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TSV moving average is plotted as an oscillator. Four divergences are calculated for each indicator regular bearish, regular bullish, hidden bearish, and hidden bullish with three look-back periods high, mid, and small. For TSV, the The New York Stock

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The forex guy price action trading futures

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Trading with Pitchfork and Slopes. Market Data Rates Live Chart. Long wick candles are a favourite for price action traders. For instance, a candle with a long upper wick shows that in that period, buyers attempted to push prices higher by some distance, but sellers resisted the attempt and even managed to return prices close to the opening price. With this information, a price action trader can back the sellers again in the succeeding period or can wait for confirmation.

Either way, long wick candles are a must-watch for price action traders. When breakouts occur, the challenge for traders is if it is a genuine one or a fake one. The psychology for the setup is that market participants are unwilling to give back any breakout gains and are ready to defend and back the new trend going forward. Trendline trading involves the use of lines to establish the optimal points to enter trades in trending markets. In an uptrend, a trendline is drawn from a particular swing low to a subsequent one and then projected into the future.

Retracements to the trendline represent an ideal price point to join the uptrend. Horizontal trendlines can be used in ranging markets to map out support and resistance areas. Price action trading is a powerful way of picking out and trading high probability trading opportunities in the market.

Open a free AvaTrade demo account and try out different price action strategies today! Price action trading can work; however the trader must understand that it requires a high degree of patience to successfully trade the markets using price action. There are very specific setups that a price trader will look for on the charts, and these could take some time to develop. Entering a trade before the optimal time can lead to losing trades, and lost money.

If a trader wishes to use a price action strategy when trading they must be sure to have a specific plan for entries and exits, and they must stick to that plan. Because price action trading is a systematic approach that uses technical analysis, recent price history, and some subjective input from the trader learning it is mostly a matter of trading and developing your own price action systems. As a foundation the trader will want to be well-versed in technical analysis, especially support and resistance levels.

Learning different methods for identifying trends is also quite important to the price action trader. There are also some common patterns that price action traders use, such as pin bars and inside or outside bars. Price action trading is not perfect.

The most accurate trading pattern used by a price action trader is the head and shoulders or inverted head and shoulders setup. Still don't have an Account? Sign Up Now. Price Action Trading. Sharpe Ratio What are Block Trades? What is Scalping? Gearing Ratio What is Strike Price? What is OTM?

What is ITM? What Is Intrinsic Value? What is DTM? What is Arbitrage? What is Liquidity? What is Carry Trade? What is Volatility? What is a Market Cycle? What is Slippage? What is a Currency Swap? What is Currency Peg? Register Now. Does price action trading really work? How do you learn price action trading? How accurate is price action trading?

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If you are trading the strong short-term momentum especially on a smaller timeframe, you can use the first red candle that shows up after a series of green candles to exit the long trade and book a profit. Or if you are trading on the daily or higher timeframes where there is less market noise, every single candlestick pattern holds more value than it does on smaller timeframes.

But candlestick patterns are best used to see the reaction of the market participants near the support and resistance areas. Instead of buying immediately, you wait for the candles to show the sellers stepping out, and buyers stepping in. In other words, you want a candlestick pattern to form near the support area, that shows the buying pressure. First, the Bullish Candlestick Patterns, or in other words, if the following candles are formed, it indicates a higher probability of price making a move in the upward direction.

After a series of red candles, a Hammer Pattern indicates a potential upward move. Here, the price made a move in the downward direction, but then there was more buying pressure, that took over the sellers. In the inverted hammer, the price first made a strong move in the upward direction indicating a strong buying pressure, but then there was a good selling pressure.

However, the selling pressure was not strong enough to take out all the buyers. Then there is a Dragonfly Doji. This pattern is formed when the price makes a move in the downward direction, but then the buyers bring the price back to where it opened. Bullish Engulfing Pattern is formed, when the buying pressure is so strong, that the green candle completely engulfs the body of the previous red candle.

In the Morning Star Candlestick Pattern, first a big red bar is formed indicating good selling pressure. But then a small green bar is formed indicating a loss of selling pressure. The Morning Star Pattern is completed, when another strong green bar appears confirming a buying pressure after the loss of selling pressure.

In the Three White Soldiers Candlestick Pattern, three consecutive green bars with almost no wick at the top are formed after a series of red candles. There are other candlestick patterns, but these are the most important and reliable patterns out there. Shooting Star. As you can tell, this one looks like a shooting star, and opposite of the hammer pattern. When the shooting star pattern is formed after a series of green candles, it indicates selling pressure.

