Following some demand for my own thread, I will, hereby, explain my understanding of Price Action,

and its application to Day Trading.I have found that very many people do not believe they could understand
Price Action, and
strain away from it considering Price Action some complicated method which requires
special skills and experience.
Experience, Yes, of course.
That is what Demo and Practise accounts are for.
Never start trading real – live, until you have gained enough experience!

People tend to look for something which, like traffic lights, will tell them
when to Go and when to Stop. They rely on indicators, and lose their money.

Why is it so?

Indicators do not get their data from a different source.

Indicators get the data from the chart.
The data is on the chart first, then it is processed by the written program.

Indicators do not show green and red lights, even though the colors might be such.
Indicators only blink the yellow light, telling us that there is a potential moment.
If we do not know, because we can not see it directly on the chart, no
indicator will ever tell us this!
Learning to read the information from the chart is not really hard, it only requires
repetition. It is repetion that makes us speak our language fluently.
It is repetition that gives us the ability to read this text.

It is repetition of bad habits that makes us lose at Forex.

It is repetition of good habits that makes the winners!

I will try to explain to the best of my abilities how Price Action works.
I will show you some simple step by step practise strategy which you can
excercise on a Demo account and then, after a time, apply your favourite indicator
and see if you will still need it. You must see this for yourself.

After some time you will see for yourself how useless the indicator had been.

I will start with the basics of Price Action and explain the very basic economic principle
of how the Forex Market works, in the first place.

Price Action is not about any setups, it is about Price Action, that is all, Price Action, which means
the ability to read the chart, like reading a text on the internet, like reading this text, ie.

PA does not work better on any Timeframe, it works the same on every Timeframe.
The only difference is in the detailed information in the given Timeframe.
The lower the Timeframe, the more detailed the information.
Timeframe to work with is only the function of the trading style:
Scalp, DayTrading, ShortTerm, LongTerm, etc., the longer the term, the larger the Timeframe.

In order to truely understand what Price Action Trading is , one must first realize the origins.
Some very inteligent Japanese invented the Candlestick chart – Why, what for?
Why did this person want to see all levels? OHLC?
Because he wanted to see what the price was doing, and picture Price Action on a chart.

When you study the basic construct of the Candlestick, and think about it, you discover
that the most important elements are the Shadows, not the Body, but the Shadows.
Why? Because the Shadows actually show where the price Consolidated in the given Period.

The even more basic element for understanding PA is understanding the basic economics,
which means – how the Market works.
In economics there are two sides: debit & creditors
Which translates in Forex to: Buy & Sell 
The Balance is always = 0.

If you understand that:

When you want to Buy at price X, there must be someone who will Sell to you at price X.
When you want to Sell at price Y, there must be someone who will Buy from you at price Y.
then you begin to understand Price Action.

That is where you start to understand, that the Market is always in a Consolidation State.

When the price is going UP, there are Buyers and Pending Sell Orders waiting at some level,
which others call S/R levels, but they actually are Consolidation Levels.

Trend is the journey the price is making from one Consolidation to another Consolidation.
This is what we are aiming to catch and exploit. That is where our Pips are.

Now, when we have understood what Consolidation is,

that it is in fact the End of a Trend and The Begining of a Trend, of the price journey,
we can start to think how to recognize these moments on the charts.

By definition, Price Consolidation is the Equilibrium of Buy and Sell Volumes in a given period of time.
The Clue here is “period of time“.
On the smallest level Price Consolidation is a Doji Candle on a tick chart.
Then, any other Doji Candle, of course.
Price Consolidation is also 2 or more Candles of about the same hight.
Price Consolidation is also a series of Candles oscilating between 2 extreme levels, several Pips,to
even hundreds of Pips apart.

That is clear, but are those the only signals or rather messages about Price Consolidation?

The Break Candle Pattern, why is it so important?

You should be getting the idea by now, if you understand Price Consolidation!

