But, the real truth is – everyone is searching for a fictitious “holy grail indicator” that is going to remove the anxiety from trade decision making.
As you probably know all too well, this develops into a love/hate relationship when nothing lives up to your expectations. Then escalates into a vicious hunt for the “perfect indicator” – expending a lot of wasted energy.
Now, at some point in your trading journey, you’re going to say to yourself: “I want to learn how to trade without indicators!”
Regardless of what has led you to this point, this new quest for knowledge will generally lead you down the path to price action trading.
Price action is a methodology, a skill of reading the naked candlesticks directly. As a price action trader you base your decisions purely on what price is doing right now, compared to what it has done in the past.
Today, I would like to arm you with some kick-starter knowledge to usher you into indicator free trading with a simple step-by-step guide to making sense of a price chart – finally extinguishing that dead-end search for holy grail accessories.
For those who are already active price action traders, keep on reading – it’s always good to refresh your mind of the basics to keep you anchored to the foundations you trade from.
Step 1: Read the Market Structure
Understanding market structure is basically tuning yourself in with the chart, and getting a good ‘read’ on “which way the wind is blowing”. It’s such a simple ‘back to basics’ skill, that many just lose touch with.
Even though market structure is basic technical analysis, it’s very important – you need it embedded into every trading decision you make.
For those who don’t know what I mean when I say ‘market structure’ – don’t worry it’s really simple.
Market structure is interpreting the arrangement of high and low points of price on the chart, or to be put more bluntly – it is the technical analysis of the combination of: higher highs (HH) and higher lows (HL), or lower lows (LL) and lower highs (LH) – which are sometimes referred to as swing highs or lows.
The order in which new highs or lows occur, can give you a very solid foundation to determine where the market is moving to, or not moving to…
Basic structure analysis will help you identify things that most traders surprisingly struggle with – allowing the price action to communicate to you if a market is:
- In a Bullish Trend
- In a Bearish Tend
- Ranging Between Two Levels
- Emerging into a New Trend
- Forming a Major Bottom to Top
Checkpoint
Identifying Trending Structure
Everyday, the same question pops up – How do I identify the trend?
This is such a simple hurdle that barricades too many traders from advancing with their chart reading skills. Many try to use complex indicators, or mathematical indicators to tell them when a market is trending.
That’s completely unnecessary – don’t rely on software to tell you if a market is trending or not, it only takes seconds if you follow this simple rule.
A trending market is one that is making higher highs and higher lows – OR – a market that is making lower lows and lower highs.
It just seems to simple to be true right? Well trust me – that’s all you need to look out for to identify trending conditions. If you can identify this simple structure, you can identify a trend…
It’s almost like a connect the dots puzzle. Map out the major swing highs and lows, then connect them up, like I’ve done with the yellow arrows – and you will ‘see’ the trending structure.
Even though trending markets are the ideal conditions for making money, traders get so burned by them because they’re either trading in the wrong direction, or entering out of position
Remember, you want to buy low, sell high – so generally speaking, you want to wait for price to retrace into swing lows, or swing highs before entering the trend.
Don’t be the trader who chases price as it’s making new highs or lows, the next retracement will likely stomp you out.
Checkpoint
Ranging Market Structure
Ranging markets can be really easy to see, and other times a little more difficult. The problem with ranging conditions is they’re a neutral ‘anything goes’ kind of sideways market – creating an undesirable trading environment.
In a text book scenario – ranging markets occur when price is trapped between two major levels – so you continuously see high and lows printed at the same horizontal levels…
Everyone knows the text book range structure – but this rarely occurs in every day markets.
Ranges are normally messy and turbulent, and don’t have clearly defined upper and lower boundaries. Generally you will have to identify the range by marking swing points that occur in the same area…
Notice how different the ranging market is in the chart above. This is a more realistic example how ranges normally behave, and why they can be so difficult to trade.
Because there is no clearly defined top or bottom, it makes it hard to pin point reversal trades. As you can see, price gets very noisy around the range boundaries – which is why you must be cautious when trying to trade these ranging structures.