The buyers made the price move in the upward direction, but then the sellers took over all the buyers and a red candle was formed. In the Hanging Man Candlestick Pattern, there was an increase in selling pressure as soon as the previous green candle was closed, but then there was some buying pressure from the bottom.

However, the buying pressure was not greater than the selling pressure. Gravestone Doji is a pattern where the buyers made the price move in the upward direction, but then sellers entered the market and brought the price back where the candle opened. This pattern is similar to the shooting star pattern and indicates a potential downward move. In the Bearish Engulfing Pattern, the red candle completely engulfs the previous green candle.

In other words, the sellers completely took over the buyers of the previous candle. In the Evening Star Pattern, first a green candle is formed indicating a buying pressure, but then the buying pressure is lost and a small red candle is formed. The Evening Star Pattern is completed when a big red candle is formed confirming a strong selling pressure.

Three Black Crows Pattern is formed when three consecutive red candles are formed with almost no wick at the bottom after a series of green candles. They are formed when the buying and selling pressure is pretty much equal. A neutral candle can look like a Plus symbol, also known as a Doji candle. Or can also look like a spinning top. When these patterns are formed, it means there is no strong buying or selling pressure and you should wait for other confirmations.

If everything is edited as I thought it would be, I should have said that I started trading with Price Action Only, but after trading for thousands of hours and making money with it, I quit. We will get to Why I stopped being a Price Action Only Trader in the next chapters, but in this chapter, we will see what I found, and one of the price action strategies I actually traded.

After thousands of hours of trading with price action strategies in the live market, I found out that these three patterns work the best. These are the most reliable patterns in the long run, especially the engulfing pattern. Now, if you have watched one of the candlestick patterns videos I did on the Trading Rush Channel, you know that the Hammer Candlestick Pattern and the Bullish Engulfing Candlestick Pattern are basically the same things, or in other words, they are telling the same story.

In both of these patterns, the price goes in one direction, and then the opposite pressure makes the price go in the opposite direction. The only difference between the two is that, one did it in a short time, and the other one took a while, resulting in two separate candles. For example, imagine that there are two candles, but one has fewer seconds left to close than the other.

In the bullish hammer and the engulfing pattern, the price makes a move down indicating selling pressure. The price movement is exactly the same, but this time, the second candle closes when the price makes a move in the downward direction, resulting in a completed red bar.

Since the first candle still has enough time to close, when the buying pressure increases and the price makes a move in the upward direction, the first candle creates a Hammer pattern, but since the second candle was closed in the middle, it ended up creating a Bullish Engulfing Pattern, even though the price made the exact same move.

Since the engulfing patterns were most reliable in my experience, I was able to make money by simply buying when a bullish engulfing or a hammer pattern was formed near a strong support area. And by selling when a bearish engulfing pattern was formed near a strong resistance area. This simple strategy was quite effective, but there is a slight problem with these setups. We will see them in the next chapters. Although Candlestick charts are the most popular charts, there are two other types of charts that you will see some traders use.

One is the Bar, which looks very similar to the candlestick chart, except there is no candle body. Then there is the Heiken-Ashi Chart, where the candles look a lot smoother. Even though Heiken-Ashi looks better than normal candlestick charts, most professional traders will not use it and stick to the normal candlesticks or bar charts that sometimes look like a mess. Heiken-Ashi is basically taking an average of the price movement, but by doing this, a lot of data is lost that a professional trader might find useful.

So Heiken-Ashi is best used to trail the stop loss and stay in the trend for a longer period of time, read the price movement better, and analyze the strength of the trend. To analyze the strength, or in other words, to see if the momentum is slowing down or increasing, all you have to do is look at the size and shadow of the candles.

If a green Heiken-Ashi candle has no shadow below the candle, it indicates upward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong upward momentum. If the size of the green candle is smaller, it shows a weak upward momentum. If the Heiken-Ashi candle has shadows on both sides, it means a slow, or a sideways momentum. If the red Heiken-Ashi candle has no shadow above the candle, it indicates downward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong downward momentum.

If the size of the red candle is relatively smaller, it shows a weak downward momentum. So far, I have only talked about and recommended things I actually made money with or were helpful in the long run. But out of all of these patterns, I have only found three patterns that work the best. You have even seen 2 of them in one of the live trading videos on the Trading Rush Channel. The first one is the bullish flag pattern, where the price makes a strong move in the upward direction, then gives a small pullback, that looks like a flag you drew as a kid.

