Price Action Analysis

One of the only two "leading indicators" in stock market trading is price action (the other one is live volume). Here we discuss the many facets of price action and how it affects your trading. To make it simple, price action is the movement of any asset's price over time. Price action typically happens in patterns over time, and reverses (or continues) at areas of liquidity aka "Support and Resistance." An example would be a trading zone, or a stock's price interacting with specific moving average, etc.

Volume is the second leading indicator in trading. Modern stock trading algos are more complicated than ever and can hide pretty much anything. Unfortunately, today's trading algorithms are designed to trick you into making a bad trade decision, then stopping you out, so that your purchased asset can be acquired by the buyer at a lower price. This is one of several reasons that you don't base trading decisions on "open" volume sticks.

The language of candlesticks and candlestick patterns. Sentiment tells us what the overall trend of a stock is and how those trading it are feeling about where price currently resides.

Value areas are "Price Zones" where price can or should reverse. Value areas are basically horizontal lines on a chart, at specific price points, where previous price action shows that the stock may change directions at these places. These areas or "price zones", are a critical place that all experienced stock traders routinely identify and have a "Plan A" and "Plan B" for these zones.

The world of indicators is vast and customizable. You use what works for you. From MA's (moving averages), RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence), MA Crossovers and hundreds of others, the only person who can determine what works best in your stock trading is you - through education and experience.