One of the simplest and most effective trading strategies in the world, is simply trading price action signals from horizontal levels on a price chart. If you learn only one thing from this site it should be this; look for obvious price action patterns from key horizontal levels in the market. If you just stick to that ‘formula’ you will have plenty of high-probability trading opportunities over the course of one year. Don’t over-complicate the process of analysing the markets / charts and finding trades. The market will generate signals for you when it’s ready, all you need to do is learn what the signals look like and where to look for them at. This is what you will learn in this lesson…
Price action signals + Horizontal levels = Success
It doesn’t really matter which component you find first, the price action signal or the level. What matters is if the two have come together to form a confluent price action trade. When you have an obvious price action signal, like a pin bar or a fakey signal, and that signal has formed at a key horizontal level of support or resistance in a market, you have a potentially very high-probability trade on your hands.
Key horizontal levels of support or resistance are areas or levels on the chart that price made a strong move either up or down from. They can be used in any market condition; trending, counter-trend or trading ranges. The important thing we are focusing on in this lesson is finding a clear price action signal at a key chart level. These levels tend to act like ‘magnets’, attracting price to them before price pushes away again. They can also be thought of as ‘value areas’, or areas on the chart where price found ‘fair value’ which typically happens before a strong move occurs again.
Let’s take a look at some examples of trading price action signals from key chart levels:
The chart below is a daily Gold chart and it shows us a nice clear example of a well-formed pin bar pattern that formed at a key horizontal level in the market. Clearly, the 1170.00 was already an important horizontal level that you should have had marked on your chart before this pin bar formed. Then, all you needed to do was sit and wait for a signal to form at or near that level. We can see a very nice pin bar buy signal did form at that level, showing a rejection of it that indicated price might push higher in the coming days..
The next example is of a pin bar buy signal that formed at a key chart level of support in an up-trending market. When you get a price action signal that has confluence with a trend and a level, that is a good-quality trade setup. You won’t find a much better example than the one below that formed on the daily GBPUSD chart. We had an uptrend, a key horizontal support level near 1.6655 and then a very well-defined / ‘perfect’ pin bar trading strategy formed at that level. You can see the trend resumed the very next day after that pin bar as price continued pushing higher.
In the chart below, the NZDUSD was trading in a large range, back and forth between horizontal support and resistance levels. In these situations, where a market is range-bound, we can look to the boundaries of the range (support and resistance levels) for potential price action buying or selling opportunities. We can see a fine example of this in the chart below when an obvious pin bar sell signal formed from the horizontal resistance of this trading range, setting off a huge move lower, to the bottom of the range…
Finally, let’s look at a counter-trend example of trading price action signals at key chart horizontal levels in the market. This is the EURUSD daily chart and we can see a very obvious fakey trading strategy formed at a key resistance level near 1.3950. This fakey signal showed a rejection and false breakout of that level, indicating that the bulls were exhausted and that price may fall lower in the coming days. We can see that price did fall from that fakey signal and it fell significantly lower in the ensuing days. Another clear example of the power of trading price action signals at key horizontal levels in the market.
Conclusion
The main point of this lesson is simply this: You DO NOT NEED a complicated or confusing trading strategy to find high-probability entries in a market. All you need is the ability to recognize price action trading strategies at key chart levels of horizontal support and resistance. If you just focus on this one strategy and really ‘master’ it, you will be able to look at any chart of any market and find high-probability price action trading opportunities.
I hope you’ve enjoyed this lesson on the simplest trading strategy in the world. To learn more, visit the price action trading university.
AboutNial Fuller
Nial Fuller is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught over 25,000+ students since 2008. Checkout Nial’s Price Action Trading Course here.
FAQs
One of the simplest and most effective trading strategies in the world, is simply trading price action signals from horizontal levels on a price chart. If you learn only one thing from this site it should be this; look for obvious price action patterns from key horizontal levels in the market.