The more clearly defined the range the better. Some ranges are just so noisy, it’s not worth the risk
Checkpoint
Unreadable Market Structure
To finish off the discussion on market structure, there is one very important thing you need to know – something that traps a lot of traders and becomes a huge black hole for money.
You can’t make sense of all market conditions!
There are some charts which are so crazy, their market structure doesn’t make sense. If you can’t get a read on the situation, then it’s probably not worth trading at all.
Sometimes there is absolutely no explanation for erratic price behavior. Even after following the swing points and highlighting the market structure – there is nothing going on here.
Don’t be the trader who thinks they can analyse, and ‘beat’ the market under any conditions – it will lose you a lot money if you attempt this! Wait for the conditions to clear up and you will be able to enter the market with more confidence, achieving better success.
Checkpoint
Step 2: Identify Likely Turning Points
After you get a read on the chart situation, you should know what direction you want to be trading – that’s if you want to be trading at all.
The next critical thing to do is to find the most likely place price is going to turn around. This is where we step up our technical analysis and use things like horizontal levels and trend lines.
Other traders may use additional technical turning points such as:
- Fibonacci levels
- Pivot Points
- Psychological price levels like ‘big round numbers’
But just for the record, I don’t use any of the above in my technical analysis. I stick to the very basics, and it serves me well.
To start building a case for a high quality, high probability trade – find those logical, proven turning points on the chart. Allow me to demonstrate this with simple, but powerful support and resistance analysis.
In the chart above, we identify the market structure and use support and resistance level to highlight potential turning points.
Now, anything can happen in Forex at any time – but there are two highly probable scenarios here…
- Price will retrace into the old support, and use that as new resistance and reverse there
- Price will continue to sell into the major range support level, where we will most likely see price turn around – or at least ‘bounce’ off.
Remember how I said most traders usually get burned by trends, because they trade out of position? Follow the chart example below for a classic example…
The example above shows how market structure and simple technical analysis can help you really start to master your chart reading skills.
We identify up-trending conditions and also mark out important support & resistance levels to pin point likely turning points. We can see that the current position of price is in a bad position to consider buying into the trend – this is how traders lose their money by trend trading incorrectly.
They believe “well, the trend is up, so I will start buying”. It’s called chasing price or buying out of position – learn how to enter a trade correctly.
By following the market structure like I showed you in step 1, we know that price is likely to retrace soon, and correct into new lows.
This is where the saying “buy low – sell high” comes into play. It means to use the trend’s retracements to our advantage, and always get into the trend at a smarter price.
Sometimes support & resistance levels don’t make sense to use – so you have to adopt a trend line from time to time. I try to be very minimalistic with trend lines – because it’s very easy to get carried away.
In most cases you only ever need to have one on your chart to do the job…
Notice in the chart above, a declining trend lines was the main turning point – illustrated easily by the major swing highs printing lower highs each time.
There were a few price action sell signals off the trend line turning point, which did turn out to be very lucrative trades.
Checkpoint
Step 3: Wait for a Trade Signal
The final piece of the puzzle is to actually wait for a buy or sell signal from your trading system. If you’re trading naked price charts, then this is most likely going to be in the form of a candlestick reversal signal, or a breakout catalyst pattern.
The most common candlestick signal is the Rejection Candle, and the best trigger signal for learning to trade without indicators.
To sum up this guide – I am going to bring all the steps together and use a Rejection candle as an example for our trade signal.
So we highlight our market structure…
Remember to ‘read the chart’ by following the swing highs and lows. Let the chart communicate to you what it is trying to do.
We can see this market is currently in consolidation – I am not a big fan of trying to trade inside consolidation structures, so the best thing to do is to wait for a breakout before taking further action.
Once a breakout occurs, and the chart provides more promising price action – then move onto step 2, and identify potential turning points to anticipate market reversals.
Then you need to patiently wait for your trade idea to come to life. The market isn’t always going to give up a signal, but when it does – don’t think about it too much, take action.
After being disciplined and patient enough to wait for all the steps here to align – we finally get our sell signal that checks the last box.
In this case, a bearish rejection candle forms right where we wanted it to. The key to price action trading, and trading Forex without indicators is not to think about things too much. Keep trading simple by following these 3 steps:
Make yourself a check list –
- Step 1: Read the Market Structure The market is weak, and trending down because it’s now making lower highs and lower lows – so we know that we want to be a seller in this market.
- Step 2: Identify Likely Turning Points Using simple support and resistance analysis, we identify that a likely turning point would be the old consolidation support since it was such a strong level. If it holds as resistance, the market will most likely reverse here.
- Step 3: Wait for a Trade Signal In this scenario the chart printed a bearish rejection candle, which is a common price action sell signal. The anatomy of the sell candle looks good, it’s large in range and the close price was below the open price – giving the candle a bearish body (this is something I like to see on my rejection candles).
As you can see this trade worked out very well – consolidation breakouts generally do create explosive moves like this, if the market offers up a signal to catch them.
If you’re getting frustrated with the markets at the moment, and feel like the situation is always turning against you – you’re probably skipping one of these 3 vital steps.
Here is what can happen if you skip, or don’t include any of these setups in your technical analysis…
- Market Structure: If you neglect to read the structure, you could simple enter very bad markets and get caught up in very undesirable turbulent conditions.
- Identify Turning Points: A lot of traders enter the market ‘out of position’, like selling low, or buying high. Wait to buy those higher lows, and sell the lower highs – use turning points such as horizontal levels/trend lines to anticipate these swing points.
- Trading Signal: Some traders will do something called ‘touch trading’, which is blindly buying or selling the market without a signal. This can work if you align step 1 & 2 together nicely, but having a trade signal basically confirms the trade idea and gives it a better chance of working out.
Write these steps on a piece of paper, create a checklist – or even better, include them in your trading plan. This will help straighten up your trading, and keep you away from those bad signals, or ‘in the moment’ impulsive decisions.
I hope this guide is going to help your trading – I personally follow this 3 step rule when I look at charts. Once you apply these 3 steps over and over, eventually it will become second nature, and you will be able to spot high quality trading opportunities within seconds.
If you would like to learn more about reading price charts, price action trading or my swing trading strategies – please check out our War Room for traders. We offer a price action trading course that extends on this lesson and gives you a deeper understanding of reading charts, timing your trades better and teaches you more trading signals.
Please leave your comments below – they are inspiring to me, and give me the positive feedback that motivates me to create more content like this for you guys.
Best of luck on the charts this week 🙂
abdul musty
Hi,
I most say this is best information I have ever came across. I have been learning as well as trading fx for 10 years now. I have never make any profit and I refused to give up. Why because when I look at clean chart, I saw a lot of moves that gives big profits on daily basis. I decided to removed all the indicators and work with clean chart with just a swing high/low dots. Starting with $55, in a week it turns to $300 and it continues with massive profit on daily basis. Although, I spent 10 years practising and blowing my account several times. Now, I am a happy and profitable trader.
Basically, the 3 points you talked about was what changed my trading life. Is like you are the one that trained me and the chart you depicted above look exactly as my chart. Now, within second, I can see profitable set up that give 100-200 Pips right away. I also agree with you that if I did not wait for signal as long as 1 & 2 steps are respected, is going to be profitable after sometimes. Step 1-2-3 are highly profitable.
I love your article and it gives me more power hearing from expert like you.
Thanks.
usmanwajihu
Here you are as usual.
We really can’t thank you enough!
Alex
Hi Dale,
Thank you for the great lesson I learned a lot. Hope we will see some trades you took in near future.
take care and God bless
PROSPER HOPE
i have not yet, try this strategy but it looks promising
Philip
I can’t thank you enough.
This is very helpful I must confess.
Mutiu
Very creative and well explained
Thank you Dale
Jhony
Thanyou very informative ..more bless to you sir
Future Billionaire
Thank you my menh, you make shits so simple
Junior
Muito bom meu amigo
Jose Navarro
Thank you very much for this article. That is how we should be trading. God bless you. Greetings from Costa Rica.
gary slade
great stuff no indicators for me.. so simple but us traders, find ways to confuse trading
Lucas Obiora
Good article, thanks I appreciate.
