Price Action
A trading methodology that makes decisions based solely on the movement of price on a chart, without relying on lagging technical indicators.
What is Price Action?
Price action trading analyzes the raw movement of an asset's price over time — using only bars, candlesticks, and chart patterns — without applying lagging indicators such as moving averages, RSI, or MACD. Practitioners read the story told by price itself: how highs and lows form, whether buyers or sellers dominate at key levels, and whether patterns suggest continuation or reversal. Core concepts include support and resistance zones, trend structure (higher highs and higher lows in uptrends), pin bars, inside bars, and engulfing candles. Price action is popular among day traders and swing traders who believe raw price reflects all available information most efficiently.
Example
A price action trader watching Apple stock might observe that after a sustained downtrend, the price formed a 'hammer' candlestick at a prior support level on high volume — a signal that sellers exhausted themselves and buyers stepped in aggressively. Without using any technical indicators, the trader interprets this as a potential reversal setup and enters a long position with a stop-loss below the hammer's low, managing risk entirely through price-derived levels.
Source: Investopedia — Price Action