Trade naked charts β let price tell you what to do next.
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Overview
Price action trading is the discipline of making trading decisions based solely on the movement of price β without the use of lagging indicators. Practitioners argue that all relevant market information is already reflected in the price, and that indicators simply repackage this information with an added delay.
The foundation is candlestick analysis: understanding what each candle β and sequences of candles β reveals about the battle between buyers and sellers. Key candlestick patterns include pin bars (rejection wicks), engulfing candles (momentum shifts), inside bars (consolidation), and doji candles (indecision). These patterns derive their significance from the context in which they appear: a pin bar at a key support level carries far more weight than one in the middle of a range.
Market structure β the sequence of swing highs and swing lows β defines the trend. In an uptrend, higher highs and higher lows form a "staircase" pattern. When this structure breaks down, it may signal a trend change. Horizontal support and resistance levels, trend lines, and channels provide the framework within which patterns are evaluated.
Pure price action strategies require no indicators beyond perhaps a volume bar and a simple moving average for trend context. This makes them robust and adaptable across markets and timeframes.
Strategy Code
This is a TradingView Pine Script strategy example for this page concept. Paste it into the TradingView Pine Editor, add it to your chart, and run it in the Strategy Tester.
//@version=6
strategy("Price Action Strategy", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript strategy example for this page concept. Open thinkorswim, create a custom strategy, paste the script, and apply it to your chart.
input fastLength = 20;
input slowLength = 50;
def fastMA = ExpAverage(close, fastLength);
def slowMA = ExpAverage(close, slowLength);
def buySignal = fastMA crosses above slowMA;Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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