Beginners Introduction To Price Action Trading REMINDER: Until August 31st, Save 30% Off Life-Time Membership To Nial Fuller's Pro Trading Courses, Daily Trade Setups Newsletter & VIP Members Community - Click Here. Price Action Trading Explained price action trading1- The Definition Of Price Action 2- Trading with “Messy” Vs “Clean” Forex Charts 3- How to identify trending and consolidating markets 4- How to trade Forex with Price Action Trading Strategies 5- How to use chart confluence and Price Action Signals What is Price Action ? Basic Definition: Price Action Trading (P.A.T.) is the discipline of making all of your trading decisions from a stripped down or “naked” price chart. This means no lagging indicators outside of maybe a couple moving averages to help identify dynamic support and resistance areas and trend. All financial markets generate data about the movement of the price of a market over varying periods of time; this data is displayed on price charts. Price charts reflect the beliefs and actions of all participants (human or computer) trading a market during a specified period of time and these beliefs are portrayed on a market’s price chart in the form of “price action” (P.A.). Whilst economic data and other global news events are the catalysts for price movement in a market, we don’t need to analyze them to trade the market successfully. The reason is pretty simple; all economic data and world news that causes price movement within a market is ultimately reflected via P.A. on a market’s price chart. Since a market’s P.A. reflects all variables affecting that market for any given period of time, using lagging price indictors like stochastics, MACD, RSI, and others is just a flat waste of time. Price movement provides all the signals you will ever need to develop a profitable and high-probability trading system. These signals collectively are called price action trading strategies and they provide a way to make sense of a market’s price movement and help predict its future movement with a high enough degree of accuracy to give you a high-probability trading strategy. “Clean” Charts vs. “Messy” Indicator-laden Charts Next, to demonstrate the stark contrast between a pure P.A. chart and one with some of the most popular forex indicators on it, I have shown two charts in the examples below. The chart on the top has no indicators on it, there’s nothing but the raw P.A. of the market on that chart. The bottom chart has MACD, Stochastics, ADX and Bollinger Bands on it; four of the most widely used indicators AKA “secondary” analysis tools as they are sometimes called: The image example below shows a clean price chart, with no mess, and no indicators, just pure price bars: pa1 The image example below shows a messy price chart, with lots of clutter, indicators and mess: messy It’s worth pointing out how in the indicator-laden chart you actually have to give up some room on the chart to have the indicators at the bottom, this forces you to make the P.A. part of the chart smaller, and it also draws your attention away from the natural P.A. and onto the indicators. So, not only do you have less screen area to view the P.A., but your focus is not totally on the price action of the market like it should be. If you really look at both of those charts and think about which one is easier to analyze and trade from, the answer should be pretty clear. All of the indicators on the chart below, and indeed almost all indicators, are derived from the underlying P.A.. In other words, all traders do when they add indicators to their charts is produce more variables for themselves; they aren’t gaining any insight or predictive clues that aren’t already provided by the market’s raw price action. Examples of some of my favorite price action trading strategies: Next, let’s take a look at some of the price action trading strategies that I teach. Note that I’ve included a “failed” trade setup because not every trade will be a winner; we aren’t here to show you “perfect” past trading results…we are here to teach you in an honest and realistic manner. In the image example below, we are looking some of my favorite P.A. trading strategies: intropa1 How to determine a market’s trend One of the most important aspects of learning to trade with P.A. is to first learn how to identify a trending market versus a consolidating market. Trading with the trend is highest-probability way to trade and it’s something you HAVE TO learn how to do if you want to stand a chance at making serious money as a trader. The charts below shows how to use price dynamics to determine a markets trend. We consider a market to be in an uptrend if it is making Higher Highs and Higher Lows (HH, HL) and a downtrend is Lower Highs and Lower Lows (LH, LL). In the image example below, we can see how higher highs and higher lows