Sure, the quality is a lot better, but when this kind of flag pattern is formed, the price has a higher probability of making a good move in the upward direction after the price breaks out of this flag. This kind of flag pattern can be easily found on the stock that opens with a gap. In other words, the price finds support at pretty much the same place, but the new swing high keeps forming at a lower point. When the price breaks above this pattern, it has a higher probability of making a move in the upward direction.

The first and second patterns tell the same story, there was a strong buying pressure. But then there was a not-so-strong selling pressure indicated by the small and weak pullback. When the price gives a breakout, there is strong upward momentum to capitalize on. The third one is the head and shoulders pattern. This one is best understood by actually understanding how it is formed. Also, this pattern works best in a strong resistance area. When the price reaches a resistance area, selling pressure is increased as expected, but the selling pressure was not strong to take out all the buyers.

When the buying pressure is increased, the price breaks the resistance, or in other words, the price gives a breakout. But then the buyers fail to make the price go higher. The selling pressure is increased and the price is back inside the resistance area, resulting in a false breakout.

The price retest the resistance area again, and after all of this rejections and mess, when the price breaks below the support, or in other words, when the price breaks below the area where the buyers were stepping in, the buyers are taken out and a strong selling pressure can be seen most of the time.

Of course, there is a chance none of what I just said actually happens, but these 3 patterns, and especially the first two, I have found to work the best after trading for thousands of hours with price action only. As you can see, the price is in a good uptrend. On this chart, we know the price is moving in the upward direction, or in other words, the price is in an uptrend. But if you look closely, you will notice that after making the upward move, it went in the sideways direction for a while.

We saw how to draw support and resistance like a pro in the previous chapters, and on this chart, this is the resistance where the price has reversed multiple times. As you can see, the price broke above the resistance, so now the resistance will act as a support area. Since we know the price is in a long-term uptrend, we will look for long trading opportunities. We will wait for the price to come back near the support area, and take a long position when we see buying pressure.

We will use the candlestick patterns that we saw in the previous chapters to find that buying pressure. But as you can see, the price went straight through the support area resulting in a false breakout.

When the price gave a breakout above the resistance area, the sellers who had the stop loss above the resistance got stopped out, and new buyers stepped in. But then there was a strong selling pressure that took over all the new buyers resulting in strong selling pressure. Since we were waiting for a bullish candlestick pattern near the support area, which never appeared, we have no reason to enter the trade.

If there was some kind of bullish pattern near this support area, we would have set the stop loss below this breakout support area. When the price was moving in the sideways direction, we can see the price found support in this area. And right now, the price is near that area again. Furthermore, when the price touched this support area, we can see a big price rejection from below. Since the candle is still red and not green, it is not the bullish candlestick pattern we are looking for.

But then, as you can see, the next candle completely engulfs the body of the previous candle, resulting in a Bullish Engulfing Pattern, or in other words, a signal to buy. So we will take a long position when the candle is completed, and we will set the stop loss below the support area.

If the swing high was far away, we could have used a 1. But here, only 1 to 1 is possible before the swing high resistance. Yes, if you were paying attention, you probably noticed that I took entry near the previous resistance. You see, there are two kinds of resistance areas.

One is weak resistance, and the other one is strong resistance. Identifying and telling the difference between weak and strong resistance will come with experience. But basically, the resistance and support areas that are visible on the higher timeframes, are strong resistance areas, because everyone can see them at the same place. But these kinds of support and resistance areas are weak resistance. Because, on our entry timeframe, we can see this as a resistance, but if we switch to a higher timeframe, the resistance area is not clearly visible.

So many traders on higher timeframes will not see any kind of resistance. Since we know the price is in a good uptrend, and even your dog knows that the price has a higher probability of breaking the recent resistance area in an uptrend, and we saw the strong buying pressure when the price touched the support area, and we took entry after the engulfing pattern which is one of the most reliable candlestick patterns I found after thousands of hours of trading with price action only, the price not only has a very high probability of going in the upward direction, but our trade has an even higher probability of winning, because the stop loss is below the support area, and profit target is below the swing high resistance.

If we fast forward the live trading clip a little, we can see the price went exactly how we anticipated. No indicators were used, and all of the analysis was done in the live market with the price action alone. The live trading example was important, because there was no hand-picked setup where everything went perfectly. And as you saw, when the analysis is done in the live market, you will see things going against us, and not so smoothly.

But hopefully, this was more helpful than a hand-picked setup from the past. After all, every trade is different from the previous one, and one liive trade example is not enough. Making money in trading is easy, making money with price action is easy, but not understanding when not to try to make money, is where people lose money and blame the strategies. Even your neighbor who bought Bitcoin when it was at the top knows, that to make money more consistently in trading, or in other words, to have a higher probability of winning, you have to trade in the direction where the price is already heading.

