Introduction to the Price Action Course
Hello, traders. Welcome to Investoo.com’s Price Action course. In this first module I’m going to introduce you to Price Action Trading. I’m going to go through what Price Action trading is, and how can you profit from it. Of course, in this first introductory lesson, I’m going to tell you what you will learn in this course and how can you benefit from it. We are also going to talk about advanced traders, and why do advanced traders also need to take this course. Well, the response to this question is very easy: advanced traders need to take this course because by taking it they’re going to improve their technical system. This course is going to teach you how to interpret Price Action and how to interpret movements in price. How to read order flow behind the candles.
But let’s start with, what is Price Action trading? PAT refers to the technique of making trading decisions based on the observation and the interpretation of price alone. This means that we are not going to be using fancy indicators here. Price Action traders don’t use indicators on their charts. They focus on the information that is provided by the chart itself. They read candlesticks, and they read the information behind candlesticks. They understand what these patterns mean at certain conflicted levels in the market. This is what I’m aiming to teach you in this course. They also use dynamic zones, of support and resistance to identify key points in the market, where price is likely to bounce. Not only they read the information behind candlesticks, but we also, identify key points of supply and demand in the market where we can find excellent opportunities with great risk-to-reward ratios.
Just a reminder of what indicators are and why we don’t use them when we are talking about Price Action trading. Indicators are just mathematical calculations based on a security’s historical price fluctuations and volume. This means that indicators are, by definition, lagging. The only real indicator is price itself. Indicators aim to predict future price fluctuations by analyzing price data. This is why they are lagging instruments. The only real-time indicator is price itself, and this course aims to teach how to read it, interpret it, and based on it, make the best possible trading decisions.
Now, let’s talk about the benefits from taking this course. First of all, you are going to learn how to trade with no messy charts. Just simple and clean entries and exits based on price structure alone. This means we are not going to fill our charts with indicators and try to get entries and exits based on the setups given by the indicator. We are going to simple it down. The KISS approach, or Keep it Simple, Stupid – taught in this course will give you the necessary skills to interpret raw price action. This is what we’re aiming to do. We are aiming for you to learn how to interpret raw price action. The only skill that you need to become an excellent trader is learning how to interpret raw price action.
This course is not only for beginning traders, as we said in the beginning of this lesson. Intermediate and advanced traders can benefit from it. For example, traders with an already profitable system can use Price Action to confirm their setups. When I’m talking about traders that have an already profitable system, I’m talking about traders that use a semi-automatical technical basis, meaning that maybe they are using a moving average, and a confirmation with an oscillator or whatever system that you are using, you can also use Price Action to confirm your sales. By confirming your sales you are going to filter out the mediocre entries and only focus on high probability trades. This is the key to become a successful trader. Because by filtering out mediocre entries and exits, you are going to improve your win rate.
Another thing that this course will teach you is how to trade with risk-to-reward ratios that you didn’t know was possible. This means, for example, traders are already trading with a semi-automatic technical system. For the sake of an example, let’s use a simple moving average crossover. When they get a signal they are going to go short or long based on the crossover of the two moving average, right? But the thing about this is that because these moving averages are based in a historical price action, they are lagging. When you take the trade, the setup is already gone, meaning that the trade is already in motion. Meaning that your stop-loss is going to be larger. By knowing where these conflicting zones are, you are going to be able to anticipate any technical based semi-automatic system and get better risk-to-reward ratios on your trades. Meaning that your stop-losses are going to be tighter, because you are going to get a better entry and you are going to be able to trade with a bigger size.
Of course, when we trade with Price Action we are aiming for at least 100-pip moves and you are going to learn how to hold on to your winners for 200 plus pips. You are going to learn how to cut your losers early and improve your win rate, and how to increase your profits. So basically this is the benefits you are going to have from taking this course.
Right now, let’s go through a little example of a trade on the U.S. Dollar, Japanese Yen that I took last year in December. I’m going to show you what a messy chart versus a naked chart looks like. Now, this is the U.S. Dollar, Japanese Yen at the beginning of December. You can see that we have the Ichimoku cloud. I think we have a couple of moving averages, Well, I think this is the 200 moving averages. We have the parabolic SAR, and we have the three oscillators here at the bottom of the chart. We are not using any labels or anything like that. We are using fractals to pinpoint an exhaustion on these corrections. But you can see that it is very uncomfortable to look at, and it is a very mechanical based system, meaning that you are only using the indicators to enter the market.
Now, if we look at a naked chart, only basing yourself on levels, you can see that this is actually the same trade. From this entry at this important level to the high of the move, we have more than 200 pips. When price broke abruptly with the next level, and tested it back, we went long again, and as you can see both of our positions are now in the money, or are winning trades with a locked in profit of around 80 pips or so.
So this is the difference between a semi-automatic trading system, based on indicators, and Price Action trading. With Price Action you are going to be basing your sales solely on price structure, market structure, order follows, and of course the information that are given to you by price itself, or the candlestick, for that matter.
Thank you for joining us on this course and I’ll see you on the next lesson.