signal an up-trend in a market: uptrend In the image example below, we can see how lower highs and lower lows signal a down-trend in a market: downtrend Trending VS. Consolidating markets As we discussed earlier, P.A.or “price action trading analysis” is the analysis of the price movement of a market over time. From our analysis of price movement we can determine a market’s underlying directional bias or “trend”, or if the market has no trend it is said to be “consolidating”…we can easily determine whether a market is trending or consolidating from simply analyzing its P.A.. We saw how to determine a market’s trend above, to determine if a market is consolidating we just look for an absence of the HH, HL or LH, LL patterns. In the chart below note how the “consolidating price action” is bouncing between a horizontal support and resistance level and is not making HH, HL or LH, LL but is instead going sideways… The image example below shows a market moving from a consolidation phase to a trending phase: gbpusd1 How to Trade Forex with Price Action Trading Strategies So how exactly do we trade Forex with price action? It really boils down to learning to trade P.A. setups or patterns from confluent levels in the market. Now, if that sounds new or confusing to you right now, sit tight and I will clarify it soon. First we need to cover a couple more things: Due to the repetitive nature of market participants and the way they react to global economic variables, the P.A. of a market tends to repeat itself in various patterns. These patterns are also called price action trading strategies, and there are many different price action strategies traded many different ways. These reoccurring price patterns or price action setups reflect changes or continuation in market sentiment. In layman’s terms, that just means by learning to spot price action patterns you can get “clues” as to where the price of a market will go next. The first thing you should to begin P.A. trading is to take off all the “crap” on your charts. Get rid of the indicators, expert advisors; take off EVERYTHING but the raw price bars of the chart. I prefer to use candlestick charts because I feel they convey the price data of the market more dynamically and “forcefully”, if you are still using classic bar charts and want more info on candlesticks then checkout this candlestick trading tutorial. I like simple black and white charts the best, as you can see below. In metatrader4 you simply right click on the chart and adjust the “properties” of the chart to get it looking like mine below. If you want more info on how to setup your MT4 trading platform checkout this metatrader 4 tutorial. After you’ve removed all the indicators and other unnecessary variables from your charts, you can begin drawing in the key chart levels and looking for price action setups to trade from. The image example below shows examples of some of the trading strategies I teach in my forex trading course. Note the key support / resistance levels have been drawn in: pa2 How to trade price action from confluent points in the market: The next major step in trading Forex P.A. is to draw in the key chart levels and look for confluent levels to trade from. In the chart below we can see that a very obvious and confluent pin bar setup formed in the USDJPY that kicked off a huge uptrend higher. Note that the pin bar trade setup showed rejection of a key horizontal support level as well as the 50% retrace of the last major move, thus the pin bar had “confluence” with the surrounding market structure… In the image example below, we can see a pin bar setup that formed at a confluent point in the market: pa3 All economic variables create price movement which can be easily seen on a market’s price chart. Whether an economic variable is filtered down through a human trader or a computer trader, the movement that it creates in the market will be easily visible on a price chart. Therefore, instead of trying to analyze a million economic variables each day (this is impossible obviously, although many traders try), you can simply learn to trade price action, because this style of trading allows you to easily analyze and make use of all market variables by simply reading and trading from the P.A. trail they leave behind in a market. In closing… I hope today’s introduction to Price Action Forex Trading has been a helpful and enlightening lesson for you. No matter what strategy or system you end up trading with, having a solid understanding of P.A. will only make you a better trader. If you’re like me, and you love simplicity and minimalism, you’ll want to become a “pure” P.A trader and remove all unnecessary variables from your charts. If you’re interested in learning how I trade with simple price action strategies, checkout my Price Action Forex Trading Course for more