Price action trading is a methodology wherein the trader uses only historic prices to enter and exit a trade. Unlike other strategies dependent on indicators, price action trading does a lot of focus reading of candlestick patterns, support and resistance levels, and market structure. With this in mind, it enables traders to have insight into market psychology and its momentum.

The major advantage of price action trading is the simplicity behind it. Traders look at the raw data of the price and act accordingly, hence avoiding information overload from the various complex indicators used. The common tools used in the strategy include candlestick formation-like pin bars, engulfing patterns, and inside bars that indicate the reversal or continuation of the market trend.

This technique can be adapted to any time frame and financial market, from forex to stocks to commodities. It is ideal for beginning and professional traders looking for a simpler, cleaner way to trade. In either case, price action trading takes practice, discipline, and an eye toward the movement of markets.