Price Action Trading Technique - Forex Market Technical Analysis

Price Action Trading Technique

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Price Action Trading Technique

Fiftieth session of Forex Training

Welcome back to Forex professional training in financial markets.

In this session we will be discussing Price Action Trading Technique.

Price Action

Most of financial institutions, banks and professional traders utilize Price Action method to detect most appropriate Sell or Buy entry price in convenient time.

Buy Zone

Buy Zone is a region in a downtrend where an upturn point is formed and a long or a short upward trend is presumed.

Sell Zone

In an uptrend, Sell zone is an area in which a downturn is formed towards the bottom with a long or a short term momentum.

Price Action Trading Technique - Trading Signals and Technical Analysis of Market

Pending Zone

Pending Zone is a region without any valid Buy or Sell signals, thus, traders must wait for an appropriate Buy or Sell zone to appear after a significant news or event.

Traders must consider that proper Buy or Sell zones are not always available, thus, a successful deal requires knowledge, experience and patience.

Price Action Strategy

When a market trend moves towards a direction due to high volume and number of agreeing orders, most of proficient traders close their orders completely or partially on certain spots where market trend would change its direction for a short or long term.

For instance, traders have placed Sell orders on a downtrend and, after some declines, most of the experts closed their Sell orders just before a corrective or reverse points, thus, they could place Buy orders on that certain price.

A proficient trader always waits for reversal points to place a suitable order with a rational profit based on different trend terms.

Price Action Trading Technique - Continuation and Reversal Method - Buy and Sell Zone

Applied tools

Implemented tools utilized on Price Action by traders are as follows:

Patterns should be considered thoroughly since they have key effects on a Price Action strategy.

Traders who trade on the basis of Fundamental Analysis would exploit technical analysis to detect suitable entry or close prices.

Obviously, traders who trade based on Technical analysis use the abovementioned tools to figure out the most appropriate entry and close price.

Price Action Trading Technique - Levels and Candlesticks - Indicator and Oscillator- Andrew's Pitchfork


Traders must set timeframe on a Monthly format, which should be changed to a desired timeframe step by step.

On each timespan, trader must determine significant levels, support/resistance lines, patterns, candles, indicators and strategies.

For instance, if a trader wants to place an order on H1 timeframe, after changing the timeframe to M1, then he/she must decrease timespan step by step toward H1 alongside of utilizing major tools on the desired spot.

H4 is the most applicable timeframe used by professional traders.

Advantages of Price Action

There are several reasons why a trader should use Price Action:

  1. Most of the traders place an order on the basis of a pattern signal. Sometimes the pattern may be formed partially or generate false and unreliable signals due to invalid spots or unpredicted trends. A Trader can foresee the future market trend by analysing market trend and patterns by utilizing Price Action. For example, a trader can speculate that the trend will proceed to the TP price generated by a certain pattern or trend will reverse its direction as it reaches 40% of the path towards the TP price.
  2. Trader can determine accurate and correct place of TP price to derive rational profit.
  3. Trader can specify the exact place of SL price. If a trader determines a wide SL price then it might perish all of the capital. If a short SL price is selected, price may reverse its direction towards the desired TP price after it touches SL price so the order is closed with a loss. SL price can be spotted precisely.

Price Action Trading Technique - Entry, Take Profit and Stop Loss Prices

  1. Trader can develop the efficiency of applied strategy if a start and an end points of a trend can be predicted thoroughly.
  2. Trader can enhance their Risk and Money management by implementing Price Action. Since traders exploit Leverage provided by brokers, they would place more orders with a higher risk to gain higher amount of profit, however, inappropriate place or time of orders causes a great deal of capital loss. Sometimes a trader may speculate that a trend may change towards the TP price when a market price proceeds towards the SL price, but this will result in “Margin Call”.
  3. Trader may consider thoroughly both directions of the trend when he/she wants to place an order after utilizing Price Action. For instance, some traders considered that the price of Gold would increase towards 2000 after it had reached the 1300, however, they did not think over a further price decline. Price of Gold decreased towards 900 and most of traders lost their capital. Trader can determine some levels on both sides that if a Market Price breaks each one of those levels then the trader can consider new order regarding recent movement.

Price Action Trading Technique - Risk and Money Capital Management to avoid Margin Call

Most suitable time

Saturdays and Sundays are the best time to analyse open orders and suitable spots for new orders.

If a trader wants to place an order on a short timeframe, or a sharp and abrupt price movement occurs, then a trader must update his/her information before the beginning of London session.

Widespread symbols

Trader should select most appropriate and prevalent pairs and commodities like:

  • Gold
  • Oil

Trader must avoid using unpopular symbols in their analysis such as those symbols that have CHF, TRL.

Financial, Tax, Interest, Importing and Exporting regulations havea significant effect on a market trend and price.

Thus, Fundamental issue has a considerable effect on a market trend rather than Technical subjects, so less important symbols have tiny or no effect on the market trend.

Suitable Platform

FXPro provides the most convenient platform which has a fine platform with a little price noise and long available history of each symbol.

Thus, traders have access to the history of a certain symbol, which is necessary when analysing on the basis of Price Action.

For instance, chart of Oil symbol on FXPro MT4 platform shows history from 2002, thus, trader can analyse market trend in different timeframes.

It is strongly recommended that a trader has 2 platforms concurrently, one for analysing market trend and another one for placing orders.

Trader can analyse more rationally when he/she does not get distracted by their open orders.

Trader must always watch the market trend and analyse the most recent trends, however, it does not mean that by any market fluctuation or movement he/she should close the order.

Most of the time TP price would be reached after some fluctuations.

Price Action Trading Technique - Trading Platform MetaTrader 4 Price Chart - Bullish and Bearish Trend

Importance of Point

The importance of price selected to be used on Price Action analysis has 3 different level: Low, Normal and High. The importance can be specified by different factors:

  1. Timeframe: The importance of analysed price on M5 and M15 is low, while price in a Weekly and Monthly timeframes has a higher importance on Price Action analysis.
  2. Confirmation: There may be multiple agreeing signals generated by some patterns or candle, thus that price has a high significance on Price Action analysis. If there is one confirmation on that price, then the importance level of that price may be normal.
  3. Overlapping: If a price trend and direction is confirmed by another tools on different timeframes, then the importance level of that price would increase.

That concludes this session, until next time and another session take care.

Linkages & Notices

You can also view the video of this session available on the PFOREX Financial Video tutorials.

You can also find the video of this session on PFOREX YouTube Channel.

PFOREX Assist app provides BEST & FREE trading signals and market analysis. PFOREX Assist is available on App Store (iOS version) & Play Store (Android version).

The PDF file of this session is also available.

PFOREX Educational materials in text and video formats are developed by PFOREX Department of Education to enhance and improve investors’ knowledge and trading skills. Due to high risks and volatile fluctuations in financial markets, traders and investors must develop their trading skills and knowledge. It is strongly recommended to apply Risk and Capital Management when trading in financial market.



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