Yes, the Break Candle is showing us Breakout or Breakdown of the Price from

a Price Consolidation Zone. And Breakout or Breakdown of the Price from
a Price Consolidation Zone is showing us the building of a new Trend.

Thus, where is the Price Consolidation Zone?

It is the Candlestick preceeding the Break Candle.
And it is the End of the Price Consolidation.

Where is the Begining of the Price Consolidation, then?

All we have to do, is turn the pattern around.
When we see a shorter opposite Candle after a longer Trend direction Candle,
this is the the Begining of the Price Consolidation.

Now comes the tricky part!

We know how the Price moves, we understand Price Action.

We understand, that Price Consolidation is where Trend Ends and Begins.
We see, that Breakout and Breakdown are indications of the new Trend direction.

The MOST IMPORTANT thing to realize at this moment is that:

The Price can always do 3 things, when in the Price Consolidation Zone:
1. Continue Consolidating,
2. Breakout and form a Bullish Trend,
3. Breakdown and form a BearishTrend.
It can be a new reversal trend or the continuation of the former trend.
We must free ourselves of judgment or speculation.
It is Price Action which tells us which direction the Price is Trending inside
the Price Consolidation Zone.

And this applies to every Timeframe and every Trading Style.

1. Find 2 Timeframes most suitable to Your trading style (ie. M30 and M5 for DT EURUSD).
2. Watch for begining Price Consolidation Zones – the potential End of Trend.
3. Use the Rectangle tool and draw the Zone as follows:

4. Switch the Timeframe to the lower one.

5. Watch for entry moments on the retrace to the zone.
6. Simultanuesly watch another larger Timeframe, H1, H4, D1, to estimate the general Trend.
Go along the General Trend, not against.
7. Set Your SL Close, a couple of Pips above or below the High or Low values as seen on pics.
8. With TP you can either set Your own target, or follow until the next Price Consolidation Zone,
and then decide upon the same rule – the Break Candlesticks and simple Trend recognition.

Important: 
The signals from the larger Timeframe always come first!
So, if there is no Break Candlestick in the opposite direction on the larger Timeframe,
do not count on trend reversal.
Rather see this as potential retrace in Trend continuation and look out for the next Price Consolidation Zone
in accord with the larger Timeframe Trend.
Then, watch for Break signals and Trend signals inside the Consolidation Zone.

The final decision and risk is on Your side.

Sometimes the market is completely unpredictable!

General rules for thread:

1. No predictions about future price movement.
2. No private opinions about future price movement.
3. Fundamental hints allowed, as long as in: “Watch PA on …, because …” style.
4. Critisism of my method and/or myself, and attempts to prove me wrong will be treated as 
violation of Forum #1Rule: Respect the Fellow Trader. 
5. People who take no interest in my method for whatever reasons are
welcome to post on my thread as long as they show proper respect to the
thread starter, other readers, respect the Forum rules, and respect the thread rules.

Anybody who fails to follow the above rules shall be added to my ignore list and cleanedup.

Rules for charts:

1. Only plain charts with the helpers and indicators supplied by me!
2. No Moving Averages, no Fibonacci, no Elliot, no other Moving Average 
based indicators are allowed in this thread! 
No indicators other than stated in point 1. 
3. Trend lines and Andrew’s Pitchfork are allowed.
4. There might be singular exclusions upon my decision for educative reasons
as negative examples or examples necessary for the context of the post.
5. No future price movement predictions or private opinions on charts.
6. Descriptions and indications of Price Action, Consolidation Zones, 
CSCZ, TBCZ, PTECZ and Zone Candle are allowed on charts!

Rule for following posts which I can not edit:

1. The term “Engulfing” should be substituted with the term “Break”
as in the text above. Thus “Engulfing Candle” should be understood as “Break Candle”.

I am willing to help anybody who is willing to follow my rules.