The trend! But if your strategy is a trend trading strategy, the last thing you want is to risk your money when the market is ranging. It sounds simple, but people lose money first, and then realize that the market was not worth trading. In the previous chapters, we saw that if the price is trending, it looks something like this. If it is up-trending, it will make higher swing highs and higher swing lows. If your trend trading strategy gives entry signals near the end of the pullbacks, you will take trades somewhere around here.

If the price was making higher swing highs at the time of entering the trade, the entry is completely valid. But if the price does not make a new swing high, it is an early sign of a slow or a sideways market. At this point, the price can make higher swing lows while creating relatively similar swing highs. If this happens, you will probably end with a chart pattern that we saw in the previous chapters. On the other hand, the price can reverse from the previous swing high, and find support again at the previous swing low.

This is when the range market is pretty much confirmed, and the uptrend is most likely over. But there are different kinds of range markets. One is a wide range, that is usually visible on multiple timeframes, and another one is a small range that is only visible on your entry timeframe as we saw in the previous live trading video. If more people can clearly see a slow or a range market, more people will take trades while keeping the range in mind. If only you can see it on your smaller timeframe, and on the higher timeframe the price is in a strong uptrend, the price has a higher probability of breaking the resistance of that weak range.

But when you see the price could not cross above the previous swing high in an uptrend, it is a good idea to stop taking new long trades, especially with profit targets above the previous swing high. Similarly, if you see the price could not cross below the previous swing low in a downtrend, it is a good idea to stop taking new short trades, especially with profit targets below the previous swing low.

Although people lose money when the market is ranging, the range market is fairly easy to identify. The beginner traders really lose money is when the market looks like this, and not like this. As you can see, the price on both of these charts are trending and is not in a range. But one chart looks easier to read and clean like something out of a fairy tale, but on the other hand, there is this mess.

This is a choppy market, and this is where most strategies, including your indicator strategies, become less reliable. You see, when I started trading, I used to take screenshots of the winning and losing trades, and store them in two separate folders. After a while, when I used to analyze them, I noticed that most of the charts of the winning trades looked like this, and most of the charts of the losing trades looked messy like this.

For example, when the price movement is good, multiple green or red candles will form in a row. Furthermore, most candles move away from the previous one. But in the choppy market, fewer green and red candles are formed in a row, and most move towards the opening price of the previous candle. So when most of the candles, are moving away from each other, the price movement is most likely good. But if most candles are not moving away from each other, the chart probably looks something like this, and the price movement is most likely choppy and you should avoid taking new trades.

If this sounds confusing, simply have a screenshot of a good trending chart on your screen for reference while looking for new trades. However, it is one of the best for picking up price pattern tools that will help you trade profitably. The book also comes a DVD that has a seminar given by Martin Pring on the latest tools for price pattern recognition.

Great value. After Steve Nison introduced Japanese Candlesticks to Western traders, the candlestick chart has become an essential feature of any charting platform and the default chart type of most traders. For many traders, life is never the same, and a lot brighter.

Candlestick charting adds a great deal of depth and variety to traditional bar patterns like those covered in Pring on Price Patterns. Poetic names like Engulfing , Hammer, Shooting Stars are now commonplace among price action traders.

Typical candlestick trading strategies include combining candlestick patterns with chart patterns and pivot points. While information on candlestick patterns is easily found online for free, they are loosely organized and hardly comprehensive. Trend line analysis is a key price action trading tool. However, trend lines usually occupy at most a chapter of any price action trading book.

While Andrew had a unique way of drawing his trend lines, price action traders can adapt his trading techniques easily for traditional trend lines and price channels. There are several books on Pitchfork analysis, but this one written by Dr.

Mircea Dologa stands out. It is clearly written with a comprehensive scope and well-pitched for beginners who have never heard of the Pitchfork. Also, we could not help noticing the great reviews from well-known technical analysts like Chuck Lebeau and Dr. Hank Pruden. Being an ultimate guide , it is not surprising that this book has three authors: John Hill , George Pruitt, and Lundy Hill.

This book is geared towards developing mechanical trading systems with price action behavior. Overall, it does an excellent job of deriving exceptional trading setups from price action. Traders looking for new trading ideas should find interesting stuff here. The Yum-Yum continuation pattern is an example of a setup from this book. I decided to include this book because many price action traders use volume in their price analysis.

And notably, Al Brooks does not feature volume in his trading methods. Hence, this book is a great complement to the Trading Price Action series for traders who like to include volume in their trading. This book is a concise work that covers everything you need to know about volume analysis. Although volume is a key ingredient in Dow Theory, most traders find it hard to truly understand the impact of volume in their trading.

