• Nial Fuller

    NIAL FULLER Nial Fuller
    Professional Trader, Author & Coach

    What Is Price Action Trading ?

    1- The definition Of Price Action trading

    2- Trading with “Messy” Vs “Clean” Charts

    3- How to identify trending and consolidating markets using price action

    4- How to trade with Price Action trading strategies

    5- How to use chart confluence and Price Action signals

    The Definition of Price Action Trading

    Price Action Trading (P.A.T.) is the discipline of making all of your trading decisions from a stripped down or “naked” price chart. This means no lagging indicators outside of maybe a couple moving averages to help identify dynamic support and resistance areas and trend. All financial markets generate data about the movement of the price of a market over varying periods of time; this data is displayed on price charts. Price charts reflect the beliefs and actions of all participants (human or computer) trading a market during a specified period of time and these beliefs are portrayed on a market’s price chart in the form of “price action” (P.A.).

    Whilst economic data and other global news events are the catalysts for price movement in a market, we don’t need to analyze them to trade the market successfully. The reason is pretty simple; all economic data and world news that causes price movement within a market is ultimately reflected via P.A. on a market’s price chart.

    Since a market’s P.A. reflects all variables affecting that market for any given period of time, using lagging price indictors like stochastics, MACD, RSI, and others is just a flat waste of time. Price movement provides all the signals you will ever need to develop a profitable and high-probability trading system. These signals collectively are called price action trading strategies and they provide a way to make sense of a market’s price movement and help predict its future movement with a high enough degree of accuracy to give you a high-probability trading strategy.

    “Clean” Charts vs. “Messy” Indicator-laden Charts

    Next, to demonstrate the stark contrast between a pure P.A. chart and one with some of the most popular trading indicators on it, I have shown two charts in the examples below. The chart on the top has no indicators on it, there’s nothing but the raw P.A. of the market on that chart. The bottom chart has MACD, Stochastics, ADX and Bollinger Bands on it; four of the most widely used indicators AKA “secondary” analysis tools as they are sometimes called:

    The image example below shows a clean price action chart, with no mess, and no indicators, just pure price bars:

    price action diagram 1

    The image example below shows a messy price action chart, with lots of clutter, indicators and mess:

    price action diagram - messy 1

    It’s worth pointing out how in the indicator-laden chart you actually have to give up some room on the chart to have the indicators at the bottom, this forces you to make the P.A. part of the chart smaller, and it also draws your attention away from the natural P.A. and onto the indicators. So, not only do you have less screen area to view the P.A., but your focus is not totally on the price action of the market like it should be.

    If you really look at both of those charts and think about which one is easier to analyze and trade from, the answer should be pretty clear. All of the indicators on the chart below, and indeed almost all indicators, are derived from the underlying P.A.. In other words, all traders do when they add indicators to their charts is produce more variables for themselves; they aren’t gaining any insight or predictive clues that aren’t already provided by the market’s raw price action.

    Examples of some of my favorite price action trading strategies:

    Next, let’s take a look at some of the price action trading strategies that I teach. Note that I’ve included a “failed” trade setup because not every trade will be a winner; we aren’t here to show you “perfect” past trading results…we are here to teach you in an honest and realistic manner.

    In the image example below, we are looking some of my favorite P.A. trading strategies:

    price action strategies diagram

    Determine a market’s trend using price action

    One of the most important aspects of learning to trade with P.A. is to first learn how to identify a trending market versus a consolidating market. Trading with the trend is highest-probability way to trade and it’s something you HAVE TO learn how to do if you want to stand a chance at making serious money as a trader.

    The charts below shows how to use price dynamics to determine a markets trend. We consider a market to be in an uptrend if it is making Higher Highs and Higher Lows (HH, HL) and a downtrend is Lower Highs and Lower Lows (LH, LL).