Anybody who will post charts that do not apply to the above rules
will be reported and cleaned up, added to my ignore list, and I will not be able to help them.
Disclaimer:

All of my indicator-tools have been designed in order to assist the Forex Trader in the process of learning Price Action and 
the Supply/Demand Trading concept on demo accounts. 
Any other usage of these indicator-tools is solely at the risk and responsibility of the individual Trader. 
As with any tool, the proper usage depends on proper training and experience. 
Any tool can be used in the occasional amateur style, the proffesional skilled craftsmen style, or the artists style! 
And, as with any other tool, it can be missused, as well. 
It is the investor/trader who makes the final decisions and judges or diagnoses the potential, 
and it is the investor who is the amateur, the proffesional skilled craftsman, or the artist! 
Just like the manufacturers of the simple hammer can not take responsibility for the effects or damages 
arrising from using their simple tool, the creator of the tools presented herein can not take any responsibility, 
whatsoever, for the effects or damages arrising directly or indirectly from using theForex Trade Supporting tools. 
Loss or Profit in Forex Trading is the sole responsibility and sole risk of the investor/trader, and has nothing to do, 
whatsoever, with any available tool, indicator or other computer programme. 
There are a number of different factors, other than the tools themselves, which lead to success or failure in any trade, 
including Forex Trading. It is extremely important to understand, that it is the investor’s ability to make the right decisions 
at the right moments which lead to success, and the tools, no matter how fantastic, are only the Supportive Aid, 
and not the decisive factor.

It is strongly advisable to thoroughly learn Price Action in Day Trading by Dadas as explained in this thread, 
before applying the tools to your charts and trying to use the concept.

Attached, some helping tools.

Attached Files
 Custom_Zone_Candle_with_Index.mq4   45 KB | 1,494 download | Uploaded Apr 11, 2013 5:23pm
 Custom_Zone_Candle_with_Index.ex4   38 KB | 891 downloads | Uploaded Apr 11, 2013 5:23pm
 Multi_Zone_Candle_OHLC_Lines.mq4   35 KB | 1,285 download | Uploaded Apr 11, 2013 5:27pm
 Multi_Zone_Candle_OHLC_Lines.ex4   33 KB | 863 downloads | Uploaded Apr 11, 2013 5:27pm
 Daily_Range_Stats.mq4   16 KB | 755 downloads | Uploaded Apr 25, 2013 9:51am
 Daily_Range_Stats.ex4   19 KB | 505 downloads | Uploaded Apr 25, 2013 9:52am
 m-Candles_ZoneCandle_Style.mq4   5 KB | 481 downloads | Uploaded May 7, 2013 1:26am
 m-Candles_ZoneCandle_Style.ex4   7 KB | 321 downloads | Uploaded May 7, 2013 1:27am
 FX-NVATC_PTECZ_Trader_User_Manual.pdf   665 KB | 537 downloads | Uploaded May 18, 2013 11:07am

Understanding the chart

This is an article I wrote some time ago:

The chart is a set of data containing information about price action presented in a certain graphic form,
a visual form. The chart is the history of price action written in a specific picture alphabet – Candle alphabet,
Bar alphabet or Linear alphabet. Data containing information about price levels is sent by the broker’s server
in information packs called ticks, and drawn by a computer programme as an element of the chart.
The linear chart contains the leastinformation about price action, because it is presented as a linear set of
averaged price levels starting at the Open value and ending at the Close value of a given period of time
(Timeframe).
 Pic. 01 Linear chart. Open and Close levels of a given period of time (Timeframe).
The linear chart shows the trend pretty well, however, it does not show any other information, especially, we
can not see the High and Low price levels in the given Timeframe, and it is difficult to recognize the beginning
and end of each time period, thus, we cannot see the price action in this period of time. We can only see
the average run of the price from the Open price, to the Close price.

The Bar chart and the Candle chart contain the full information about OHLC levels.