Gil Ward
makes sense
George
this what i need THANK YOU VERY MUCH
Dane
Great read! Thank you so much!!
Michael Barlow
Thanks for the amazing content!
Themba
Thank you very much ..I can now used resistance and support
Uche
Greater article. Thanks for sharing
MARIO VILLAVERDE
Thank you, very, very much..
God bless you ..
Nina Brazer
Keep it simple – it’s a life changer – thank you so much
prince
so educative,thank you for this analysis
Kio
Very Informative. Just read this and I can almost taste success. I must say, this is the first article, “Trading Related”, that I’ve read through 3 times fully. Thanks for sharing such info. Best of luck, friend! 😉
Festus
Great inspiring write up. Does this method work on all time frames or we need to flip between charts to use this price action strategy. How can i become your student (mentoring)
Gus M Kanavakatini
Thank you appreciate your article exactly what I needed to hear. Reminds of of another video on the same subject where the person says, why use old technology to predict the forex market. What he was referring too was indicators created in the 50, 60, 70, 80 being used to predict what is happening in 2018!! totally crazy!..been trading for a number of years using indicators has become a struggle and I need to simplify my trading….this is why I am moving away from indicators.
Not too say here that they are not useful but to my way of thinking I get hung up on all the noise without realizing the simplicity of the market. The best analogy here is the KISS principal keep it simple stupid!!..anyway thank you
Chris
Very comprehensive and so valuable. Exactly what I was looking for. Looking forward to getting better in my trading thanks to you.
Hamid
Awesome method, the one I was searching for, Thanks So Much
fikri
very helpful for a beginners like me…hope you can teach me more… hoping for an email from you..
yannik
Hi Dale,
I am currently trading CFDs not Forex, Is your course still viable for me to take even though I trade a different market. I am also a swing trader and am loving your free tutorials and guides, thanks mate.
Yannik
Qalu
I really appriciate your work very nice artical and heplful information thank u so much
paul heston
MORE, MUCH MORE PLEASE. !!!
Jeremy Dugdale
what time frame are you basing all your charts on?
If it’s daily I assume your waiting days or weeks for a trade to set up?
Replying to: Jeremy Dugdale
Dale WoodsAuthor
sometimes you have to wait a few days for something good to pop up, yes.
Anthony brooks
Great stuff
Roy Peters
Excellent!
herbert andrade
Where are you going Sunday? If a perfect signal appears on Sunday and is valid? Until what day you enter if the input signal appears? Do you let your open position on the sixth?
Peter
Brilliant! Because of your articles I turned from a losing trader to a profitable one. I made 49% ROI last month… I try to make an average of 1% per day but now only go for trades that look right according to your rules and have made, well, a lot more. I expect to join your war room soon!
Rayol
Do you know that you’ve done a great job brother. Thank you!
Jam
Wow! This website is a goldmine. Great article.
Zainuddin Abdul Wahid
Very simple explanation….thank you.
Hetti
it is a great explanation. And a great strategy. Thank you very much Sir.
Najam Ul Hassan
Great job sir…just carry on…
Smonds
Great article indeed
sentosa masyhor
now open my eyes
Jamie Pips
I started trading in July of 2015 with no knowledge of the markets and blew through $2500 by Aug and I called it quits. I took a break for a few months and got back in and blew another $500. I said ok let me gain knowledge and wisdom. I prayed and I swear that’s when I found your vids on YouTube. I wish I found them sooner. After watching them all in about 2-3 days, then reading your articles, and back testing feverishly I then re-entered the markets and I am up 40% in 2 months. Thank you so much this has literally changed my family’s life. You taught me how to fish.
Siyabonga
Such a great and simple article. Thank you so much.
Jamie Tang
Thank you very much for such an informative article.
Gerald Louw
Very helpfull, I have always been a price action trader and it has never failed me. Cant argue that your inputs has made things much more clearer. Thank you and keep up the good work. 🙂
Muzi Nkambule
Very informative, I’d call it KISS (keep it simple strategy). Many thanks
Wan
Thanks for this beautiful article..