    In the image example below, we can see how higher highs and higher lows signal an up-trend in a market:

    uptrending price action diagram

    In the image example below, we can see how lower highs and lower lows signal a down-trend in a market:

    downtrend price action diagram

    Determine Trending VS. Consolidating markets using price action

    As we discussed earlier, P.A.or “price action trading analysis” is the analysis of the price movement of a market over time. From our analysis of price movement we can determine a market’s underlying directional bias or “trend”, or if the market has no trend it is said to be “consolidating”…we can easily determine whether a market is trending or consolidating from simply analyzing its P.A.. We saw how to determine a market’s trend above, to determine if a market is consolidating we just look for an absence of the HH, HL or LH, LL patterns. In the chart below note how the “consolidating price action” is bouncing between a horizontal support and resistance level and is not making HH, HL or LH, LL but is instead going sideways…

    The image example below shows a market moving from a consolidation phase to a trending phase:

    consolidation price action diagram

    How to Trade with Price Action Trading Strategies

    So how exactly do we trade with price action? It really boils down to learning to trade P.A. setups or patterns from confluent levels in the market. Now, if that sounds new or confusing to you right now, sit tight and I will clarify it soon. First we need to cover a couple more things:

    Due to the repetitive nature of market participants and the way they react to global economic variables, the P.A. of a market tends to repeat itself in various patterns. These patterns are also called price action trading strategies, and there are many different price action strategies traded many different ways. These reoccurring price patterns or price action setups reflect changes or continuation in market sentiment. In layman’s terms, that just means by learning to spot price action patterns you can get “clues” as to where the price of a market will go next.

    The first thing you should to begin P.A. trading is to take off all the “crap” on your charts. Get rid of the indicators, expert advisors; take off EVERYTHING but the raw price bars of the chart. I prefer to use candlestick charts because I feel they convey the price data of the market more dynamically and “forcefully”, if you are still using classic bar charts and want more info on candlesticks then checkout this candlestick trading tutorial.

    I like simple black and white charts the best, as you can see below. In metatrader4 you simply right click on the chart and adjust the “properties” of the chart to get it looking like mine below. If you want more info on how to setup your MT4 trading platform checkout this metatrader 4 tutorial.

    After you’ve removed all the indicators and other unnecessary variables from your charts, you can begin drawing in the key chart levels and looking for price action setups to trade from.

    The image example below shows examples of some of the trading strategies I teach in my price action trading course. Note the key support / resistance levels have been drawn in:

    price action setups 1

    How to trade price action from confluent points in the market:

    The next major step in trading P.A. is to draw in the key chart levels and look for confluent levels to trade from. In the chart below we can see that a very obvious and confluent pin bar setup formed in the USDJPY that kicked off a huge uptrend higher. Note that the pin bar trade setup showed rejection of a key horizontal support level as well as the 50% retrace of the last major move, thus the pin bar had “confluence” with the surrounding market structure…

    In the image example below, we can see a pin bar setup that formed at a confluent point in the market:

    price action retracements diagram

    All economic variables create price movement which can be easily seen on a market’s price chart. Whether an economic variable is filtered down through a human trader or a computer trader, the movement that it creates in the market will be easily visible on a price chart. Therefore, instead of trying to analyze a million economic variables each day (this is impossible obviously, although many traders try), you can simply learn to trade price action, because this style of trading allows you to easily analyze and make use of all market variables by simply reading and trading from the P.A. trail they leave behind in a market.

    Closing thoughts on Price Action Trading…

    I hope today’s introduction to Price Action Trading has been a helpful and enlightening lesson for you. No matter what strategy or system you end up trading with, having a solid understanding of P.A. will only make you a better trader. If you’re like me, and you love simplicity and minimalism, you’ll want to become a “pure” P.A  trader and remove all unnecessary variables from your charts. If you’re interested in learning how I trade with simple price action strategies, checkout my Price Action Trading Course for more info.

    Good trading, Nial Fuller

    Related Price Action Lessons:

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    Nial Fuller

    About Nial Fuller

    is a Professional Trader, Investor & Author who is considered ‘The Authority’ on Price Action Trading. His blog is read by over 200,000+ followers and he has taught 25,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.
    Nial Fuller Professional Trading Course Preferred broker 2020 v1
    1. Nwiwu Austin

      Thanks so for your style of teaching you are too good.

