3 Steps to Start Price Action Trading - The Profit Score

3 Steps to Start Price Action Trading

You must have listened the term, price action trading or naked trading a lot in the trading world because trading is incomplete without proper understanding of price action. If you are a beginner in price action trading then you may be confused at the level that where to start the price action trading. So, if you have decided to go with the price action trading then in this article, we are going to share three steps which will be helpful for beginner to start their price action trading career. So, lets go to these steps.

Step 1. Decide the Market and Learn the Basics of Price Action Trading

Price action trading is equally applicable in all the markets whether it is stocks, forex, commodity or crypto. In the start we do not recommend to go in all the markets at the same time instead take your first flight first. You may start from the stocks or forex. Before starting, learn the basics of stock market, why they exist, and why we should invest in the stock market. If you do not have any idea about it then educate yourself a little bit more and read our article of “why we should invest in the stock market”. If you have decided to go into the forex market then learn the foundations of the forex market, how it works and basic terminologies of it like currency pairs, going short, going long, bull vs bear market etc. This will help to set the foundations of your trading career and seamlessly you can learn how to trade the price action strategies. 

Step 2: Remove all the Indicators from your Chart

After taking the initial step of getting the stock market or forex account, you must start analyzing the market with the help of technical charts. Till now, you may have leaned a lot about the technical indicators any many traders have their screen full of indicators. Through this way they are too much focused on technical indicators that they loss the real thing that is price. Price is the only indicator on which the market runs. So, in the second step we will remove all the indicators from the trading charts. Yes, you read it right, we will remove all the indicators from the trading charts and will keep it simple and smooth. If we analyze, all indicators are based on price and providing you the second-hand information. So, instead of relying on indicators why not catch the basics of all that is price. If we follow the price then there is no need to follow any indicators. In fact, most of the time, indicators are confusing. At one time, the one indicator shows the buying signal and on the same time the other signal shows the sell signal and traders got confused what to do. These will only become a source of loss and headache. So, remove all the indicators and just follow the price which is the best indicator. Look at the example below, how a chart full of trading indicators looks confusing and the chart with out indicators and just marked key price level looks clean and tradeable. When you decided to make your trading strategies on the basis of price action only, it looks relatively simple and stress free and you can make key decision easily. 

Trading screen with indicators on it

Step 3: Educate yourself with Price Action Strategies

Now, your chart is clean and you have decided to plan your trading on the basis of price action. The next step is to be skillful and expert in price action trading. Learn the basics of price action strategies and how to read the raw charts and price action movements. You are not supposed to go into some kind of fancy systems because in trading you are not going to impress anyone or to fulfill your satisfaction. In trading, you are for making money and that’s it. Among all the trading methods that traders use to make money in the stock market or forex market, the best among all the price action strategies and this is also very simple and easy to learn as well. Don’t forget the rule of KISS in trading, keep it simple and smart.

Once you are used to see the naked charts, you can easily identify the price movements. Learn the basics of how to draw the key price level, identify the support and resistance area. How to identify the uptrend, downtrend and consolidation areas? What higher high & higher low and lower high & lower low looks like and what they indicate? How to trade the pin bars and fake out patterns in the price action trading? When to enter the trade and how to set the stop loss and profit target? Once you are expert in all of the price action trading strategies and taking profit from the stock market, forex, commodities, or crypto will be a piece of cake for you because price actions remain relatively same throughout all markets. In the below chart we can clearly see the clean chart with key levels marked on it and the trading areas based on pin bars. This is just a simple example; you can do much more than that. 

candle stick naked chart

Leave a Comment