Price action trading strategies are a method of trading that uses an analysis of price movement to form the basis of a trading method. This style of trading works on everything from a 1hr intraday chart all the way to the monthly chart.
Since all the moves we see on a chart is the movement of price (even indicators need price to move first), it makes sense that beginners to advanced traders alike, learn how to use price action as setups for their strategies not only in Forex, but Futures, Stocks, and commodities.
Before I give you (free) the 12 best price action trading strategies I know of (there may be others that you find success with but these are mine), let me say that you don’t need to purchase a book on price action if you want to learn it.
#1: Trendline Trading Strategy
This price action trading strategy is extremely simple to use. The secret to the trendline is the fact that price responds and bounce off trendlines and if you know how to draw trendlines, you can anticipate where price is going to bounce off the trendlines and take trades based on that.
Just ensure that when using a trendline strategy, you are consistent in how you draw them. Another important note is that the more times a line is tested the more apt it is to break, even for a brief period of time.
Also, it is quite common for a trend line to break and then be retested from the other side. If you see price pulling back, don’t be alarmed as it is just the pattern of price occuring.
#2: Trendline Breakout Forex Trading Strategy
The trendline breakout Forex trading strategy works really well with the Trendline Trading Strategy. Think of it as the complete opposite of #1 above
Think of having a trendline on price and you’ve been looking to take continuation trades off of it.
With the trendline trading strategy, you are trading the bounce up or down on the trendlines. This means that price respects the trendline.
With the trendline breakout Forex trading strategy, the rules come into play when the trendline is interesected or broken by price.
This means that the current trend has now changed so you need to be looking to exit your trades that you have based on the trendline trading strategy and now open a trade in the opposite direction based on the trendline breakout forex trading strategy.
#3: Support And Resistance Forex Trading Strategy
This support and resistance Forex trading strategy is also simple but a universal trading system that is applicable to all markets from Forex to any other market.
Traders watch support and resistance levels like eagles ready to strike. When price behaves in a manner that tells them the market is going to bounce off that support level and head up or price is going to reverse and head down from that resistance level, then the dive in with orders.
The result is that you see price bouncing off support and resistance levels. The secret to this trade and to increase the probability of either support/resistance holding/breaking, by using price action analysis that will give you a heads up of the probably outcome. (I say probable…not guaranteed!)
#4: Support Level Breakout Forex Trading Strategy
So you monitored a support level but it didn’t hold so you couldn’t use the support and resistance Forex trading strategy. No problem. You have more than one price action structure trading method and this one will help you trade the break of support.
The great thing about this strategy is that there will be times that you’ve caught the change from an uptrend to a downtrend after the major support level has broken. These types of trades can end up making up a bulk of your trading profits for the year.
#5: Resistance Level Breakout Forex Trading Strategy
When resistance is broken, price is moving up and could very well be aiming for brand new highs. Or, as the flipside to support breaking, you may be catching a downtrending market rolling over into an uptrend.
There will be price action patterns that will show you the probability of these levels holding or breaking. Often times though it will be hidden in the daily price action and you will have to drop to a lower time frame to really monitor for patterns that can help you set your trade up.
#6: Best Trading Strategy For All Timeframes
This price action trading strategy is also built on the support and resistance. It is a must-know forex price action trading strategy for all traders.
Is it really the best though? I don’t think there is a best in trading but there are some basics that play out on virtually every chart and time frame. Knowing these can help you jump into some of the best setups that can lead to some serious gains in your trading account.
#7: Multi-Timeframe Trading With Trendline Trading Strategy And 123 Pattern
This pattern applies a really neat trick by using the 123 pattern (also called 1 2 3 reversal) as a signal to buy or sell using the trendline trading system. It comes compliments of Vic Sperandeo (trader Vic) and like all good price action setups, it utilizes the mechanics behind the market for its criteria.
This is for those cautious traders that do not like to trade the bounce of the trendline trading system just yet but need the breakout of the 1-2-3 pattern to get into a trade. One reason I like it is because you have an obvious area for your stop loss and the trade entry is determined by breaking of support/resistance.
#8: Daily Pin Bar Forex Trading Strategy
The daily pin bar forex trading strategy is an awesome strategy iF you are fan of trading the daily candlesticks, especially pin bars. We all know how powerful pin bars as reversal candlesticks when they form especially around areas of support and resistance levels.
Why?
Because forex traders take notice and if the high or the low of the pin bars get broken, the chances of the market moving in the direction of the breakout is increased significantly and you can make a lots of profitable pips applying this method.
#9: 123 Forex Trading Strategy
Very simple yet a solid trading system based on the 123 chart pattern. Every forex trader should know this trading system.
#10: Inside Bar Forex Trading Strategy
This price action forex trading strategy is based only on one bar, the inside bar pattern, which is a one candlestick pattern. When inside bars form, they indicate a period of low volatility as well as indecision as traders are undecided where the market will go next.
A breakout of the high or the low of the inside bar often results in the market moving enermously in the direction of breakout.
So you can say that when the inside bar forms, its is alike coiled spring ready to strike. The vital key is that these must setup in an area where we can expect a level of supply/demand imbalance. Look for these in areas of clear support and resistance AND during the 123 trading method.
#11: The Railway Tracks Chart Pattern Forex Trading Strategy
This is another interesting price action trading strategy where you have two candlestick of almost the same lengths but opposite in intention, one is bearish while the other one is bullish or vice versa.
When you see this pattern, you should know that the trend may be changing. And if you see this forming in support and resistance levels, they really do form a good trade signal. Imagine taking into consideriation parts of all these strategies and then seeing this setup occur?
#12: Support Turned Resistance-Resistance Turned Support Forex Trading Strategy
This price action forex trading system may confuse newbies a bit but once you fully understand how it works, then it becomes are really powerful forex trading system.
Here is the rationale behind this strategy
Sometimes you will see market move in a downtrend and break the support levels and it goes down for a while only to return back up to the support levels that was just broken. Guess what the broken support level becomes now? A Resistance level. So that previous broken level now becomes a resistance level from which price hits it and bounces back down. If you see a setup like a railway track or inside bar, is that a good trade for you?
For a buy trade, its the opposite of the above…market moves up, breaks resistance levels and continues up and starts to fall back down to the resistance level it just broke. This previous resistance levels will usually now act as a support level. That’s where you look to take a buy trade.
Intraday Price Action Trading Strategies
Some people would like to know if these price action trading strategies can be used intraday. You certainly can use them on any time frame but I find these work better on higher time frame chart.
I would say that one of the best ways to handle these setup is as follows:
Using a higher time frame chart, look for one of the strategies to start playing out (example would be support holding)
Drop down to an intraday chart such as the 1hr and look for inside bars, decedning trendline breaks, railway tracks, pin bars…anything that gives an indicator that support will be holding. We are not day trading here!
Enter the trades using your trading plan and proper risk protocols.
Are These High Probability Trading Strategies?
In trading, what does high probability even mean? That just seems to be the buzzwords that marketeres like to use to sell their trading systems.
There is only probability. Your wins and losses will come in a random distribution and that is why all the big players will tell you: RISK MANAGEMENT COMES FIRST!
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