Price Action Definition – What is Price Action? | CFI LB

price action

Price action is a form of technical analysis used to identify buy or sell opportunities when trading stocks, commodities, indices, equities, or anything with data. When traders talk about price action, they are referring to the fluctuations in the price of financial products. Technical traders gauge a financial assets price action by monitoring patterns and indicators to help them identify trading opportunities in otherwise random price movements.

 

If you are new to trading, learning price action analysis makes for a great starting point. Price action trading is often used by institutional and retail traders who use [leverage] to place large trades based on anticipated smaller price movements.

 

A popular form of technical analysis used to identify price action is candlestick charts. Traders use these to help them put price movements into context. Although very “technical” technical analysis is still very personal and unique to each trader; two different people can be presented with the same price action but then arrive at different conclusions about what the pattern signifies.

 

Key takeaways:

 

  • Price action refers to the fluctuations in the price of a financial product.
  • Price action trading can be used as a trading strategy where trades are executed strictly based on a financial product's price action.
  • Institutional and retail traders use leverage to place large trades to benefit from small underlying price movements.
CFI Financial Group is an award winning global financial markets provider with over 23 years of experience and regulated entities in several jurisdictions, focused on offering impeccable execution and trading conditions including very low spreads, professional services, dedicated support and powerful tools.
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CFI provides execution-only services and does not provide any investment advice. To make an investment decision, you cannot rely on the content of this website, or on any information, opinion, report or other materials (“Information”) you receive from CFI, or its representatives. Such Information is general and does not consider your objectives and your financial situation, thus they shall not be considered in any way as an express or implied promise nor a guarantee of any profit or limit of loss. CFI shall not bear any liability in case you used or relied on such Information. Please ensure that you make your own research and seek independent advice if necessary.

Forex and CFDs are leveraged products that incur a high level of risk. A small adverse market movement may expose the client to lose the entire invested capital. The majority of retail client accounts lose money when trading in CFDs. Please be aware of trading risks and that you could sustain a loss exceeding your deposited funds, even if a stop loss is used.

CFI Lebanon is regulated by the Banque du Liban and the Capital Markets Authority

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