Price Action

Price action is the movement of a security’s price. Technical analysts tend to focus on price action because they believe price action reflects all-known information about a stock and that important information will show up in price action before it shows up in the newspapers. They focus on what’s happening(price action) instead of why it’s happening(the fundamental reason). Though this may sound mystical, a trader trading correctly would likely have gotten out of dotcoms before they dropped 90% even if he was slightly scarred.

Traders use charts to analyse price action. They often couple it with volume to figure out the future direction of a security’s price.

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