Is price action trading effective?

What is price action trading?

Price action trading is trading based on the movement of the underlying in respect of volume, structure, location and human psychology. The goal of price action trading is buying at low price and selling at higher price. It is considers as the purest method of technical analysis. Only price action can focus on what market or underlying is doing currently.

Many people believe that price action trading is more effective in day trading, but the truth is price action trading is more validated over higher timeframe. Swing trading to investment, no other strategy can be better than price action.

Earlier professional traders focussed on Elliott Wave heory for their trading, but during 2008 market crash this Elliott Wave theory unable to forcast about the crash, where price action generated many symptoms of crash. Since then Professionals mostly depends of price action trading.

Even in 2020, price action trading clearly given a sell signal, in Indian market if you check chart of Nifty you can find out it n 20th January 2020, the formation is a total bearish engulfing which indicates an End Of The rally obviously location and volume and structure are important.

Price action creates many uncommon candlesticks formations, a price action tradig expert can identify those uncommon pattern or formation and utilise if favour of their trade. Technical analysis mesure the probability of an underlying movement in near or midterm future, and the best part is, price & volume help us to know wheather we shall be a buyer or seller in the current market.

Head and Shoulders, Double Tops/Bottoms, strong support/resistance level, pin bar, inside bar are populer name of price action trading but personally I believe those are old days concepts, infinite types of formation is possible using price, volume, structure, location and human psychology. So proper learning needed.

If you able to learn how price action really works then no one can stop you from making money from trading if you are a disciplined trader.