Price Action Definition and Core Concept
Price Action is the study of how price moves over time. It forms the foundation of all technical analysis, since every indicator—such as RSI, moving averages, or other tools—is ultimately based on price movement.
Price action reflects the real-time interaction between buyers and sellers. It shows how traders collectively express supply and demand through price movement, without relying on external or lagging indicators.
Understanding price action means learning to read the story of the market directly from the chart, using candlestick formations, swing highs and lows, and overall market structure.
Although it’s one of the most important skills for any trader, it is also one of the most challenging to master. Successful price action trading requires:
The ability to interpret raw charts without depending on indicators.
Recognizing whether the market is ranging or trending.
Understanding how price structure forms over time and how it signals potential reversals or continuations.
In short, price action is market language. The better you learn to read it, the clearer your trading decisions become.
Now let’s go through some lessons on Price Action.
1. What goes up must go UP…
2. What goes down must go DOWN…
3. What goes sideways must go… UP or DOWN
Understanding price movement is foundational for confident trading. This visual introduces two essential patterns: range-bound and symmetrical triangle, in a format that’s easy to grasp, even for beginners.
How do you know when a stock is rising?
Look for at least two higher highs, each followed by a higher low. This confirms an uptrend.
How do you know when a stock is going down?
Look for at least two lower highs, each followed by a low. This confirms a downtrend.
Notes: Knowing when a stock is going up or down helps you protect your capital, spot opportunities early, and make smarter decisions with confidence.
Timeframes
Whether a high is considered a “higher high” or a low is considered a “lower low” depends on the timeframe you’re viewing.
There’s technically no such thing as an “all-time low”, since every company starts at $0 per share before its IPO. However, there is such a thing as an “all-time high.”
A simple rule of thumb:
All-time highs are always higher highs on every timeframe.
That said, higher highs can sometimes occur in different ways, as shown in the image below.
Tradeable Patterns
Below are a few of the tradeable price action patterns worth starting from. This is, by no means, an exhaustible list. One of the most important skills you can develop as a Trader (and as a Human, btw) is learning how to learn. Use your analytical mind to identify patterns; train your subconscious mind to recognize them and send some ‘feelings’ and intuition to your conscious mind.
Tradable Pattern # 1
All dips that occur during uptrends tend to have a guaranteed 50% bounce.
Tradable Pattern # 2
Every touch of the highs increases the likelihood of a breakout. This includes triangle breakouts, stair-step patterns, and the lingerer. Among these, the stair-step is notably rare and often signals strong momentum when it appears.
You’ve just learned the fundamentals of price action, including how to spot patterns, anticipate breakouts, and read the market with clarity. Now we recommend you to play ChartGame, a simulation that lets you practice identifying setups, making decisions, and seeing how price unfolds without the pressure of live trading. As you progress through each chart, you’ll sharpen your pattern recognition, build confidence, and develop the timing needed to trade with precision.
Master the game, and you’ll be one step closer to mastering the market.
ChartGame
ChartGame Intro
ChartGame.com is a free online simulator that helps you practice trading decisions using historical market charts. It’s like a flight simulator for traders, allowing you to test entries, exits, and risk management without risking real money.
When you start, the game gives you $100,000 in virtual capital, and your goal is to grow it as much as possible by trading historical price charts — ideally up to $1 billion. This target isn’t random; it’s a benchmark that indicates you’ve developed the skills and emotional control needed to trade in real markets.
Why ChartGame Is So Effective
ChartGame builds the essential skills every trader needs:
•Technical mastery: Learn to read price action, spot trends, and identify setups like candlestick patterns, support and resistance, and opening range breakouts (ORB).
•Emotional discipline: Practice controlling greed, fear, and overtrading — the same emotions that affect live traders.
•Risk and bankroll management: Learn how to manage position sizes and protect your capital, just as you would in real markets.
•Instant feedback: Every trade you make is reflected immediately, helping you understand cause and effect in your trading decisions.
Many traders report that mastering ChartGame takes 1–3 months of regular practice. Once you can reach the $1 billion mark consistently, you’ll have the confidence and discipline to begin trading with real capital.
Recommended Action: Create an account on ChartGame.com and try to beat the game as quickly as you can. It’s a fun way to build your skills in reading price action.
Supplemental Resources for Studying Price Action:
How to Become a Winning Trader: https://blog.BigShort.com/how-to-become-a-winning-trader/
Chartgame: