So how do we trade using price action? It essentially involves learning to identify and trade P.A. setups or patterns from key levels in the market. If that sounds unfamiliar or confusing, don’t worry, I’ll explain it shortly. But first, we need to cover a few more points:

Because market participants tend to react similarly to global economic variables, a market’s P.A. often repeats itself in various patterns. These patterns, known as price action trading strategies, can be traded in many different ways. These recurring price patterns or setups reflect changes or continuations in market sentiment. In simpler terms, by learning to recognize these price action patterns, you can gain “clues” about where the market’s price is likely to move next.

The first step to start P.A. trading is to remove all unnecessary elements from your charts. Eliminate indicators, expert advisors, and everything else except the raw price bars. I prefer using candlestick charts because they convey market price data more dynamically and effectively.

I prefer simple black and white charts, as shown below. Once you’ve removed all the indicators and other unnecessary elements from your charts, you can start identifying key chart levels and looking for price action setups to trade from.