What is the simplest price action strategy? ›
The head and shoulders reversal trade is one of the most popular price action trading strategies as it's relatively easy to choose an entry point (generally right after the first shoulder) and to set a stop loss (after the second shoulder) to take advantage of a temporary peak (the head).
What is the simplest trading strategy ever? ›
Moving averages are one of the most basic yet effective trading strategies. They calculate the average price of a security over a specified period of time and smooth out price fluctuations, making it easier to spot trends.
Does price action trading really work? ›
Although price action trading does have the potential for making handsome profits, it is up to the individual trader to clearly understand, test, select, decide, and act on what meets their requirements for the best possible profit opportunities.
Is there a 100% trading strategy? ›
A 100 percent trading strategy is an approach that involves investing all of your capital into a single trade. While this can be risky, it can also lead to significant profits if executed correctly.
Who is the best price action trader in the world? ›
Nial Fuller is a Professional Trader & Author who is considered 'The Authority' on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught over 25,000+ students since 2008.
Which trading strategy is the most profitable? ›
One of the ways beginners can implement the most profitable trading strategies effectively is by embracing the buy-and-hold strategy. This involves researching companies with solid fundamentals and stable earnings, then holding their stocks for a long time without being swayed by short-term market fluctuations.
What is No 1 rule of trading? ›
Rule 1: Always Use a Trading Plan
You need a trading plan because it can assist you with making coherent trading decisions and define the boundaries of your optimal trade. A decent trading plan will assist you with avoiding making passionate decisions without giving it much thought.
What is the easiest pattern to trade? ›
The easiest to learn patterns are the falling wedge, rising wedge, bull flag breakout, and cup and handles. The cool thing about trading patterns is that they happen repeatedly, and you can fall in love with or even marry them.
What is the trick for trading? ›
By setting clear entry and exit points before initiating a trade, you commit to a plan that mitigates the risk of emotional trading. This strategy involves conducting thorough research to identify potential buy and sell points based on historical data, technical indicators, and market analysis.
Price is Better Than Indicators
Price action traders often think their method is always better. However, price action and indicators are quite similar. Both use price info from charts like candlesticks or bar charts. Indicators just apply a formula to the same info.
What is the success rate of price action? ›
How accurate is price action trading? Price action trading is not perfect. No trading system or strategy will be correct 100% of the time. However, price action strategies have been shown to be quite accurate, with many of the setups used by the price action trader showing a success rate of 75% or higher.
What is the best indicator for price action? ›
The most commonly used price action indicator is the study of price bars or candlesticks which give details such as the open and closing price of a market and its high and low price levels during a specific time period. Analysing this information is the core of price action trading.
Why 95% of traders lose money? ›
The emotional aspect of trading often leads to irrational decisions like panic selling. When the market moves unfavourably, many traders, especially those who are inexperienced, tend to panic and exit their positions hastily. This panic selling often occurs at the worst possible time, leading to significant losses.
Is it possible to make $1000 a day trading? ›
While it's not outside the realm of possibility to earn $1,000 a day by day trading, reaching that level on a consistent basis requires several things: knowledge, discipline and a lot of cash to start with. Here's what you need to know.
Can I be a millionaire by trading? ›
It is theoretically possible to become a millionaire through scalping trading, but it is important to understand that this is a very difficult and risky way to try to achieve this goal. Scalping trading involves making multiple trades within a short period of time, often trying to profit from small movements in price.
What is the 5 minute price action strategy? ›
The 5-Minute strategy is created to aid sellers and buyers engage in back tracking and spend some time in the location with the appearance of prices proceed in a latest route. The system depends upon exponential moving averages and the MACD forex trading indicators.
What is price action for dummies? ›
Imagine making trading decisions based on the actual movement of price itself. That is what price action is. On a practical level, that means learning to identify key patterns which are formed by the candlesticks or bars on your charts.
What is the success rate of price action strategy? ›
How accurate is price action trading? Price action trading is not perfect. No trading system or strategy will be correct 100% of the time. However, price action strategies have been shown to be quite accurate, with many of the setups used by the price action trader showing a success rate of 75% or higher.
