Price action is a method of analyzing and interpreting the movements of a security's price over time. It involves studying the patterns and trends in price movements without relying on technical indicators or other external factors.


Price action traders typically use candlestick charts to analyze price movements, as they provide a detailed visual representation of price action over a specific time period. They look for patterns and trends in the price movements, such as support and resistance levels, trend lines, and chart patterns, to identify potential trading opportunities.


The key principle behind price action is that price movements reflect all the information that is currently available in the market, including economic data, news events, and other market factors. Therefore, by analyzing the price movements, traders can gain insights into the sentiment of the market and make informed trading decisions.


Price action trading is often used in conjunction with other technical analysis techniques, such as trend analysis and support and resistance levels, to confirm trading signals and identify potential entry and exit points. It is commonly used in trading of stocks, currencies, commodities, and other assets.


One of the advantages of price action trading is its simplicity and flexibility. It does not rely on complex technical indicators or other external factors, which can be subject to interpretation and may provide conflicting signals. Instead, it focuses on the raw price data and the patterns and trends that can be observed directly on the chart.