What Is Price Action Trading?
It’s a trading methodology that helps you identify the current market condition so you can adopt the right trading strategy at the right time.
In a nut & shell there are five components of price action trading:
#1 Market Structure
Identify the current market structure, whether the market is in uptrend, downtrend or sideways.
Decide what to do…
Buy, Sell or stay out of the market.
#2 Area Of Value
Identify the area of value like support & resistance, moving average, trendline, demand zone & supply zone.
Decide where to buy /sell.
#3 Entry Trigger
With the help of candlestick patterns…
Decide when to buy/sell.
#4 Exit Trigger (If you’re wrong)
Use stoploss to get out of the trade at a level where your setup gets invalidated.
You can use ATR or Pivot Points Standard indicator to set the stop loss.
#4 Exit Trigger (If you’re right)
If everything is right…
It’s time to book the profit. Capture a swing like high & low, support & resistance. Get out of the trade.