Pic. 02 Bar chart with OHLC levels

 Pic. 03 Candle chart with OHLC levels
The Candle chart provides a much more visualy clear picture of price action in a given Timeframe. As we can
clearly see, a Candle consists of three areas:the candle body (from Open to Close), the upper shadow, the
lower shadow. From the structure of the candle, we read the Open price level, the Highprice level,
the Low price level and the Close price level. In other words, we can see what the price was doing in the given
Timeframe. We do not need to read the actual OHLC values, it is enough that we can see, that:
At such and such hour, the price tested a higher level, but found some Resistance (High) and began falling
(upper shadow).
The price fell down to a certain level and found some Support (Low), and there it stopped falling further.
The price turned back upwards somewhat and Closed at a lower level than the previous Candle (lower
shadow).
Thus, the trend in this period of time was Bearish.
In the exact same way, we can read each Candle, on every or any Timeframe chart.
Reading each Candle, one by one, we get the whole story, the history of the price. We see the price action. We
are able to read the chart. All other indicators, suddenly, become useless, because we can read the chart itself,
and we can see it all. Indicators which, in theory, are supposed to show trend, take their data directly from the
charts, not from another source. Since we can, now, see it for ourselves on the chart, what do we need any
indicators for?
In the following hour, the price dropped some more, created a new Low level, and Closed lower than the
preceding Candle, thus confirming theBearish trend.
In the hour after that, the price still dropped, created a new Low level, and Closed lower than the preceding
Candle. However, we notice that the bodies of the last two Candles are much shorter than the body of the
Candle we started with, so, obviously the trend is weaker, though still there.
In the still next hour, the body of the Candle is even shorter and we can see the upper and lower shadows.
Thus, the price tested a lower level, found Support, tested a higher level, found Resistance, Closed lower than
the preceding Candle, so the trend is still Bearish, but the price is, obviously, consolidating.

Let us take a look, again, at the Candle we startet out with.

The High price level is the Resistance level for that hour – isn’t it?
The Low price level is the Support level for that hour – isn’t it?
Thus, what are the shadow areas of Candles, if not Resistance and Support Zones for the given period of time?

Pic. 04 Resistance and Support zones of a Candle

Following this trail, Resistance and Support Zones for a given Candle are nothing other
than Price Consolidation Zones (equilibrium or balance of Buyersand Sellers) in a smaller period of time. There
were still Buyers at the Open price, so the price went up. There were no more Buyers at the High price,
andSellers took over, so the price went down. There were no more Sellers at the Low price, and the price
started to go up again. The price went up until theClose level, where, again, the Sellers took over. With the
help of a simple MT4 tool, the rectangle, we can draw such Zones, and we see even more clearly what is going
on, here!

We cannot see that on the linear chart. We can, on the Bar chart, but not as clearly.

Continuation in next post due to picture limitation per post.

Disclaimer:
All of my indicator-tools have been designed in order to assist the Forex Trader in the process of learning Price
Action and
the Supply/Demand Trading concept on demo accounts.
Any other usage of these indicator-tools is solely at the risk and responsibility of the individual Trader.
As with any tool, the proper usage depends on proper training and experience.
Any tool can be used in the occasional amateur style, the proffesional skilled craftsmen style, or the artists
style!
And, as with any other tool, it can be missused, as well.
It is the investor/trader who makes the final decisions and judges or diagnoses the potential,
and it is the investor who is the amateur, the proffesional skilled craftsman, or the artist!
Just like the manufacturers of the simple hammer can not take responsibility for the effects or damages
arrising from using their simple tool, the creator of the tools presented herein can not take any responsibility,
whatsoever, for the effects or damages arrising directly or indirectly from using theForex Trade Supporting
tools.
Loss or Profit in Forex Trading is the sole responsibility and sole risk of the investor/trader, and has nothing to
do,
whatsoever, with any available tool, indicator or other computer programme.
There are a number of different factors, other than the tools themselves, which lead to success or failure in
any trade,
including Forex Trading. It is extremely important to understand, that it is the investor’s ability to make the
right decisions
at the right moments which lead to success, and the tools, no matter how fantastic, are only the Supportive
Aid,
and not the decisive factor.

It is strongly advisable to thoroughly learn Price Action in Day Trading by Dadas as explained in this thread,
before applying the tools to your charts and trying to use the concept.

