Pure Price Action Defined

[sdtrader 10]

Most of you have heard the term, "Pure Price Action" many times and probably believe it to be a great method of trading. First let me clarify that there is no argument here. We trade "Pure Price Action" everyday, however we take it many steps further. For you to truly understand price action you should understand that it is nothing more than a painted picture of many things. Trading psychology and Supply and Demand are the most important things within price action. If we ask ourselves why price moves in any given direction there is always one answer..... because of the equilibrium of Supply and Demand. If the equilibrium is off, supply or demand will create balance once again which causes price action candles, bars or other chart types to display a trend. If the equilibrium is in balance then we will show sideways movement.

 

Every candle, bar etc. represents thousands of people making a decision on the value of a particular instrument. Learning how to properly analyze this psychology is key. We then have the ability to use pre-defined trading strategies to capitalize on the markets. We focus on the imbalances in price and locate the highest probability areas in which the equilibrium is off. This gives us the ability to locate supply and demand on multiple time frames. Using pre defined trading methods, we can now use pure price action to give us exact entry, stop, and targets.

[BlueHorseshoe 10]

Using pre defined trading methods, we can now use pure price action to give us exact entry, stop, and targets.

 

 

That's really great - I'm so pleased for you. Now where do we fit in to this picture?

 

BlueHorseshoe

[sdtrader 10]

Thank you.

Your first step should be to learn about the mechanics of supply and demand on a price chart. This will take some time so please be prepared. After you have learned how to locate these areas, you will want to defiine an entry technique for each trade. This rule must be in place for every trade. The next step will be to define your risk tolerance which will then define your entry from your stop price. Last you will want to learn your technique for targets. There are many different techniques and there is not one right way. We recommend choosing by relating to your personality. For example if you are a patient trader you may want to take less trades with larger gains, or if you are someone that likes to place trades you should consider smaller profits with more entries.

While we understand this is very vague, please understand we can not teach supply and demand in an article. If you have questions please feel free to send us a message via private message or email. Please look for future articles that will describe some of these techniques in detail. First step is learning what the underlying of price action is. Hopefully this helps and we look forward to posting more articles regarding these mentioned.