Price action


Price action is one of the most accurate ways of trading. Normally the change of trend is traded. There are a number of steps required to achieve the setup of this strategy:


  1. Determine the High (H)
  2. Determine the Low (L)
  3. Determine the Higher Highs (HH)
  4. Determine the Higher Lows (HL)
  5. Determine the Lower Highs(LH)
  6. Determine the Lower Lows (LL)

price-action


A down trend forms from a series of LH and LL. On the other hand, an up trend forms from a series of HH and HL. Following the diagram above, one can identify the following: L, H, HL, HH, HL. The uptrend was not confirmed becuase the next step was a LH. As soon as the price crossed below the previous HL, a short trade was opened. The downtrend followed with a series of LL, LH, LL etc. The below diagram describes the same scenario, however on the upside.


price-action



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