info. Good trading, Nial Fuller Related Lessons: Simple Price Action Trading Patterns Understanding Price Action Trading Strategies How to Filter Good & Bad Price Action Trading Signals Beginners Guide to Price Action Forex Trading Professional Price Action Trading Strategies What Is Price Action Analysis ? REMINDER: Until August 31st, Save 30% Off Life-Time Membership To Nial Fuller's Pro Trading Courses, Daily Trade Setups Newsletter & VIP Members Community - Click Here. author image About Nial Fuller Nial Fuller is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008. Checkout Nial's Professional Forex Course here. 14 Comments Leave a Comment irfan June 7, 2014 at 1:46 am Nial price action article is superb….! very informative.. Thanks Reply dave j May 26, 2014 at 4:38 pm Nial,Thanks for the free information on p/a I found it makes sense and is easy to understand so far gday davej Reply Alex May 9, 2014 at 11:29 pm Dear Sir Nial, You done the best job for us to learn price action trading strategy easily. Hope every one can learn this price action trading easily if they read carefully this article. Reply Emalban FX April 16, 2014 at 8:30 am This is great, am glad for the job Mr Fuller is doing here. Thanks. Reply Forex Winners March 18, 2014 at 8:22 am good work all respect Reply Mike G. February 20, 2014 at 4:09 pm Hi Nial, I find your blog site very valuable and interesting. Theres a lot to learn here. Now I come to know why I fail in my trading. Thanks for the free information Nial. Its a good place to start learning to trade profitably. I will consider learning more from you and eventually be part of your community. :-) Many thanks Nial. Mike G. Reply Olalekan December 31, 2013 at 1:08 am Dear Nial Fuller, . your teaching is the fuel to my Motor to keep moving and profit in my forex trading . Thank you for the time you use for all of them. Olalekan Reply Sulaiman December 19, 2013 at 6:18 pm Thanks for the clearer picture Nail! I have studied all available indicators in the trading scope and they confused me even more and have decided to go for price-action trade through my own conciense. Your affirmation in this strategy give me more confidence. I would like to learn more from you. Reply Ahesan FX November 4, 2013 at 7:46 pm Thanks Sir, this article totally change my view towards market now I feel much more confident with simple pure price chart. Eager to learn more from you… Reply Obinna October 10, 2013 at 8:15 am this is the final piece to my forex puzzle. Sir Nial Fuller you are indeed an expert in forex strategy. thanks Reply abideen September 17, 2013 at 3:35 am nail u are 1 of my best top 3 Forex mentor, u are obviously great keep it up, GOD bless. pls i want u to discus the strategy, best time to use in trading crude oil, gold and silver thanks. Reply gary August 30, 2013 at 4:43 pm Thanks for the lesson..eager to learn more and glad I found you tks Reply mideel August 24, 2013 at 12:10 pm Thanks, for the lessons. Its really clear and comprehensive. Reply calvin August 21, 2013 at 4:51 am Sir Nial this is such a great introduction. This proved to be helpful in concept building thanks…! Reply Leave a Comment Your email address will not be published. Required fields are marked * Comment Name * Email * Website Notify me of new posts by email. price-action-trading-course-banner Nial Fuller’s Price Action Forex Trading Course. Learn Advanced Price Action Strategies & High Probability Trade Entry Signals That Work Get My Weekly Trade Setups Newsletter Delivered To Your Inbox - 100% Free Subscribe to the most popular forex trading blog online, with over 250,000 readers. We promise to not use your email for spam! Find Us on Facebook Recent Popular Comments post Why Having A Trading Routine Is Vital To Your Success image Why Having A Trading Routine Is Vital To Your Success post The Market is Speaking, But Are You Listening? image The Market is Speaking, But Are You Listening? post Why Trading ‘End-of-Day’ Strategies Will Improve Your Results image Why Trading ‘End-of-Day’ Strategies Will Improve Your Results post 10 Trading Affirmations to Begin Every Trading Day image 10 Trading Affirmations to Begin Every Trading Day post Feel Like Giving Up Trading? Here’s How to Fix That… image Feel Like Giving Up Trading? Here’s How to Fix That… post What Pro Fisherman Can Teach You About Trading image What Pro Fisherman Can Teach You About Trading post Why Traders Give Back Profits After Winning Streaks image Why Traders Give Back Profits After Winning Streaks post Why You Should Take the Profits and Run! image Why You Should Take the Profits and Run! Categories Forex Trading Articles Forex Trading Commentary Forex Trading Strategies Forex Trading Tutorials Forex Trading Videos Forex Trading Blog Forex Trading Tools Download Free Trading Platform Price Action Trading Course

