators can profit off the small time players. What if you learned this skill to ‘Trade ALONGSIDE the Market Manipulators’ and profit alongside them? Wouldn’t that be a better use of your ‘screen time’ than trying to outsmart the manipulators?

To learn more about Alson’s Price Action Manipulation techniques, kindly register for his FREE 3-Hour Introductory Workshop where he shares more details on the rationale behind his strategies and how you can use them in your trading.

The best part is, the more you don’t know about trading, the better and faster you learn. Alson will also be busting myths that you once thought you knew about trading.