Attached, some helping tools.

Attached Files
 Custom_Zone_Candle_with_Index.mq4   45 KB | 1,494 download | Uploaded Apr 11, 2013 5:23pm
 Custom_Zone_Candle_with_Index.ex4   38 KB | 891 downloads | Uploaded Apr 11, 2013 5:23pm
 Multi_Zone_Candle_OHLC_Lines.mq4   35 KB | 1,285 download | Uploaded Apr 11, 2013 5:27pm
 Multi_Zone_Candle_OHLC_Lines.ex4   33 KB | 863 downloads | Uploaded Apr 11, 2013 5:27pm
 Daily_Range_Stats.mq4   16 KB | 755 downloads | Uploaded Apr 25, 2013 9:51am
 Daily_Range_Stats.ex4   19 KB | 505 downloads | Uploaded Apr 25, 2013 9:52am
 m-Candles_ZoneCandle_Style.mq4   5 KB | 481 downloads | Uploaded May 7, 2013 1:26am
 m-Candles_ZoneCandle_Style.ex4   7 KB | 321 downloads | Uploaded May 7, 2013 1:27am
 FX-NVATC_PTECZ_Trader_User_Manual.pdf   665 KB | 537 downloads | Uploaded May 18, 2013 11:07am
Price Consolidation means an equilibrium or balance of Buyers and Sellers in any period of
time. Price Consolidation is a period of indecision, lack of visible trend. Price Consolidation can be clearly
recognizable on the chart as a Doji Candle (no candle body), as two opposite Candles (Bullish and Bearish) of
equal or nearly equal body hight, as a series of Candles oscilating in a certain horizontal channel of, sometimes
a few, sometimes even a couple of hundred Pips without a clear trend. However, the
most important Price Consolidation Zones seem to be the ones not readily recognizable on the chart, yet, they
are the beginnings, the earliest indications of a Price Consolidation! And they are: the Shadow Zones of
Candles, the first negation Candles of a trend (meaning the first Candle to go opposite the trend and marking
the beginning of Price Consolidation), and Candles preceding the Engulfingformation, marking the end of
a Price Consolidation.

Pic. 05 Examples of Price Consolidation Zones of Candle shadows, Doji also visible
Pic. 06 Example of Price Consolidation Zone of nearly equal Candle bodies
Pic. 07 Example of 160 Pips Price Consolidation Zone on the D1 chart

Pic. 08 Examples of Consolidation Zones on first negation Candles

 Pic. 09 Examples of Consolidation Zones on Candles preceding Engulfing
Price Consolidation is the equlibrium period, it is the Zero Point. The balance of Buyers and Sellers. The
absence of trend.
Price Consolidation can last one tick long, one minute, several minutes, an hour, several hours, a day, several
days, a week, several weeks, even several months, and it can have a different span, from 0 Pips to hundreds of
Pips, or even more.
However, the Price Consolidation is the Zero Point, the decisive point. The direction in which the price breaks
out of the Consolidation, and then confirms, is where the price is going, is the trend. And that is the best
moment to open a new order, to get into the best position. The following Price Consolidation, the one ending
the trend, is the best moment to close our order!

Now, we can read the chart, we understand Price Action and we are able to read it from the chart.
We know how to recognize trend and Price Consolidation!

We have the complete set, all we need for successful trading and investing in the Forex market.

Attached, some helping tools.

