Price Action (Price Action) - The universal language of the market and Forex trading tips used by professional traders

Successful Forex traders often mention Price Action as the foundation of sustainable profits because it involves reading the actual movement of prices on the chart without relying on lagging indicators. This article will help you understand what Price Action is and show you how to use it until you become more skilled.

What is Price Action? The Behind-the-Scenes of Chart Reading

Simply put, Price Action is “price behavior,” but deeper meaning involves the art and science of understanding market behavior through observing what prices are doing right now.

This concept is based on the economic principle that “Price reflects everything,” meaning that information, news, policies, market sentiment, and even the fears and greed of millions of people are absorbed and manifested in the current price. Therefore, studying price movements is equivalent to studying all market data simultaneously.

Why is it better than Indicators — The Major Issue of Lag

To see the difference, compare it with common technical indicators like RSI, MACD, or Stochastic.

The main problem is lag. For example, a 50-day Moving Average is calculated from past data of 50 days, so the signals you see are based on old information, not what’s happening now. In fast-changing markets, waiting for an indicator to compute can mean entering too late.

In contrast, Price Action involves reading the “language” of the market in real-time. When a clear Price Rejection signal occurs, experienced Price Action traders recognize it immediately, while indicator users still have to wait for several candles before a signal appears.

Key Components You Must Know Before Trading

Candlesticks and the Stories They Tell

Candlestick charts are the most suitable tool for analyzing Price Action because each candle tells the story of the battle between buyers and sellers.

Main components of a candlestick:

• Open — the start of the battle during that period
• High — the highest point buyers pushed the price
• Low — the lowest point sellers pushed the price
• Close — the final result of the battle, indicating who won in that candle

Colored candles (green/white = buyers win, red/black = sellers win), along with long wicks/shadows, show how price was pushed in one direction but then reversed. This is the language the market uses to communicate with us.

Trend, Support, and Resistance

Trend is the main direction of price — uptrend (making Higher Highs and Higher Lows), downtrend (Lower Highs and Lower Lows), or sideways.

Support and Resistance are zones where fierce battles occur. Support is where buyers say, “It’s cheap, I buy here,” while resistance is where sellers say, “It’s expensive, I sell here.” When price breaks through resistance, it often retests that level, which then becomes support.

Candlestick Patterns — The Market’s Language

Pin Bar — a candle with a long wick and small body, indicating a clear price rejection. Price tried to move in one direction but was strongly pushed back.

Engulfing — a single candle that “engulfs” the previous one entirely, signaling a potential change in momentum. Either buyers or sellers regain control in one candle.

Inside Bar — a small candle contained within the previous candle’s range, signaling consolidation. After this, price may break out in either direction.

3 Proven Strategies Used by Professional Traders

Strategy 1: Breakout

Wait for price to “break out” of a support/resistance zone or sideways range. When a candle closes outside the zone, it indicates a decisive move by one side.

Trade in the direction of the breakout: buy if it breaks resistance, sell if it breaks support. Beware of False Breakouts — when price appears to break but then reverses. The safer approach is to wait for a retest of the broken level with clear Price Action signals, confirming the breakout.

Strategy 2: Trend Following and Pullbacks

This is the safest and most popular strategy because it aligns with market momentum. In a strong uptrend, price doesn’t go straight up; it moves in impulses and pauses (pullbacks).

Method: Confirm the main trend on larger charts (Daily/Weekly). Look for key support levels—old highs, Fibonacci retracement (50%-61.8%), or trend lines. When price pulls back to these levels, look for reversal signals like Bullish Pin Bar or Bullish Engulfing to enter.

Advantages: Better entry prices (buy on dips), clear stop-loss levels, and favorable risk-reward ratios.

Strategy 3: Reversal

The most difficult but potentially most rewarding. It involves predicting that the current trend is ending and a new trend is about to start.

Note: Only consider this when the trend has been strong (weeks or months) and shows signs of losing momentum, such as failing to make new Higher Highs or sharp reversals. Look for strong Price Action signals like large Bearish Engulfing or Head and Shoulders patterns. The safest entry is after a break of structure—when higher lows are broken, indicating sellers have taken control.

5 Advanced Techniques for Professional Trading

1. Larger Timeframes Are More Powerful

This is a secret often overlooked by beginners. Signals on 1-minute charts may be noise, while signals on Daily or Weekly charts carry more weight.

Start with the big picture: analyze Weekly/Daily charts to identify main trends and key support/resistance zones. Then zoom into H4 or H1 for precise entries. Always trade in the direction of the larger trend.

2. Context > Pattern

Memorizing “Pin Bar = Reversal Signal” reduces understanding. A Pin Bar in a strong trend may be meaningless, but a Pin Bar (Bearish) at weekly resistance after a long rally is a powerful sell signal.

3. “Less but Better” — Master Price Action with Fewer Trades

No need for many tools or frequent trading. Be patient and wait for “everything to align” — good overall context, at key support/resistance, with clear Price Action signals. Just 3-4 high-quality trades per month can be enough to generate income.

4. Keep a Trading Journal

Our brains tend to remember wins more than losses. Take screenshots of your setups before entry (with reasons) and after exit (profit or loss). Review weekly to learn and improve.

5. Risk Management Is Key — Not Guesswork

No strategy is 100% accurate. Sometimes you lose. The strength of Price Action is having very clear Stop Loss levels. Traders who win 50% of the time but make twice as much on winners (Risk:Reward 1:2) will survive longer.

Starting from Zero — Practical Steps

Step 1-2: Choose a platform and practice reading naked charts

Find a platform with clean, simple charts, low spreads. Price Action analysis requires calm, no indicators. Pick one asset (e.g., EUR/USD or gold) and start with Daily charts.

Draw support/resistance zones (as zones, not lines), identify trend, look for Price Action candles, repeat until patterns emerge.

Step 3: Create a Trading Plan

Set clear rules:

• Entry conditions: e.g., “Buy on Bullish Pin Bar at Daily support in an uptrend”
• Stop Loss: where to place it (below the Pin Bar)
• Take Profit: target levels (next resistance) or risk-reward ratio (1:2)

Step 4-5: Practice on demo account first, then gradually move to real trading

Don’t rush. Use a demo account until you see consistent positive results. Then start small with real money. The goal isn’t huge profits immediately but following your plan and managing emotions.

The Truth in Thailand: Price Action and Forex

Price Action isn’t a shortcut or a technical tool; it’s a skill, like learning a new language.

Start with “basics” (candles, trend, support/resistance), move to “conversation” (reading signals and making decisions), and finally achieve “fluency” (consistent profitable trading).

The core values of Price Action trading are “simplicity” (no need for complex tools), “speed” (read in real-time), and “flexibility” (applicable across all assets and timeframes).

If you’re ready, start practicing reading Daily charts today. Gradually understand market movements until you “speak the language” of the market. Then you’ll be ready to trade like a professional.

Investing involves risks and may not be suitable for everyone. Study thoroughly before trading with real money.