Greetings from Malaysia
muhey
I have been trading full time for 2 years and find this information extremely accurate. Even in one of your comments on your charts you mention planning, patience, and discipline. Without the three steps you teach here, and without the aforementioned three principles of trading, one would be at .
(your the person who made me success i think you are very honesty person) God bless you forever.
Noble Johnfaith
thanks Dale
This concept is , find the condition if he market first,, check the market the SR levels,, let the market play to your position, then finally make a move into the market’
I have being loving your in dept posting and analysis. keep helping us . The Lord will bless you
Sameer
Thank u ,u smart man, now I read future.
TranceX
Hello Dale, wonderful job u have done here. What do you think about EURUSD Weekly Timeframe? Is there a rejection candle there?
Mounir lajili
Thnak you for helping pepole and spacially for NOT trying to sell some crappy expert or indicator .
Keep up
NIECO PAMA
This is a great article. It can help a lot without price but of great gratitude to the author. The author knows that sharing without cost is a best way to earn more!!! Thumbs up to the author. God Bless you more author!
Harry Nguyen
Wait, I don’t get it. I love the content that you have especially this article. But, in your videos, all I see is indicators. I was thinking about buying the membership but I need it to where it’s purely price action…
Replying to: Harry Nguyen
Dale WoodsAuthor
That’s a good point, that is my battle station indicator – which is more than a tool rather than an indicator. It monitors the chart for price action events and patterns and then reports it to our mobile phone or email. It’s optional, and designed for those people who can’t check the charts as often – it will alert you when there is something worth checking out.
Robert Mokgatle
Great and enlightening article…Analysis spot on….
Eddy Evans
Great content Dale. I had reached a point where I have simplified my indicators to the RSI and stochastic, but still fall into the same traps you have explained, and while not losing money, not making any either. I have even tried to get to understanding Institutional Order Flow, but I get bogged down. I trade predominantly Forex. I have seen the scenarios you describe plenty timds before, but never really recognised them. I will be paying closer attention in the future. Here’s to profitable trading! Thanks once again!
Bernard
This is the most straightforward article I’ve read about Price Action Trading. I feel much more confident attempting this approach as you have given me clear steps. What is your opinion about a hybrid system (Price Action + Select technical indicators)? I’d love to hear from you about this.
Replying to: Bernard
Dale WoodsAuthor
I think it’s unnecessary to add in indicators. Most traders get frustrated with them and start adding in more, then before you know it you’ve got a chart full of indicators again. Keep your mind clear, keep trading simple, so you can make sound trading decisions.
Francis
Very refreshing and explained in simple and easily understandable fashion. Welcomed info on price action forex trading.
Khaled
Thank you for the “in -a-capsule” straiting -up lecture ????
Marquin
Very informative and simple. Thanks Dale for making a complex solution very simplistic. Your articles are relevant and fresh. Thanks for your expertise.
subairi
Terimakasih bimbing kami agar seperti anda
Ismail
Hi Dale. Just great especially for newbies like me. I will definitely include this in my short list of strategies.
sanjay
sanjay
thanks, I am very truthfull to you
soorej
thanks a lot I ll follow it
Bhanuka
which time frames are most accurate ??
what time frames are you use for trading ???for PA
Replying to: Bhanuka
Dale WoodsAuthor
swing trading time frames, like h4 and above.
carl89
Thank you for your guide.
I will incorporate this in my trading.
Markus Izang
Quite educative. Thanks
ola
Thanking you DAĹE. JUST SHORT OF WORDS. EXCELLENT EXPLANATION . STILL A BIT CONFUSED THOUGH AS TO WHEN EXACTLY CAN I TAKE TRADES. THE TYPE OF CANDLE OR PRICE TO WATCH OUT FOR.
Very simple explanation. Still not clear when to take trades.
Mario Zulu
Hi Dale, my name is Mario & I’m for South Africa. I just can’t wait to be part of the war room! Wow you are the best me! ????????
dani
I am amazed for your knowledge about trading, you have a very simple and working technic, when are u going to write a book??? i will be your first buyer!! or any trading master class!! hugs from spain, following you from now!
sven midholm
in what broker forex is recommended for this
live in sweden and thanks for the first time ai get very good explain wath to do in forex markets now it is time for practice have demo account in 10markets.com
cind regard sven midholm
vinay
Thanks.
