Price Action Trading Was Hard

Price Action Trading Was Hard
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Oh god, that is some really old coffee. But anyway, trading around pure price action is one of the best ways I have ever found to trade. If you can master price action trading, you can not only set yourself apart from other retail traders using indicators all over the place but also dramatically increase your probabilities of becoming a consistently profitable trader. In this video, I’m going to show you a really simple three-step process that, for me, turned price action trading from something that seemed like rocket science to something as easy as counting one, two, three. With no exaggeration at all. If that sounds good, go ahead and click that like button for me. Follow us if you’re new by clicking subscribe and the notification bell to join the TTC family. I’ll let the intro and disclaimer roll, and I’ll see you directly after.

Welcome back. First off, for those of you who are brand new, let’s talk about what price action trading is. Very simply put, price action trading is trading based on what you see on the chart with no indicators. It’s trading based on the action of price, and we use price action trading to find high probability setups in the market based on things like trend, support, resistance, supply, demand, candlestick patterns, chart patterns. We use a combination of all these things to find high likelihood opportunities on a specific instrument. In today’s case, we’re going to be talking about forex. The way we use price action to do this is where people oftentimes get stuck. Let’s dive right into this three-step process right now.

Three-Step Process

So what you see on the screen is the three-step process I use in every single price action trade. Adopting this three-step process will keep you from placing random trades, which is the downfall of many beginners in the trading world. They’ll just go out and want to place a trade during a day without doing any preemptive analysis or preparation. This is my preparation for any price action trade. Let’s get started with number one.

Number one: The first thing I do when I’m going to trade a price action trade is look for the trend and the structure levels that I need to pay attention to on any particular market. Let’s identify the trend first. What type of trend are we in? Depending on the way you classify trend, it may be different for everyone. But the way I’m identifying this, we are currently in a downtrend because of this move right here. We’ve seen price have a dramatic fall and then break into new lower lows. The definition of a downtrend is a low followed by a lower low, along with a high followed by a lower high.

Number two: Preparation and predicting. If the market’s sitting right here at the end of this red candle, what could happen? What’s the prediction here? Well, we could see price just continue down, right? Price could do that, no problem. Or price could continue up. That’s essentially the only two options we have. It’s going to do one or the other. Now it may consolidate a bit in through here. Oh, I can draw Pac-Man. Hold on. It’s an ugly one, but we can draw a little ghost right here. Yeah, we’re calling this the Pac-Man pattern. The ghost is running away. Ah, so scared. That’s it, Pac-Man. But essentially, these are the only two things price can do—either go up or down.

Possible Trade

Now, once I’ve prepared, once I’ve predicted what I think is going to happen, my next step is to take action and enter a possible trade. Personally, I have a few ways I can do this. You can decide for yourself how you enter a market, whether that be a chart pattern, whether that be some kind of candlestick pattern, whether…

Market Factors

We anticipate this level becoming resistance and exerting downward pressure on the market because it represents the latest structure support that was breached. It is a common phenomenon for support to transform into resistance, especially considering it has undergone multiple tests. Our approach to predicting the next market move involves taking action on a one-hour chart, relying on chart patterns such as double tops or head and shoulders. Occasionally, we may adopt an aggressive strategy based on candlestick patterns, considering various market factors.

In the case of the Pound-Dollar pair, the price eventually reached our identified zone, offering an entry point. A screenshot of the trade entry is provided for reference. Subsequently, the market swiftly moved downward, resembling a waterfall. It’s crucial to note that while this method doesn’t guarantee success every time, it serves as a practical illustration of live trades.

To illustrate another scenario, let’s analyze the current situation on the New Zealand Dollar. We are currently in a trade with a downtrend. The chosen structure level is the most recent support level that was broken in this downtrend. Despite the downtrend, this level had a significant impact on the market previously. Considering these factors, this level becomes our structure.

Having identified the trend and structure, our next step involves preparing and predicting potential market movements. If the price decreases, we expect it to breach the low in line with the downtrend. If the price rises, our anticipation is for this level to act as resistance due to its prior role as support and multiple tests. Once the preparation and prediction are in place, the subsequent step is to await the price to reach the designated level and then execute the trade.

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