      Reply
    2. Sachin Warpe

      Dear sir,
      The way you have explained much information in short with 📉📈 chart easy to understand for begginer also.

      Great job, Thanks a lot sir!!
      You helped us, God will help you.

      Reply
    3. Daniel

      Thanks for the insight and God bless you.

      Reply
    4. Efemena palmer

      Thank you sir for this wonderful knowledge.

      Reply
    5. Victor Etteh John

      You are the best.
      I confirm all you said to be true

      Reply
    6. fitir

      nail u are 1 of my best top 3 Forex mentor, u are obviously great keep it up, GOD bless. pls i want u to discus the strategy, best time to use in trading crude oil, gold and silver thanks.

      Reply
    7. Mr Hoang

      Thanks Sir!

      Reply
    8. Tom

      Hi,

      So, this is my first time browsing your site and I can see you have some useful info on the site; however, what I noticed is that almost all of your teachings are based off of a ‘daily’ chart! Now, unless somewhere on your site or in your courses you mention to people that trading off of a daily chart requires a rather large trading account, none of this analysis would really mean much or be useful to someone with a small account (which is almost everyone looking for a new trading course) who is trading on a 1, 2 or 5 min chart.

      Taking your signal bars on a 5 minute chart would cause many many stop outs before one would work out, simply because of the noise. Unless you have other signals bars to enter on smaller timeframes of course.

      Just my opinion and based on my own studies and trading of price action on all timeframes over the past 10 or so years. Robust price action trading should work on all timeframes, not just the higher timeframes in my opinion.

      Cheers

      Reply
      • Nial Fuller

        You are incorrect on 2 points. It is incorrect to assume price action works the same on all timeframes. The lower the timeframe the less effective the signal is because of noise. If a signal takes a day to form it has more weight behind it, if a signal takes 5 minutes to form is has much less weight behind it. Does a pebble have the same impact on a pool of water as a boulder ? Think about that for a moment.
        It is incorrect to assume that daily charts mean you need a larger size trading account, you can solve this problem by reducing position size per trade (less contracts or fractional lots).

        Reply
        • Peter

          Agree totally Nial

          Reply
    9. Percy

      This was so helpful for me as a beginner.Looking forward to put it into action and learn more.

      Reply
    10. Albert Mutemeri

      Wow,thank you so much Sir Nail this was so eye opening and informative.

      Reply
    11. ABDULLAH-AL-AMIN

      Sir many many thanks. God bless you.

      Reply
    12. Denish

      Mentor Nial, thanks so much for your concern and introduction to price action strategy, am now off to go now Mr Nial, thanks so much

      Reply
    13. Priyanka

      Neil, Thanks for a great read. I have few questions
      1) On what time frame do you draw support and resistance? Do you keep changing it as per time frame or keep it constant?
      2) If I get a pin bar at 1 hour chart, Can’t i trade it without getting confluence from longer time frame of charts?

      Reply
    14. Machi

      It’s 2020 so far no better PA explanation than this one..your writing is concise and no BS.

      Keep up good work..

      Thanks

      Reply
    15. Mr Rock

      To be sincere, as a trader, price action gives me an edge over the market every time. And no other trading strategies I have ever seen comparable to the price action strategy. Therefore, any trader who really wants to make it big in this business has to learn this price action strategy wholeheartedly. I love it so much. Though the learning curve is long, but the end result is highly, incomparably and indisputably profitable.

      Thanks Nial for this great work here!

      Reply
    16. George Mukanda

      You have helped me to deepen my understanding of the price action strategy.Thank you so much. God bless you abundantly.

      Reply
    17. Clemence saulo

      Thank you sir you have change the way I have been trading

      Reply
    18. konky dare

      wow!!! what a wonderful information, very understandable and comprehensive… more knowledge to your wisdom.

      Reply
    19. The Forex Scalpers

      Thank you for sharing such a piece of wonderful information with us. Great job!

