Price Action Trading – Learning How To Master The Craft
Since quite some time now I’m fascinated by a thing called Technical Analysis or more specifically Price Action Trading.
We all heard of it or seen it on TV probably on CNBC or some other business news channel, a guy talking about a specific stock or commodity.
Next he’s pulling up this chart and drawing some seemingly random lines on it. Making predictions of future price movements and talking some gibberish that sounds kind of impressing but where we have no idea what it really means.
So as I’m a very curious person by nature I started to read more about it, bought a book or two went through countless YouTube videos and even took an online course in order to see if this makes any sense to me and if this could be something that could earn me some real money.
So I thought before I move my hard earned cash into some of those “trading opportunities”, I’ll make a video-series of me trying to explain these techniques and applying them to the real world using a paper trading account.
What is a paper trading account? Well its basically a trading account using fake money, so you can try out stuff without the risk of loosing it all, for now…
Making these videos will help me better understand what I’m doing, see mistakes i make and hopefully getting some feedback from some of you who already have had success in the trading sphere. So I can get better and maybe we can learn from each other. If, on the other hand, this is as new to you as it is to me, just follow along and we can learn this stuff together.
So this is by no means financial advice, I’m just an idiot trying to figure this out and basically recording this for myself for future reference. Some kind of trading diary if you will.
I’m trying to make these videos on a regular basis analysing at least one stock, commodity or crypto in each video.
Why Price Action Trading?
Today I’m going to try to explain what i have learned about the basics of Technical Analysis and Price Action Trading in specific starting with the why – why price action trading?
Price action trading is a method of technical analysis that relies on analysing price data to make trading decisions. The advantage of price action trading is that it can be used on basically all tradeable assets, whether that be stocks, forex, commodities or crypto currencies, it doesn’t matter, as the only focus is on price action. It also works on any time-frame from Monthly down to the 5 minute time frame. It’s a versatile approach that can be used to trade a wide variety of market conditions also.
The key principle is that all relevant information is reflected in price. This means that there is basically no or very limited use of indicators or fundamental analysis. Instead, there is a heavy reliance on past price data.
Its a very reactive approach that focuses on identifying and trading mostly market reversals or break outs. You look for patterns in price data that can be used to anticipate where the market is likely to turn.
