Price action trading is one such method. Where traders trade by looking at the price movement of any stock or index. For this, you have to do research on any stock or index and understand its movement. Traders do not need any indicator to generate entry and exit signals with the help of price action.
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How to Use Price Action?
Price action is not an indicator of any kind. As soon as you apply it, you get buying and selling signals. For this you need a lot of thinking. You have to track every single movement of the candle.
Trend lines are that important part of the price action, without which it is incomplete. Trend lines help you a lot to know the support and resistance in the market.
Not only this, it also helps a lot in knowing the direction of the market. Price action cannot be seen without trend lines. This is an important part of the it.
If trend lines are telling you about support. This tells us about two things. The first market can go up by taking support on that trend line and the second market can go down by giving a breakdown of that trend line. Whenever the market comes in contact with that trend line. At the same time you get buying and selling signals.
On the other hand if the trend line is telling you about the resistance. In this also you get only two options. First, if the market acts as a resistance on this, then there will be a fall in the market, but if the market gives a breakout of this trend line, then the market will see a rise.
Support & Resistance
In price action, you also need to identify support and resistance very well. With the help of support and resistance, we also get a lot of help in making positions in the market.
At any given point you get two chances. If the market is giving a breakdown of the support then you get a sell signal but if the market is moving up with the support at the support then you get a buy signal.
Now let’s talk about the second moment, if the market is giving a breakout of resistance, then you get a buying signal. On the other hand, if the market is coming down with resistance at the resistance level, then you get a sell signal.
What is Price Action?
Today you must have helped a lot in understanding price action. It is a very big topic. I have tried to explain to you a very small part of it. hope you got good information.