How to Become a successful trader using Price Action Trading 

Are you looking for a powerful Price action pattern that has been generating for me consistent returns? Have you ever wondered why a particular stock moves up or down? It’s because of institutional participation by big institutions like Big Banks and Institutions. We retail investors can’t create such huge institutional footprints that create these price patterns. Supply and demand traders use these price patterns to take trades and profit from them.

 

What is Price Action Trading?

 Price action Trading is nothing but trading without indicators or oscillators. Price is the best indicator and for the purpose of this article, we will be going in-depth in this article.

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4 powerful Price Action Trading Strategies using Supply and Demand Zones

1.    Rally- Base- Rally

2.    Drop- Base- Rally

3.    Drop- base-Drop

4.    Rally-base-drop

Let’s understand the psychology behind these four patterns.

 

1.    Rally- Base- Rally

                     Rally-Base- rally is a demand zone created by Institutions and big banks. Let’s understand what is a demand zone? The demand zone is nothing but an Institutional footprint. Look at the Image below

A Rally- Base - Rally is a price action structure that indicates the formation of a Demand Area. This pattern is usually found in strong uptrends and indicates a continuation of an uptrend. This pattern generally includes a leg in the candle, followed by a basing candlestick and another Big Explosive candle-out candle. The leg-out candle in the above photo shows an impressive move that is most likely due to institutional buying. These huge moves cannot be created by retail traders like us.

 

Let us understand with an example. The Below example shows the chart of Bel 

RBR DEMAND ZONE created on Bel stock chart on 18^th Oct 2022. Price retraced back to the demand zone on 21^st Oct 2022. We exited this trade on a 1:3 ratio.

2. Drop-base-rally

Drop-Base-Rally is a Demand zone pattern created by Institutions and Big Banks. This is another pattern for a Demand zone where the origin of the imbalance indicates Huge Demand in that area. This type of pattern is usually found at the end of the trend, a trader can plan and execute his trade on retracements to this area.

Lets us understand with the help of an example, here is another example of a trade that we took

3.Drop- Base- Drop 

A Drop - Base - drop is a price action trading pattern that is created by Institutions and Big Banks. This is mainly a Supply zone and is usually found in continuation of a trend. Supply and Demand Traders can look to trade the retracement levels.

Lets us see this with an example we traded recently

Price retraced to our supply zone created, we shorted on the retracement

We exited this stock at 1:3 ratio.

4. Rally-Base-Drop

A Rally-Base-Drop is a supply zone and another price action pattern that is usually found at the end of the trend. If you spot such a pattern then it is the reversal if the trend.

Lets see an example of the same

 

See how this trade gave us more than 1:3.

Trading Price action with Supply and demand zones does look easy, but there are many steps that lead to decide a good zone. If you wish to take your learnings further in this field , there are many courses provided by MAK trading school . MAK Trading school was founded by Mahesh kamath. He is a Full time price action trader for the past 11 + years and have been teaching and training this strategy for the past decade. They have a dedicated support team who can handle your queries at 7400088842.

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