Price Action Trading Strategies

Basic Candlestick On Price Action Trading Setup

 

In price action trading strategies, candlestick is very important on analyze parameter. On candlestick we see closing price and open price from body candlestick. This Japanese candlestick is the bread and butter for all price action traders. It would be a good idea to take your time and learn as much as you can about candles because they are what price action traders use to trade the market. 

 There is bullish and bearish from candlestick picture below that we can study from it. Here some basic candlestick information from price action candlestick analyze. 

 

The candles are made up of a couple of parts, the high, low, close and open of that specific time period. These are all represented on the candle. The high is the wick that protrudes above the body of the candle. The low is the wick that protrudes below the body. The body is the area between the open and close price.
A candle with a big body means that the close price has moved a great deal from the open price. A candle with a small body means that the close price has hardly moved from the open price.
You can have a candle that represents 1 minute of data or a candle that represents 1 month of data. They are all going to have the same makeup, a wick, body, open and a close but a 1 month candle is going to have a lot more data packed into it than a 1 minute candle. Candles on a higher time frame such as a daily or weekly are generally considered to be more reliable.

All of these parts of the candle are important when reading the market. Each candle has different characteristics and each candle tells a different story. Being able to read the story that candle is telling is key in becoming a successful trader.
When these candles are put onto a chart together they create patterns that we recognize and this is what we base our trading off of. These patterns form over and over again and being able to identify these patterns is what price action trading is all about.
Some of the more common candle patterns are the pin bar and engulfing bar. Each of these tell us what the market is probably going to do and we can use the history of these patterns to predict where the price is going next.

Pin Bar and Engulfing Bar Examples

 
Being able to identify and use these patterns to your advantage will be the difference in you becoming a winning trader or a losing one.  With this basic price action trading strategies on reading body candlestick we should be a better trader from now on.