The ONLY Price Action Trading Strategy you will EVER need (Can’t unsee this…)

Summary

This video script introduces a simple yet powerful price action trading strategy based on momentum loss and candlestick patterns. It emphasizes identifying key support and resistance levels and observing candle sizes to predict price reversals. The strategy's effectiveness is demonstrated through examples, including a successful trade on gold that yielded nearly ten thousand dollars. Viewers are encouraged to backtest the strategy on demo accounts before applying it to live trading.

Takeaways

• 📈 The strategy revolves around identifying momentum loss through candlestick patterns and sizes at key support and resistance levels.
• 🔍 Key levels are identified by observing where the price has historically reversed after hitting those levels.
• 🌟 Smaller candlesticks approaching a key level indicate a loss of momentum, suggesting a potential reversal in price direction.
• 📊 A doji candlestick at a support level can signal a reversal, prompting a buying opportunity.
• 🛑 Observing multiple long wicks at a support level suggests the price is unlikely to break through and may reverse.
• 📉 At resistance levels, a change in candlestick color from bullish (green) to bearish (red) can indicate a loss of momentum and potential price drop.
• ❌ Avoid trading at a resistance level when the price is showing strong bullish momentum with large candlesticks, as it may break through.
• 🚫 Recognize and avoid common mistakes, such as entering a sell at a resistance level when the price has strong bullish momentum.
• 🔑 Trading is about reacting to market conditions rather than predicting them; wait for confirmation of price action at key levels before trading.
• 💰 The speaker used this strategy to trade gold, making approximately $10,000 by identifying and reacting to momentum loss and reversal signals.
• 📚 Emphasizes the importance of backtesting strategies on demo accounts before applying them to live trading to ensure their effectiveness.

Q & A

What is the main concept of the price action trading strategy discussed in the script?

The main concept of the strategy is based on the idea of momentum loss through candlestick patterns and sizes, which indicates a potential reversal in the market trend.

Why is it important to identify key support and resistance levels in this trading strategy?

Identifying key support and resistance levels is crucial as these are the areas where the price is likely to reverse after losing momentum, providing high win rate trade setups.

What should traders look for in candlestick patterns as they approach key support or resistance levels?

Traders should look for candlesticks getting smaller and smaller as they approach these key levels, indicating that the price is losing momentum and may reverse.

What is a 'doji' candlestick and why is it significant in this trading strategy?

A 'doji' candlestick is a reversal pattern that occurs when the price opens and closes at the same level, signifying indecision in the market and often leading to a price reversal.

How does the color change of candlesticks at key support or resistance levels indicate market sentiment?

A change in the color of candlesticks from predominantly red (bearish) to green (bullish) at key levels suggests a shift in market sentiment, with buyers starting to take control.

What is a common mistake that beginner traders make when they see a red candle at a resistance level?

A common mistake is entering a sell position immediately upon seeing a red candle at a resistance level, without waiting for confirmation of a reversal, which can lead to being stopped out when the price breaks through the resistance.

Why is it important to wait for confirmation before entering a trade at a key support or resistance level?

Waiting for confirmation is important to ensure that the price is indeed reversing and not just experiencing a temporary pause before continuing in the same direction.

What is the significance of a 'long wick' candlestick in the context of this trading strategy?

A 'long wick' candlestick, especially when it is smaller than the previous candles, indicates that the price is losing momentum and may be approaching a reversal.

How does the trader in the script use the strategy to trade gold and achieve significant profits?

The trader identified key support levels in gold's downtrend, observed the momentum loss through smaller candlesticks, and entered a buy position when the price showed signs of reversal, leading to substantial profits.

What advice does the script give about trading in general, apart from the specific strategy discussed?

The script advises traders to react to what the market shows rather than imposing their own thoughts or predictions onto the market, and to always backtest strategies before applying them to live trading.