Lesson 6 of 20 · 10 min
Price Action
Step 1
What it is
Price action means reading what candles and swings are doing directly, without leaning on indicators. Every indicator is built from price anyway.
You are looking for a change in behaviour: moves getting smaller, a new extreme that fails, a single candle that undoes the last few.
Traders use it because it keeps the chart clean and every decision tied to something they can see. The risk is that it is easy to read what you want to see, so the rules must be written down.
Step 2
See it on a chart
One last push fails, and a single candle changes the picture.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 3
The exact rules
What must be true before entry
- A move that is losing force.
- One last push to a new extreme that fails.
- A strong candle closing past the last two candles.
What volume should show
Where to enter
Where the hard stop goes
Where the target goes
What invalidates the idea
- A new extreme past the stop.
- The next candles close back through the turning candle.
When not to take it
- You cannot explain the setup in one sentence.
- The turning candle has weak volume.
- Major news is due soon, or you would be trading outside your planned hours.
- You have just taken a loss and feel the need to win it back.
Step 4
Your turn: plan the trade
After a final push up that failed, one strong candle has closed back down. Price has made a small pullback. Mark your plan.
This setup is a short. Look at the candles and the volume. Choose a line below, then tap the chart to place it. You can also drag its label or type a price.
Illustrative chart with made-up prices and tick volume, built for teaching. It is not real market data and not a trade idea.
Step 5
The trap: reading the chart you want
Without an indicator to blame, your own bias decides what you see. If you already hold a view, you will find candles that agree. Write the reason for a trade before you enter, and check it again after.
Read why journaling mattersStep 6