      Reply
    20. KAVUO ISSAH DIYAKA

      woow your lesson was fantastic. i wish to get more . i graduated from the university 3 months ago and want to divert my profession to fx trading. thanks so much sir.

      Reply
    21. Kabelo Qhelane

      thank you so much sir for this wonderful explanation. i am really happy for this information because its now that i became aware that i was lost by other traders.

      thank you so much, i wish you can go deeper if possible

      Reply
    22. Oageng

      Hey Nial. I’ve been a price action trader for almost a year now, and what you wrote is completely relatable. I do this. If I may ask though, what are the benefits of being your group member? With all this info at our disposal and all. Is there any more stuff to learn?

      Reply
    23. Pheello Nkaki

      Thank you Nial, the lesson was so interesting and have started to use those stratergies, will give youfeedback.

      Reply
    24. Kenneth Majola

      Thanks for sharing price action it helped me be a profitable trade

      Reply
    25. wali ogechi

      i think u will be a great teacher

      Reply
    26. robert

      lesson was very comprehensive,thanks alot

      Reply
    27. NWEKE UCHENNA EMMANUEL

      Great lesson

      Reply
      • Adegboyeg

        You have explain price action in a very simple way, well- done

        Reply
      • Julius Freeman

        So great !!!

        Reply
    28. Karel Ben

      Hello Nial,
      I am from the Czech Republic and have searched on the internet for 50% retracement setup and discovered your site. Even though I went through the training of some good teachers, I see that studying your articles will move me another piece on my journey to be a trader. Thank you very much.
      So far I want to study them and get them under my skin.
      Then I’ll call and sign up for your live course.

      Everything good in the new year.

      Karel

      Reply
    29. Emmanuel Binya

      Thank you so much for this special knowledge you provide, I suggest if possible to convert to pdf so that can be easy for someone to read when they are offline

      Reply
    30. Logan Fx

      Thank you Nial I found this P.A useful sir

      Reply
      • Ferdous Kamal

        I,without any hesitation would like to comment that your articles are so simple ,informative and educative that even a novice like me can easily understand .I feel myself to be a lucky guy to meet a great teacher like you .Thank you very much .

        Reply
    31. Kabole

      thanks sir I went through it seems interesting, I’ll practice price section and see the results

      Reply
    32. Dave

      I am a beginner. And I find your articles interesting. They are full of insights. Thanks a lot.

      Reply
    33. Francis de Souza

      Probably the best lesson I have ever learned in forex ; I’ll practice and see the result

      Reply
    34. Jerome

      This Article helped a lot in helping grasp the concept. I’m using the support & resistance strategy to trade but one thing always gets me losing when the market is consolidated: how do I select my entry and re-entry points?

      Reply
    35. MD. Firoz zaman

      It is a nice technical analysis.

      Reply
    36. Zamokwakhe Emmanuel Mohase

      Good evening I find your lesson vey usefully I am looking forward to build a career out of trading so i will need all the help I can get

      Reply
    37. Quintin

      I took the week off from work to learn more and today my last day of the week cane across this article. I’m so thankful as it is all confirmation that I am on the right track. Also if I hadn’t traded the whole week before it might not have made so much sense. Thanks a million for this great informative and accurate information! GREAT JOB!

      Reply
    38. Thembile

      Thank you so much Nial.

      Reply
    39. Ravi

      Amazing!!!

      Reply
    40. Chidi

      nice one

      Reply
    41. Luis De Menezes

      Congratulations.Between all market Gurus I like your writtings and v. simple explanations by charts.I am trading since 1992

      Reply
    42. Joao

      Awesome Stuff

      Reply
      • maximillian Sasagu

        Wao!! your are Great Sir its Precisely understandable we are together
        your MAXIMILLIAN SASAGU

        Reply
    43. Tamonokare Adokiye Ferguson

      Loving this already. So insightful.

      Reply
    44. Olive Peace Nabuuma

      youre really excellent at this. too bad the membership is too high

      Reply
    45. Jeremy Kirui

      Invaluable reference and knowledge this is truly tailor made.