Beginners Introduction To Price Action Trading

REMINDER: Until August 31st, Save 30% Off Life-Time Membership To Nial Fuller's Pro Trading Courses, Daily Trade Setups Newsletter & VIP Members Community - Click Here.

Price Action Trading Explained

1- The Definition Of Price Action
2- Trading with “Messy” Vs “Clean” Forex Charts
3- How to identify trending and consolidating markets
4- How to trade Forex with Price Action Trading Strategies
5- How to use chart confluence and Price Action Signals

What is Price Action ?

Basic Definition: Price Action Trading (P.A.T.) is the discipline of making all of your trading decisions from a stripped down or “naked” price chart. This means no lagging indicators outside of maybe a couple moving averages to help identify dynamic support and resistance areas and trend. All financial markets generate data about the movement of the price of a market over varying periods of time; this data is displayed on price charts. Price charts reflect the beliefs and actions of all participants (human or computer) trading a market during a specified period of time and these beliefs are portrayed on a market’s price chart in the form of “price action” (P.A.).
Whilst economic data and other global news events are the catalysts for price movement in a market, we don’t need to analyze them to trade the market successfully. The reason is pretty simple; all economic data and world news that causes price movement within a market is ultimately reflected via P.A. on a market’s price chart.
Since a market’s P.A. reflects all variables affecting that market for any given period of time, using lagging price indictors like stochastics, MACD, RSI, and others is just a flat waste of time. Price movement provides all the signals you will ever need to develop a profitable and high-probability trading system. These signals collectively are called price action trading strategies and they provide a way to make sense of a market’s price movement and help predict its future movement with a high enough degree of accuracy to give you a high-probability trading strategy.

“Clean” Charts vs. “Messy” Indicator-laden Charts

Next, to demonstrate the stark contrast between a pure P.A. chart and one with some of the most popular forex indicators on it, I have shown two charts in the examples below. The chart on the top has no indicators on it, there’s nothing but the raw P.A. of the market on that chart. The bottom chart has MACD, Stochastics, ADX and Bollinger Bands on it; four of the most widely used indicators AKA “secondary” analysis tools as they are sometimes called:
The image example below shows a clean price chart, with no mess, and no indicators, just pure price bars:

The image example below shows a messy price chart, with lots of clutter, indicators and mess:

It’s worth pointing out how in the indicator-laden chart you actually have to give up some room on the chart to have the indicators at the bottom, this forces you to make the P.A. part of the chart smaller, and it also draws your attention away from the natural P.A. and onto the indicators. So, not only do you have less screen area to view the P.A., but your focus is not totally on the price action of the market like it should be.
If you really look at both of those charts and think about which one is easier to analyze and trade from, the answer should be pretty clear. All of the indicators on the chart below, and indeed almost all indicators, are derived from the underlying P.A.. In other words, all traders do when they add indicators to their charts is produce more variables for themselves; they aren’t gaining any insight or predictive clues that aren’t already provided by the market’s raw price action.

Examples of some of my favorite price action trading strategies:

Next, let’s take a look at some of the price action trading strategies that I teach. Note that I’ve included a “failed” trade setup because not every trade will be a winner; we aren’t here to show you “perfect” past trading results…we are here to teach you in an honest and realistic manner.
In the image example below, we are looking some of my favorite P.A. trading strategies:

How to determine a market’s trend

One of the most important aspects of learning to trade with P.A. is to first learn how to identify a trending market versus a consolidating market. Trading with the trend is highest-probability way to trade and it’s something you HAVE TO learn how to do if you want to stand a chance at making serious money as a trader.
The charts below shows how to use price dynamics to determine a markets trend. We consider a market to be in an uptrend if it is making Higher Highs and Higher Lows (HH, HL) and a downtrend is Lower Highs and Lower Lows (LH, LL).
In the image example below, we can see how higher highs and higher lows signal an up-trend in a market:

In the image example below, we can see how lower highs and lower lows signal a down-trend in a market:

Trending VS. Consolidating markets

As we discussed earlier, P.A.or “price action trading analysis” is the analysis of the price movement of a market over time. From our analysis of price movement we can determine a market’s underlying directional bias or “trend”, or if the market has no trend it is said to be “consolidating”…we can easily determine whether a market is trending or consolidating from simply analyzing its P.A.. We saw how to determine a market’s trend above, to determine if a market is consolidating we just look for an absence of the HH, HL or LH, LL patterns. In the chart below note how the “consolidating price action” is bouncing between a horizontal support and resistance level and is not making HH, HL or LH, LL but is instead going sideways…
The image example below shows a market moving from a consolidation phase to a trending phase:

How to Trade Forex with Price Action Trading Strategies

So how exactly do we trade Forex with price action? It really boils down to learning to trade P.A. setups or patterns from confluent levels in the market. Now, if that sounds new or confusing to you right now, sit tight and I will clarify it soon. First we need to cover a couple more things:
Due to the repetitive nature of market participants and the way they react to global economic variables, the P.A. of a market tends to repeat itself in various patterns. These patterns are also called price action trading strategies, and there are many different price action strategies traded many different ways. These reoccurring price patterns or price action setups reflect changes or continuation in market sentiment. In layman’s terms, that just means by learning to spot price action patterns you can get “clues” as to where the price of a market will go next.
The first thing you should to begin P.A. trading is to take off all the “crap” on your charts. Get rid of the indicators, expert advisors; take off EVERYTHING but the raw price bars of the chart. I prefer to use candlestick charts because I feel they convey the price data of the market more dynamically and “forcefully”, if you are still using classic bar charts and want more info on candlesticks then checkout this candlestick trading tutorial.
I like simple black and white charts the best, as you can see below. In metatrader4 you simply right click on the chart and adjust the “properties” of the chart to get it looking like mine below. If you want more info on how to setup your MT4 trading platform checkout this metatrader 4 tutorial.
After you’ve removed all the indicators and other unnecessary variables from your charts, you can begin drawing in the key chart levels and looking for price action setups to trade from.
The image example below shows examples of some of the trading strategies I teach in my forex trading course. Note the key support / resistance levels have been drawn in:

How to trade price action from confluent points in the market:

The next major step in trading Forex P.A. is to draw in the key chart levels and look for confluent levels to trade from. In the chart below we can see that a very obvious and confluent pin bar setup formed in the USDJPY that kicked off a huge uptrend higher. Note that the pin bar trade setup showed rejection of a key horizontal support level as well as the 50% retrace of the last major move, thus the pin bar had “confluence” with the surrounding market structure…
In the image example below, we can see a pin bar setup that formed at a confluent point in the market:

All economic variables create price movement which can be easily seen on a market’s price chart. Whether an economic variable is filtered down through a human trader or a computer trader, the movement that it creates in the market will be easily visible on a price chart. Therefore, instead of trying to analyze a million economic variables each day (this is impossible obviously, although many traders try), you can simply learn to trade price action, because this style of trading allows you to easily analyze and make use of all market variables by simply reading and trading from the P.A. trail they leave behind in a market.

In closing…

I hope today’s introduction to Price Action Forex Trading has been a helpful and enlightening lesson for you.  No matter what strategy or system you end up trading with, having a solid understanding of P.A. will only make you a better trader. If you’re like me, and you love simplicity and minimalism, you’ll want to become a “pure” P.A  trader and remove all unnecessary variables from your charts. If you’re interested in learning how I trade with simple price action strategies, checkout my Price Action Forex Trading Course for more info.
Good trading, Nial Fuller
Related  Lessons:

• Simple Price Action Trading Patterns
• Understanding Price Action Trading Strategies
• How to Filter Good & Bad Price Action Trading Signals
• Beginners Guide to Price Action Forex Trading
• Professional Price Action Trading Strategies
• What Is Price Action Analysis ?

REMINDER: Until August 31st, Save 30% Off Life-Time Membership To Nial Fuller's Pro Trading Courses, Daily Trade Setups Newsletter & VIP Members Community - Click Here.

About Nial Fuller

Nial Fuller is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught 15,000+ students since 2008. Checkout Nial's Professional Forex Course here.

•