Brandon
This post has been truly inspirational for me in my trading. I’m a fairly new trader that has been victim to finding the holy grail of indicators that takes all of the work and emotion away from me when determining when to enter trades. For 2 years I have tried and maneuvered almost every ‘free’ indicator out there. I have heard about price action trading ad read a couple articles and watched a few videos on it but strayed away from it because honestly ‘ I was lazy and wanted the easy way to make money’. Through my evolution as a trader I have become immersed in this world of being part of the elite and have been going All In with my trading. You have really given me a new breath paired with an extra layer of iron emotion/discipline that is allowing me to more easily read the structure of multiple markets and have success in trading them. There aren’t any words that can express how much this site has changed my life and enhanced my love for trading. Thank you.
Kenny Nguyen
Eye opener easy to read and enjoyable . All I have to say is wow! Worth more money then all the stuff we pay to learn useless indicators that don’t work!
FXBozo
Thanks Dale for sharing. I have been in dilemma after going through so many videos and webinars but this is very clear and precious. I have fallen into the traps many times.
thabo
I took notes and posted the 3 steps in my room
jayprakash
very very helpful article.can i get copy of this
Joan
Thank you for this helpful article 🙂
TREVOR
VERY GOOD BASIC INFORMATION,THANKS TREVOR
ahmich
Great Work
Mandir
Excellent article. Please let me know, for low risk strategies
Ed
Great article
Evert
Thanks you very much
Juan
Thank you so much for this refreshing article.
Greetings from Spain!
Daria
Very helpful, thank you very much! Love to read it, easy to understand, different from others course.
ritikmodi
thanks for this beautiful article…..it helps me a lot….
FXALTareeq
GREAT Article. No doubt trading Price Action is the natural way to go. As Price Action Traders we don ‘t to predict the market, we are market Reactors. A philosophy that I teach with my PA Students. There is absolutely no reason to use lagging indicators, oscillators or other thingamajigs. The market tells you exact live, upfront and in person where it is going . Thank you so much for adding value to our community.
Have a magnificent day on PURPOSE!
FXALTareeq
madhan.g .G
GREAT!
Vijay Sonawane
Gr8 presentation! Very Simple, Excellent & Very Useful but needs to be practiced well?! Thank you very much dear!
johnny
I have been trading full time for 2 years and find this information extremely accurate. Even in one of your comments on your charts you mention planning, patience, and discipline. Without the three steps you teach here, and without the aforementioned three principles of trading, one would be at a $0 account balance very soon. Thank you again.
Budi Liem
Simple but excellent. very usefull. Thanks a lot
Anexas
Excellent and Simple explanation of a critical skill. Thank you TFG.
Tanya
This article came just in time. Extremely helpful, solved a serious problem I had in trading. Thank you SO much!
wongchenmang
Hi,keep on given infor.tqvm !
sal
TQVM very useful n simple trading strategy
denis
Thanks a lot,very very usefull ,thank you.
Duane
Great stuff, thanks for writing the article.
MIKE
Great info, straight and simple…..the type of info one needs.
ismail
very nice article what i noticed your charts are very recent. which is make it for me awesome articles
thank a lot
osama
Amaaaazing…So just wrote what was in my mind…Great
Denny
very usefull
Mehdi
Dear Sir,
Let me thank you very much for such a precious and eye openning agenda which specially makes serious and necessary hints during complex market situations. Please accept my sincerest respects for your generosity.
mgn
Good job Dale, many thanks !
Norbert
Thanks a lot! I appreciate the way, you teach the price action technique, very much.
Martyn
Great informative post as always Dale
Henry
Amazing…
Simple…
Applied
Xerkley
Very helpful, as always.
Thank you!
Replying to: Xerkley
Anil Bhaskaran
It is very helpful
Replying to: Xerkley
David Harrison
The three steps you have explained are the best things I learnt since I start to read about trading on Forex Trade. Thank you, your post is exceptional and simple.