      Reply
    46. Hazman Zakaria

      Big thanks

      Reply
    47. Cucu Pok Leh

      a very good info tQ sir

      Reply
    48. Gazman Mohd Nor

      Good info….

      Reply
    49. Chokthiwat Chokthiwat

      Ok. …..

      Reply
    50. Vicent Michael

      Nice

      Reply
    51. INDUWARASG

      THANK YOU SIR

      Reply
    52. Anesu

      Lucid,brevity and stark thanks Nial.

      Reply
      • Robert

        This is clear and very well simplified for us beginners . Thanks

        Reply
    53. Ada Tripple A

      Big Thanks!

      Reply
    54. Gjep Ahmad

      thank you sir

      Reply
    55. Batubo Moses

      thanks i understand it now

      Reply
    56. Kittichoti Mala

      Fantastic!

      Reply
    57. Offsfish Nyaze

      Great stuff thanks

      Reply
    58. Steve Abayomi Otokiti

      nice

      Reply
    59. Miri Al Ali

      Amazing…

      Reply
    60. Ravin Nair

      thanks

      Reply
    61. siswono

      i want your student in forex analisis

      Reply
    62. Mohlomi Seitlheko

      very useful

      Reply
    63. Anass Tourabiil

      pretty useful

      Reply
    64. วิศิษฐ์ ทองรอง

      Thank you

      Reply
    65. Uzzal Baidya

      thank u so much…

      Reply
    66. Shafie Mohd

      Great article

      Reply
    67. Oleste Cemelus

      wow youre great .

      Reply
    68. Tim van Niekerk

      Great article Nial. Straightforward yet detailed enough to offer a solid grasp of PA trading.

      Reply
    69. Chyka Jacobs

      thank u sir

      Reply
    70. irfan

      Nial price action article is superb….! very informative..
      Thanks

      Reply
    71. dave j

      Nial,Thanks for the free information on p/a I found it makes sense and is easy to understand so far gday davej

      Reply
    72. Alex

      Dear Sir Nial,
      You done the best job for us to learn price action trading strategy easily. Hope every one can learn this price action trading easily if they read carefully this article.

      Reply
    73. Emalban FX

      This is great, am glad for the job Mr Fuller is doing here. Thanks.

      Reply
    74. Forex Winners

      good work
      all respect

      Reply
    75. Mike G.

      Hi Nial,

      I find your blog site very valuable and interesting. Theres a lot to learn here. Now I come to know why I fail in my trading. Thanks for the free information Nial. Its a good place to start learning to trade profitably. I will consider learning more from you and eventually be part of your community. :-)

      Many thanks Nial.

      Mike G.

      Reply
    76. Olalekan

      Dear Nial Fuller,
      . your teaching is the fuel to my Motor to keep moving and profit in my forex trading .
      Thank you for the time you use for all of them.
      Olalekan

      Reply
    77. Sulaiman

      Thanks for the clearer picture Nail! I have studied all available indicators in the trading scope and they confused me even more and have decided to go for price-action trade through my own conciense. Your affirmation in this strategy give me more confidence. I would like to learn more from you.

      Reply
    78. Ahesan FX

      Thanks Sir, this article totally change my view towards market now I feel much more confident with simple pure price chart. Eager to learn more from you…

      Reply
    79. Obinna

      this is the final piece to my forex puzzle. Sir Nial Fuller you are indeed an expert in forex strategy. thanks

      Reply
    80. abideen

      nail u are 1 of my best top 3 Forex mentor, u are obviously great keep it up, GOD bless. pls i want u to discus the strategy, best time to use in trading crude oil, gold and silver thanks.

      Reply
    81. gary

      Thanks for the lesson..eager to learn more and glad I found you

      tks

      Reply
    82. mideel

      Thanks, for the lessons.

      Its really clear and comprehensive.

      Reply
    83. calvin

      Sir Nial this is such a great introduction. This proved to be helpful in concept building thanks…!

      Reply

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