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Alison Heyerdahl
Edited by
Author
Alison Heyerdahl
Edited by
Alison Heyerdahl
Head of Content

Alison Heyerdahl is the Head of Content at FxScouts and a financial writer with extensive experience in Forex trading, broker analysis, and market research. She has reviewed 100+ brokers, publishes weekly YouTube trading videos, and co-hosts the “Let’s Talk Forex” podcast to help traders make informed, safe decisions.

Learn more about Alison Heyerdahl
Author
Author
Chris Cammack
Partner Manager and Financial Writer

Chris Cammack is the Partner Manager and a financial writer at FxScouts. Chris builds and maintains our relationships with our partners to provide our users with the best Forex trading experience.

Learn more about Chris Cammack

What is Price Action Trading?

Reading time: 2 min | Intermediate | Technical Analysis | Trading Strategy
  • Price action is the movement of an instrument's price over time.
  • Price action trading is when traders analyse the historical change in an instrument's price to identify future trading opportunities.
  • Price action trading relies heavily on chart-based analysis - it is a technical trading method, in stark contrast to trading using fundamental macroeconomic trends.

Price Action Trading Strategy

The most common price action trading strategy is using price bars on a chart, such as candlesticks, to analyse the high and low price levels of an instrument over time. Essentially, this is the analysis of what all the other market participants, both buyers and sellers, are doing.

There are two types of bars that plot price action.  Which price action bar charts you use is a matter of personal preference and trading style.  They are:

  1. OHLC bars (Open, High, Low, Close)
  2. Candlesticks
Price Action - Candlestick & Bar Charts

Typically a bullish bar (or bullish candlestick) is created when the closing price is higher than the opening price, and a bearish bar (or bearish candlestick) is created when the closing price is lower than the opening price.

If the closing price is lower than the opening price (a bearish candlestick) then the majority of market participants are selling the instrument. If you decide to sell the same instrument based on this information you are using a price action trading strategy.

This is the most basic example of how price action trading strategy works. It is so common that new traders will employ this method without even realising they are using a price action strategy.

Like many things in Forex trading, price action strategy can become more complex and there are dozens of price action strategies of varying levels of sophistication. Some of the more popular price action trading strategies are:

The Psychology Behind Price Action

Price action traders believe that market psychology is the main driver of price: They believe that there are many fundamental and technical reasons for price movement, but that ultimately it’s all about the traders reactions to developments.

Price action often gives an overview of people’s emotions. Fear, greed and market expectations are the elements that compose the overall sentiment of the market and this in turn will lead to patterns in market behaviour. Price action trading often works because a price chart shows market behaviour.

By studying price action, we can get a detailed view of the buying and selling power that goes into the markets. Since price action is an accurate representation of supply and demand on the market, it’s used by retail traders, institutional traders, banks, and multi-billion dollar hedge funds.

Conclusion

Technical traders rate price action trading very highly, as they believe that it puts them in the best position to make more profitable trades.

It takes time and experience to master price action trading but with the right price action analysis, traders can often anticipate market movements and trade the price fluctuations.

The great advantage to price action trading is it's versatility. It can be used regardless of the direction of the market, and it can be used with any traded market, be it equities, commodities, cryptocurrencies or Forex pairs.

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Meet the Experts Behind Our Unbiased Reviews

Chris Cammack

Partner Manager and Financial Writer

Chris Cammack
Chris Cammack is partner manager and senior financial writer at FxScouts, specialising in broker relations and forex market analysis. As the former Head of Content (2019–2024), he set editorial standards for all content published at FxScouts, including broker reviews, broker comparison pages and education. With over a decade of experience in editorial management and partner relations, Chris builds and maintains our relationships with our partners to provide the best Forex trading experience for our users. He also co-hosts the “Let’s Talk Forex” podcast with Alison Heyerdahl, where he explores trading strategies, industry news, and macroeconomic trends to help traders navigate the markets with confidence.

Alison Heyerdahl

Head of Content

Alison Heyerdahl
Alison Heyerdahl is the Head of Content at FxScouts and an experienced financial writer with extensive hands-on experience in the Forex trading industry. She specialises in Forex trading, broker analysis, and market research, with a focus on helping traders navigate the complex world of online trading safely and confidently. Alison has tested and reviewed more than 100 Forex brokers, assessing everything from regulatory status and trading conditions to platform features and customer support. Her goal is to provide honest, detailed, and practical insights that traders can rely on when choosing a broker. She’s also produced more than 100 educational videos for the FxScouts YouTube channel, where she explains trading concepts in a clear, accessible way. As the co-host of the “Let’s Talk Forex” podcast, Alison shares expert commentary on broker reliability, trading strategies, and market developments—always with a focus on transparency and trader protection.

Ida Hermansen

Financial Writer

Ida Hermansen
Ida is a financial writer with a passion for cryptocurrencies, blockchain networks, and Forex trading. A dedicated crypto trader, she developed a deep interest in Forex technical analysis and price action, continually expanding her expertise in market trends and trading strategies. With a background in digital marketing, SEO, and content strategy, Ida combines her analytical skills with clear, engaging writing to help traders navigate the ever-evolving financial markets. She stays up to date with the latest Forex and crypto developments, researching the best trading environments for new and experienced traders alike.

Stefan de Clerk

Financial Writer

Stefan de Clerk
Stefan is a financial writer and Forex trading enthusiast with over a decade of experience creating in-depth content on finance and technology. His deep interest in geopolitical events, big data, and market sentiment fuels his passion for analyzing how global factors shape financial markets. With a background in marketing and financial research, Stefan believes that Forex trading offers the best insight into the pulse of the world economy. Committed to delivering well-researched, unbiased, and objective information, he helps traders navigate the markets with clarity and confidence.
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