Most volume trading methods are obscure and difficult to implement. In her book , Anna Coulling has managed to keep things simple and practical. This book is a real bargain for traders looking for their first book on volume analysis. Using solid market data and statistics, it presents:. While this book does not prescribe an exact trading strategy, it has more than enough facts and figures for you to build your own trading tactics and to have faith in the patterns you are seeing.

Identifying the trend or the lack of one is the cornerstone of successful trading. It applies not only to price action traders but to traders of all styles. Hence, it certainly deserves more attention than just a simple definition. What L. Little attempted in his book is commendable. He constructed a framework to qualify trends and to find the best among them, using only price and volume.

This idea of using price and volume to confirm trends is attractive to price action traders who want a minimalist trading style. Price action traders commonly delegate the job of defining the trend to moving averages or simple trend lines. Little goes further and takes a hard look at the structure of trends to assess their quality.

While the concepts are not revolutionary, the trend-oriented approach in this book is beneficial and offers a different perspective on trend trading. The Anchor Zones is a concept from L. This price action trading book is extremely well-organized and packed full of sound trading ideas. The section on practical trading templates is especially impressive. Rather than prescribing exact rules or staying away from specifics, he offers sound templates that you can use based on your own analysis.

Before you jump into the deep end of price action analysis, remember that its roots are in technical analysis. Make sure that you have a solid foundation in technical analysis before delving into price action trading.

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Holy indicator forex Support and Resistance 3. Here are some of the most reliable price action setups in the market:. This is what differentiates price action from other forms of technical analysis where the use of mathematical indicators is prevalent. They believe that everything they need to know about any particular market is displayed in the price. Log In.

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However, the selling pressure was not strong enough to take out all the buyers. Then there is a Dragonfly Doji. This pattern is formed when the price makes a move in the downward direction, but then the buyers bring the price back to where it opened. Bullish Engulfing Pattern is formed, when the buying pressure is so strong, that the green candle completely engulfs the body of the previous red candle.

In the Morning Star Candlestick Pattern, first a big red bar is formed indicating good selling pressure. But then a small green bar is formed indicating a loss of selling pressure. The Morning Star Pattern is completed, when another strong green bar appears confirming a buying pressure after the loss of selling pressure. In the Three White Soldiers Candlestick Pattern, three consecutive green bars with almost no wick at the top are formed after a series of red candles.

There are other candlestick patterns, but these are the most important and reliable patterns out there. Shooting Star. As you can tell, this one looks like a shooting star, and opposite of the hammer pattern. When the shooting star pattern is formed after a series of green candles, it indicates selling pressure. The buyers made the price move in the upward direction, but then the sellers took over all the buyers and a red candle was formed.

In the Hanging Man Candlestick Pattern, there was an increase in selling pressure as soon as the previous green candle was closed, but then there was some buying pressure from the bottom. However, the buying pressure was not greater than the selling pressure. Gravestone Doji is a pattern where the buyers made the price move in the upward direction, but then sellers entered the market and brought the price back where the candle opened.

This pattern is similar to the shooting star pattern and indicates a potential downward move. In the Bearish Engulfing Pattern, the red candle completely engulfs the previous green candle. In other words, the sellers completely took over the buyers of the previous candle. In the Evening Star Pattern, first a green candle is formed indicating a buying pressure, but then the buying pressure is lost and a small red candle is formed.

The Evening Star Pattern is completed when a big red candle is formed confirming a strong selling pressure. Three Black Crows Pattern is formed when three consecutive red candles are formed with almost no wick at the bottom after a series of green candles. They are formed when the buying and selling pressure is pretty much equal. A neutral candle can look like a Plus symbol, also known as a Doji candle.

Or can also look like a spinning top. When these patterns are formed, it means there is no strong buying or selling pressure and you should wait for other confirmations. If everything is edited as I thought it would be, I should have said that I started trading with Price Action Only, but after trading for thousands of hours and making money with it, I quit. We will get to Why I stopped being a Price Action Only Trader in the next chapters, but in this chapter, we will see what I found, and one of the price action strategies I actually traded.

After thousands of hours of trading with price action strategies in the live market, I found out that these three patterns work the best. These are the most reliable patterns in the long run, especially the engulfing pattern. Now, if you have watched one of the candlestick patterns videos I did on the Trading Rush Channel, you know that the Hammer Candlestick Pattern and the Bullish Engulfing Candlestick Pattern are basically the same things, or in other words, they are telling the same story.

