Mastering Price Action Trading - The Best Strategies I’ve Learned Over a Decade

When I first began trading, I fell into a trap many beginners face: overcomplicating everything. My charts were cluttered with indicators—moving averages, RSI, Bollinger Bands, MACD—you name it, I had it. And yet, no matter how many tools I added, my results didn’t improve. That’s when I discovered Price Action Trading, and it completely changed how I approached the markets.

Price action is more than just a trading method; it’s about understanding the story the market is telling. Instead of relying on lagging indicators, you learn to read the raw movement of price. Over the years, I’ve refined three powerful price action strategies that consistently deliver results. Whether you’re a beginner or a seasoned trader, these strategies can help you cut through the noise and trade with confidence.

In this guide, I’ll walk you through these strategies in detail, sharing the nuances and insights I’ve gained from years of experience. Let’s dive into the world of price action trading.

What is Price Action Trading?

At its core, price action trading involves analyzing price movements on a chart without relying on technical indicators. It’s about observing patterns, key levels, and how the market reacts to them.

Why Choose Price Action?

• Simplicity: No cluttered charts or overcomplicated strategies.
• Timeliness: Unlike indicators, which lag behind price, price action gives you real-time insights.
• Universality: Price action works across all markets—forex, stocks, commodities—and timeframes.

The Fundamentals of Price Action Trading

Before diving into specific strategies, it’s important to understand the building blocks of price action:

1. Support & Resistance

These are key levels where price has historically reversed or paused.

• Support: A level where price tends to stop falling and reverse upward.
• Resistance: A level where price tends to stop rising and reverse downward.

2. Candlestick Patterns

Candlesticks reveal the market’s emotions, showing when buyers or sellers are in control.

• Shooting Star: Signals bearish rejection at resistance.
• Hammer: Indicates bullish rejection at support.

3. Market Structure

Price moves in trends:

• Uptrend: Higher highs and higher lows.
• Downtrend: Lower highs and lower lows.
• Sideways: Price moves within a range.

Understanding these elements is crucial for implementing the strategies I’ll discuss next.

The 3 Best Price Action Strategies

Let’s explore the strategies that have helped me navigate the markets with clarity and confidence:

Strategy 1: Break of Structure

This strategy focuses on identifying shifts in market structure, signaling when it’s time to enter a trade.

How It Works

1. Identify a Key Level on the Daily Chart
• Look for price approaching significant resistance (for shorts) or support (for longs).
2. Switch to the 4-Hour Chart
• Observe the trend. In an uptrend, price forms higher highs and higher lows.
3. Wait for a Structure Break
• Look for the market to form a lower high and lower low, indicating a shift to bearish momentum.
4. Enter the Trade
• Place a sell stop order below the swing low (for shorts) or a buy stop order above the swing high (for longs).
5. Set Your Stop-Loss and Take-Profit
• Stop-Loss: Place it just above the swing high (for shorts) or below the swing low (for longs).
• Take-Profit: Target the nearest swing low or high.

Example: Gold Trade

• Daily Chart: Price breaks below support.
• 4-Hour Chart: Market initially forms higher highs and lows, then shifts to lower highs and lows.
• Execution:
• Short entry below the swing low.
• Stop-loss above the swing high.
• Take-profit at the nearest swing low.

Strategy 2: Price Rejection at Key Levels

This strategy helps you time your trades by focusing on how the market reacts to key levels.

How It Works

1. Highlight Key Levels on the Daily Chart
• Identify areas where price has reversed in the past.
2. Observe Retests on the 4-Hour Chart
• Wait for the price to retest the level.
3. Look for Price Rejection
• Watch for candlestick patterns, such as:
• Shooting Star: Signals bearish rejection.
• Hammer: Signals bullish rejection.
4. Enter the Trade
• Short entry: After bearish rejection at resistance.
• Long entry: After bullish rejection at support.
5. Set Stop-Loss and Take-Profit
• Stop-Loss: Above the rejection candlestick’s high (for shorts) or below its low (for longs).
• Take-Profit: Target the nearest swing high or low.

Example: USD/JPY Trade

• Daily Chart: Price approaches resistance.
• 4-Hour Chart: Shooting star forms at resistance.
• Execution:
• Short entry below the candlestick’s low.
• Stop-loss above the candlestick’s high.
• Take-profit at the nearest swing low.

Strategy 3: Advanced Break of Structure

This variation refines the first strategy, offering earlier entries with reduced risk.

How It Works

1. Confirm the Daily Trend
• Is the market in an uptrend or downtrend?
2. Focus on Key Levels
• Observe resistance for shorts or support for longs.
3. Look for Early Signs of Reversal
• On the 4-hour chart, watch for bearish candlesticks at resistance or bullish candlesticks at support.
4. Enter the Trade
• Enter after the candlestick rejection, aligning with the daily trend.
5. Set Dual Targets
• First target: The nearest swing high or low.
• Second target: The extreme swing high or low.

Example: EUR/USD Trade

• Daily Chart: Downtrend.
• 4-Hour Chart: Price retests resistance and forms a bearish engulfing pattern.
• Execution:
• Short entry after rejection.
• First target at the nearest swing low.
• Second target at the previous extreme low.

Trade Management - Locking in Profits

Managing trades is just as important as entering them. Here’s how I do it:

1. Trailing Stop-Loss

• Move your stop-loss as the price forms new swing highs (for shorts) or lows (for longs).

2. Scaling Out

• Close part of your position at the first target to secure profits.
• Let the remaining position run to the second target.

3. Stick to Your Plan

• Avoid moving your stop-loss out of fear or greed.

Conclusion

Trading doesn’t have to be complicated. By focusing on price action, you can cut through the noise, simplify your charts, and make better decisions. The strategies I’ve shared—Break of Structure, Price Rejection, & Advanced Break of Structure—have helped me consistently grow my account.

If you’re ready to trade with confidence, start practicing these strategies today. The market is always telling a story—price action will teach you how to listen.