What Is Price Action? Price Action Explained At CAPEX.com

Most people would have price action explained as being the way in which a security’s price changes over time. It’s a method by which traders use data for trading a range of assets from stocks to commodities and Forex pairings. Such a form of technical analysis focuses on how the price of a security has changed in the past to make future decisions about whether to buy or sell that security. Such a procedure is known as price action trading and it’s something that can successfully be done with our CFDs here at CAPEX.

Price action works in a different way from other trading methods: you won’t have to rely on specialist knowhow such as a moving average or Bollinger bands. Instead, you’ll be focusing on the raw price data and hoping to find some kind of order from within the chaos. As always, success is never guaranteed but price action should always be taken into account.

Using price action

Now that you have a basic overview of price action and how it can be used in trading, let’s move on to the practicalities of incorporating it into your market speculation.

Price action trading is based on being able to spot the key patterns that identify when you should enter or exit your trade. You should be able to spot when a breakout is taking place as this means that the price of a security is starting to behave in different ways to what has occurred previously. This is the basis of price action trading as you’re ultimately trying to spot unusual patterns in the price data – whether good or bad for the action you plan to take.

Candlestick charts, like the ones you can use at CAPEX, offer you a particularly strong way of identifying price trends. This is because you’ll be able to visualize the price movements through displays of the open, high, low and close values. Understanding what certain candlestick patterns mean such as the Harami cross and the three white soldiers are an excellent way of building expectations for where the value of a security is heading next.

We can’t answer the question of “What is price action?” without taking a look at some of the best price action strategies. The first thing that you can do is to try and get your price data as clearly presented as possible. This means removing most of the other kinds of technical data that can clog up your display. As a result, you should be left with the basic price bars of the chart and will be ready for when certain patterns emerge.

Above all, successful price action trading strategies will rely on you correctly identifying patterns and predicting where they could head next. The ascending triangle pattern has proven to be particularly useful as it can predict potential breakouts. This is because the pattern suggests that several efforts have been made to create a breakout and that the next major buying pattern could be more successful. Also, don’t forget that you can learn trading at the CAPEX Academy and test new strategies when trading with a demo account, which we provide with all accounts at CAPEX.

Now that we’ve identified the key features of price action, it is easy to see why it is so beloved by traders. After all, price action trading gives you a fast way to find better entries and exits compared to relying on technical indicators. It’s also true that this method of trading requires a fair amount less research time and it’s nicely flexible to be used in conjunction with other strategies.

At CAPEX, we give you a simple way to put your price action trading into practical use. This is because we feature a range of detailed price charts that help you plot the real-time price changes and identify what breakouts or triangles there may be in the price data. All of which should give you a fast and simple way to find those entry and exit points that give you maximum value on your trades.

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