In both of these patterns, the price goes in one direction, and then the opposite pressure makes the price go in the opposite direction. The only difference between the two is that, one did it in a short time, and the other one took a while, resulting in two separate candles.

For example, imagine that there are two candles, but one has fewer seconds left to close than the other. In the bullish hammer and the engulfing pattern, the price makes a move down indicating selling pressure. The price movement is exactly the same, but this time, the second candle closes when the price makes a move in the downward direction, resulting in a completed red bar.

Since the first candle still has enough time to close, when the buying pressure increases and the price makes a move in the upward direction, the first candle creates a Hammer pattern, but since the second candle was closed in the middle, it ended up creating a Bullish Engulfing Pattern, even though the price made the exact same move.

Since the engulfing patterns were most reliable in my experience, I was able to make money by simply buying when a bullish engulfing or a hammer pattern was formed near a strong support area. And by selling when a bearish engulfing pattern was formed near a strong resistance area. This simple strategy was quite effective, but there is a slight problem with these setups. We will see them in the next chapters.

Although Candlestick charts are the most popular charts, there are two other types of charts that you will see some traders use. One is the Bar, which looks very similar to the candlestick chart, except there is no candle body. Then there is the Heiken-Ashi Chart, where the candles look a lot smoother. Even though Heiken-Ashi looks better than normal candlestick charts, most professional traders will not use it and stick to the normal candlesticks or bar charts that sometimes look like a mess.

Heiken-Ashi is basically taking an average of the price movement, but by doing this, a lot of data is lost that a professional trader might find useful. So Heiken-Ashi is best used to trail the stop loss and stay in the trend for a longer period of time, read the price movement better, and analyze the strength of the trend. To analyze the strength, or in other words, to see if the momentum is slowing down or increasing, all you have to do is look at the size and shadow of the candles.

If a green Heiken-Ashi candle has no shadow below the candle, it indicates upward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong upward momentum. If the size of the green candle is smaller, it shows a weak upward momentum. If the Heiken-Ashi candle has shadows on both sides, it means a slow, or a sideways momentum.

If the red Heiken-Ashi candle has no shadow above the candle, it indicates downward momentum. If the size of the Heiken-Ashi candle is relatively bigger, it shows a strong downward momentum. If the size of the red candle is relatively smaller, it shows a weak downward momentum. So far, I have only talked about and recommended things I actually made money with or were helpful in the long run. But out of all of these patterns, I have only found three patterns that work the best. You have even seen 2 of them in one of the live trading videos on the Trading Rush Channel.

The first one is the bullish flag pattern, where the price makes a strong move in the upward direction, then gives a small pullback, that looks like a flag you drew as a kid. Sure, the quality is a lot better, but when this kind of flag pattern is formed, the price has a higher probability of making a good move in the upward direction after the price breaks out of this flag.

This kind of flag pattern can be easily found on the stock that opens with a gap. In other words, the price finds support at pretty much the same place, but the new swing high keeps forming at a lower point. When the price breaks above this pattern, it has a higher probability of making a move in the upward direction. The first and second patterns tell the same story, there was a strong buying pressure. But then there was a not-so-strong selling pressure indicated by the small and weak pullback.

When the price gives a breakout, there is strong upward momentum to capitalize on. The third one is the head and shoulders pattern. This one is best understood by actually understanding how it is formed. Also, this pattern works best in a strong resistance area. When the price reaches a resistance area, selling pressure is increased as expected, but the selling pressure was not strong to take out all the buyers.

When the buying pressure is increased, the price breaks the resistance, or in other words, the price gives a breakout. But then the buyers fail to make the price go higher. The selling pressure is increased and the price is back inside the resistance area, resulting in a false breakout.

The price retest the resistance area again, and after all of this rejections and mess, when the price breaks below the support, or in other words, when the price breaks below the area where the buyers were stepping in, the buyers are taken out and a strong selling pressure can be seen most of the time.

Of course, there is a chance none of what I just said actually happens, but these 3 patterns, and especially the first two, I have found to work the best after trading for thousands of hours with price action only. As you can see, the price is in a good uptrend. On this chart, we know the price is moving in the upward direction, or in other words, the price is in an uptrend. But if you look closely, you will notice that after making the upward move, it went in the sideways direction for a while.

We saw how to draw support and resistance like a pro in the previous chapters, and on this chart, this is the resistance where the price has reversed multiple times. As you can see, the price broke above the resistance, so now the resistance will act as a support area. Since we know the price is in a long-term uptrend, we will look for long trading opportunities. We will wait for the price to come back near the support area, and take a long position when we see buying pressure. We will use the candlestick patterns that we saw in the previous chapters to find that buying pressure.

