What is price action?


Price action means price action, it is a trading technique based on analyzing the price of an asset without considering anything else.

When analyzing an asset we can find countless indicators, oscillators and averages, the operators who make decisions through price action techniques, do not take them into account at all, only the candles.

Trading and analyzing with price action is doing it with nothing, all decisions are made based on price movements.

There are many variables, there are those who defend at all costs that only the analysis through the price can be considered price action, others that some average can be included in the price, and others that the volume can be added. We could spend hours giving our opinion on the different modalities.

Consider that price action when we do not have indicators, personally, I like to add some average and volume, and if I had to add something external, it would be volume. As we can see, price action strategies are not defined in a rigid way, they can and should be adapted to our way of being.

Traditional technical analysis tries to look for universally valid points, levels, structures without considering further. With the analysis based on price action, what is sought is to understand what is happening in the market so that the price of an asset goes up or down. But before that, you have to know how the market works, in its most basic aspect. Let’s start from the basis that it is nothing more than a struggle of forces between buyers and sellers. In an “ideal” structure we would be talking about a balance between the two with 50% on each side. Once this balance is broken, we enter into a power struggle to gain control of the market. But who are both sides? In today’s markets, 90% of operations are carried out by “institutions”, understood as such not by large companies, but by operators capable of “moving the market”. This does not mean that the small investor is sold to these institutions, but rather that he must learn to operate like them.

On the other hand, more than 70% of the trades are made through automatic systems. This is robots. Without going into assessing the suitability of these types of operators, we have to bear in mind that robots, not even the most advanced ones, take into account any news or external event beyond the price of an asset. Therefore, if we want to learn to operate like robots, we must ignore everything that takes us away from the graph. If the price of an asset plummets, we should not care why it does so, be it an attack or a macroeconomic figure. All we need to know is that sellers have taken over the market, for whatever reason.

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