Price Action Definition – What is Price Action? | CFI

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.

Important Disclaimer:

We would like to remind that while we endeavour to provide best possible services, CFI provides execution only services and any information, reports, opinions, commentary or other materials he receives from CFI directly or from its employees or through any analytical tools provided to him or third party research provided to him from the Company shall not be deemed as investment advice and it cannot be relied upon to make investment decisions. The Client commits to make his own research and from external sources as well to make any investment. The Client accepts that CFI will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. The contents of any report provided should not be construed as an express or implied promise, as a guarantee or implication that clients will profit from the strategies herein, or as a guarantee that losses in connection therewith can, or will be limited.

Forex and CFDs are leveraged products that incur a high level of risk and a small adverse market movement may expose the client to lose the entire invested capital. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The possibility exists that you could sustain a loss in excess of your deposited funds even if a stop loss is used and therefore, you should not speculate with capital that you cannot afford to lose and be aware of trading risks. CFI International Ltd provides general information that does not take into account your objectives, financial situation or needs. The content of this website must not be interpreted as personal advice. Please ensure that you understand the risks involved and seek independent advice if necessary.

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