But as you can see, the price went straight through the support area resulting in a false breakout. When the price gave a breakout above the resistance area, the sellers who had the stop loss above the resistance got stopped out, and new buyers stepped in. But then there was a strong selling pressure that took over all the new buyers resulting in strong selling pressure. Since we were waiting for a bullish candlestick pattern near the support area, which never appeared, we have no reason to enter the trade.

If there was some kind of bullish pattern near this support area, we would have set the stop loss below this breakout support area. When the price was moving in the sideways direction, we can see the price found support in this area. And right now, the price is near that area again. Furthermore, when the price touched this support area, we can see a big price rejection from below.

Since the candle is still red and not green, it is not the bullish candlestick pattern we are looking for. But then, as you can see, the next candle completely engulfs the body of the previous candle, resulting in a Bullish Engulfing Pattern, or in other words, a signal to buy. So we will take a long position when the candle is completed, and we will set the stop loss below the support area. If the swing high was far away, we could have used a 1.

But here, only 1 to 1 is possible before the swing high resistance. Yes, if you were paying attention, you probably noticed that I took entry near the previous resistance. You see, there are two kinds of resistance areas. One is weak resistance, and the other one is strong resistance. Identifying and telling the difference between weak and strong resistance will come with experience.

But basically, the resistance and support areas that are visible on the higher timeframes, are strong resistance areas, because everyone can see them at the same place. But these kinds of support and resistance areas are weak resistance. Because, on our entry timeframe, we can see this as a resistance, but if we switch to a higher timeframe, the resistance area is not clearly visible. So many traders on higher timeframes will not see any kind of resistance.

Since we know the price is in a good uptrend, and even your dog knows that the price has a higher probability of breaking the recent resistance area in an uptrend, and we saw the strong buying pressure when the price touched the support area, and we took entry after the engulfing pattern which is one of the most reliable candlestick patterns I found after thousands of hours of trading with price action only, the price not only has a very high probability of going in the upward direction, but our trade has an even higher probability of winning, because the stop loss is below the support area, and profit target is below the swing high resistance.

If we fast forward the live trading clip a little, we can see the price went exactly how we anticipated. No indicators were used, and all of the analysis was done in the live market with the price action alone. The live trading example was important, because there was no hand-picked setup where everything went perfectly.

And as you saw, when the analysis is done in the live market, you will see things going against us, and not so smoothly. But hopefully, this was more helpful than a hand-picked setup from the past. After all, every trade is different from the previous one, and one liive trade example is not enough. Making money in trading is easy, making money with price action is easy, but not understanding when not to try to make money, is where people lose money and blame the strategies.

Even your neighbor who bought Bitcoin when it was at the top knows, that to make money more consistently in trading, or in other words, to have a higher probability of winning, you have to trade in the direction where the price is already heading. The trend! But if your strategy is a trend trading strategy, the last thing you want is to risk your money when the market is ranging. It sounds simple, but people lose money first, and then realize that the market was not worth trading.

In the previous chapters, we saw that if the price is trending, it looks something like this. If it is up-trending, it will make higher swing highs and higher swing lows. If your trend trading strategy gives entry signals near the end of the pullbacks, you will take trades somewhere around here.

If the price was making higher swing highs at the time of entering the trade, the entry is completely valid. But if the price does not make a new swing high, it is an early sign of a slow or a sideways market. At this point, the price can make higher swing lows while creating relatively similar swing highs.

If this happens, you will probably end with a chart pattern that we saw in the previous chapters. On the other hand, the price can reverse from the previous swing high, and find support again at the previous swing low. This is when the range market is pretty much confirmed, and the uptrend is most likely over.

But there are different kinds of range markets. One is a wide range, that is usually visible on multiple timeframes, and another one is a small range that is only visible on your entry timeframe as we saw in the previous live trading video.

If more people can clearly see a slow or a range market, more people will take trades while keeping the range in mind. If only you can see it on your smaller timeframe, and on the higher timeframe the price is in a strong uptrend, the price has a higher probability of breaking the resistance of that weak range. But when you see the price could not cross above the previous swing high in an uptrend, it is a good idea to stop taking new long trades, especially with profit targets above the previous swing high.

Similarly, if you see the price could not cross below the previous swing low in a downtrend, it is a good idea to stop taking new short trades, especially with profit targets below the previous swing low. Although people lose money when the market is ranging, the range market is fairly easy to identify. The beginner traders really lose money is when the market looks like this, and not like this.