Attached Files
 Custom_Zone_Candle_with_Index.mq4   45 KB | 1,494 download | Uploaded Apr 11, 2013 5:23pm
 Custom_Zone_Candle_with_Index.ex4   38 KB | 891 downloads | Uploaded Apr 11, 2013 5:23pm
 Multi_Zone_Candle_OHLC_Lines.mq4   35 KB | 1,285 download | Uploaded Apr 11, 2013 5:27pm
 Multi_Zone_Candle_OHLC_Lines.ex4   33 KB | 863 downloads | Uploaded Apr 11, 2013 5:27pm
 Daily_Range_Stats.mq4   16 KB | 755 downloads | Uploaded Apr 25, 2013 9:51am
 Daily_Range_Stats.ex4   19 KB | 505 downloads | Uploaded Apr 25, 2013 9:52am
 m-Candles_ZoneCandle_Style.mq4   5 KB | 481 downloads | Uploaded May 7, 2013 1:26am
  m-Candles_ZoneCandle_Style.ex4   7 KB | 321 downloads | Uploaded May 7, 2013 1:27am
 FX-NVATC_PTECZ_Trader_User_Manual.pdf   665 KB | 537 downloads | Uploaded May 18, 2013 11:07am

Price Consolidation means an equilibrium or balance of Buyers and Sellers in any period of

time. Price Consolidation is a period of indecision, lack of visible trend. Price Consolidation can be clearly
recognizable on the chart as a Doji Candle (no candle body), as two opposite Candles (Bullish and Bearish) of
equal or nearly equal body hight, as a series of Candles oscilating in a certain horizontal channel of, sometimes
a few, sometimes even a couple of hundred Pips without a clear trend. However, the
most important Price Consolidation Zones seem to be the ones not readily recognizable on the chart, yet, they
are the beginnings, the earliest indications of a Price Consolidation! And they are: the Shadow Zones of
Candles, the first negation Candles of a trend (meaning the first Candle to go opposite the trend and marking
the beginning of Price Consolidation), and Candles preceding the Engulfingformation, marking the end of
a Price Consolidation.

Pic. 05 Examples of Price Consolidation Zones of Candle shadows, Doji also visible
Pic. 06 Example of Price Consolidation Zone of nearly equal Candle bodies
Pic. 07 Example of 160 Pips Price Consolidation Zone on the D1 chart

Pic. 08 Examples of Consolidation Zones on first negation Candles

 Pic. 09 Examples of Consolidation Zones on Candles preceding Engulfing
Price Consolidation is the equlibrium period, it is the Zero Point. The balance of Buyers and Sellers. The
absence of trend.
Price Consolidation can last one tick long, one minute, several minutes, an hour, several hours, a day, several
days, a week, several weeks, even several months, and it can have a different span, from 0 Pips to hundreds of
Pips, or even more.
However, the Price Consolidation is the Zero Point, the decisive point. The direction in which the price breaks
out of the Consolidation, and then confirms, is where the price is going, is the trend. And that is the best
moment to open a new order, to get into the best position. The following Price Consolidation, the one ending
the trend, is the best moment to close our order!

Now, we can read the chart, we understand Price Action and we are able to read it from the chart.
We know how to recognize trend and Price Consolidation!

We have the complete set, all we need for successful trading and investing in the Forex market.

Attached, some helping tools.

Attached Files
 Custom_Zone_Candle_with_Index.mq4   45 KB | 1,494 download | Uploaded Apr 11, 2013 5:23pm
 Custom_Zone_Candle_with_Index.ex4   38 KB | 891 downloads | Uploaded Apr 11, 2013 5:23pm
 Multi_Zone_Candle_OHLC_Lines.mq4   35 KB | 1,285 download | Uploaded Apr 11, 2013 5:27pm
 Multi_Zone_Candle_OHLC_Lines.ex4   33 KB | 863 downloads | Uploaded Apr 11, 2013 5:27pm
 Daily_Range_Stats.mq4   16 KB | 755 downloads | Uploaded Apr 25, 2013 9:51am
 Daily_Range_Stats.ex4   19 KB | 505 downloads | Uploaded Apr 25, 2013 9:52am
 m-Candles_ZoneCandle_Style.mq4   5 KB | 481 downloads | Uploaded May 7, 2013 1:26am
 m-Candles_ZoneCandle_Style.ex4   7 KB | 321 downloads | Uploaded May 7, 2013 1:27am
 FX-NVATC_PTECZ_Trader_User_Manual.pdf   665 KB | 537 downloads | Uploaded May 18, 2013 11:07am