As you can see, the price on both of these charts are trending and is not in a range. But one chart looks easier to read and clean like something out of a fairy tale, but on the other hand, there is this mess. This is a choppy market, and this is where most strategies, including your indicator strategies, become less reliable. You see, when I started trading, I used to take screenshots of the winning and losing trades, and store them in two separate folders. After a while, when I used to analyze them, I noticed that most of the charts of the winning trades looked like this, and most of the charts of the losing trades looked messy like this.

For example, when the price movement is good, multiple green or red candles will form in a row. Furthermore, most candles move away from the previous one. But in the choppy market, fewer green and red candles are formed in a row, and most move towards the opening price of the previous candle. So when most of the candles, are moving away from each other, the price movement is most likely good. But if most candles are not moving away from each other, the chart probably looks something like this, and the price movement is most likely choppy and you should avoid taking new trades.

If this sounds confusing, simply have a screenshot of a good trending chart on your screen for reference while looking for new trades. Step 1. Open the higher timeframe chart. If your entry timeframe is 30 mins, your important higher timeframes are every popular timeframe above 30 mins. Step 2. Draw the clearly visible support and resistance areas on that higher timeframe by using everything you learned in the previous chapters.

Make sure the price is trending and not ranging on the higher timeframes. Step 3. Switch to your entry timeframe, and make sure the price on the entry timeframe and the higher timeframe, is trending in the same direction.

Identify if the market is choppy or not using everything you saw in the previous chapter. Also, we could not help noticing the great reviews from well-known technical analysts like Chuck Lebeau and Dr. Hank Pruden. Being an ultimate guide , it is not surprising that this book has three authors: John Hill , George Pruitt, and Lundy Hill.

This book is geared towards developing mechanical trading systems with price action behavior. Overall, it does an excellent job of deriving exceptional trading setups from price action. Traders looking for new trading ideas should find interesting stuff here. The Yum-Yum continuation pattern is an example of a setup from this book. I decided to include this book because many price action traders use volume in their price analysis.

And notably, Al Brooks does not feature volume in his trading methods. Hence, this book is a great complement to the Trading Price Action series for traders who like to include volume in their trading. This book is a concise work that covers everything you need to know about volume analysis. Although volume is a key ingredient in Dow Theory, most traders find it hard to truly understand the impact of volume in their trading.

Most volume trading methods are obscure and difficult to implement. In her book , Anna Coulling has managed to keep things simple and practical. This book is a real bargain for traders looking for their first book on volume analysis. Using solid market data and statistics, it presents:. While this book does not prescribe an exact trading strategy, it has more than enough facts and figures for you to build your own trading tactics and to have faith in the patterns you are seeing. Identifying the trend or the lack of one is the cornerstone of successful trading.

It applies not only to price action traders but to traders of all styles. Hence, it certainly deserves more attention than just a simple definition. What L. Little attempted in his book is commendable. He constructed a framework to qualify trends and to find the best among them, using only price and volume.

This idea of using price and volume to confirm trends is attractive to price action traders who want a minimalist trading style. Price action traders commonly delegate the job of defining the trend to moving averages or simple trend lines.

Little goes further and takes a hard look at the structure of trends to assess their quality. While the concepts are not revolutionary, the trend-oriented approach in this book is beneficial and offers a different perspective on trend trading. The Anchor Zones is a concept from L. This price action trading book is extremely well-organized and packed full of sound trading ideas.

The section on practical trading templates is especially impressive. Rather than prescribing exact rules or staying away from specifics, he offers sound templates that you can use based on your own analysis. Before you jump into the deep end of price action analysis, remember that its roots are in technical analysis. Make sure that you have a solid foundation in technical analysis before delving into price action trading.

If you are already familiar with the basics of technical analysis and hope to hone your price action trading skills, go ahead and take your pick among the price action trading books above. Cut the time you need to master price action trading. Regain your time with a concise package of price action learning materials. Hey Gary, I just saw it on Amazon today as well. I will be adding it to this list. Thanks for the info! It is also a good book based on Price action.

Hi Raj, thanks for the suggestion. Your email address will not be published. Download for free now. This website or its third-party tools use cookies which are necessary to its functioning and required to improve your experience. Please click the consent button to view this website. I accept. Deny cookies Go Back. Thank you for sharing.

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Day Trading Futures with Price Action - No Indicators needed

A trading plan applicable to futures, stocks, forex, cryptocurrencies, or any financial instrument to gain unlimited confidence using price action. It's the “action” of “price”. It describes the way a market moves, including its trends and key support and resistance levels. However, trading Forex with price. What are price action strategies? This guide will show you what they are and how to use them to stack the odds in your favor.