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Price Action Trading - An Introduction

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Price Action Trading - An Introduction

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COMPLETE WEBINAR RECORDING: https://blog.quantinsti.com/introduction-price-action-trading-webinar-18-october-2022/
---------------------------------------------
This session introduces you to the skill of trading without using technical indicators by understanding the price behaviour.

It covers several important price action trading tools such as supply and demand analysis, patterns, pivot points, etc.
---------------------------------------------
Overview:
- Need for price action trading
- Fundamentals of price action trading
- Tools of price action trading
- Backtesting and evaluating price action trading strategies
- Automating price action trading
- Interactive Q&A
---------------------------------------------About the Speaker:

Varun Kumar Pothula (Quantitative Analyst at QuantInsti)
Varun holds a Masters degree in Financial Engineering. He has experience working as a trader, a global macro analyst, and also an algo trading strategist.

Currently, working in the Content & Research Team at QuantInsti as a Quantitative Analyst, his contributions help in creating offerings for learners in the domain of algorithmic & quantitative trading.
---------------------------------------------
Link to our Blog: https://blog.quantinsti.com/
Like us on Facebook @ https://www.facebook.com/quantinsti/
Follow us on Twitter @ https://twitter.com/QuantInsti
Follow us on LinkedIn @ https://www.linkedin.com/school/quantinsti/
Follow us on Instagram @ https://www.instagram.com/quantinstian/
E-mail us @ sales@quantinsti.com
-----------------------------------------
#priceaction #priceactiontrading #technicalanalysis #chart #chartpatterns #pivotpoints #technicalindicators

COMPLETE WEBINAR RECORDING: https://blog.quantinsti.com/introduction-price-action-trading-webinar-18-october-2022/
---------------------------------------------
This session introduces you to the skill of trading without using technical indicators by understanding the price behaviour.

It covers several important price action trading tools such as supply and demand analysis, patterns, pivot points, etc.
---------------------------------------------
Overview:
- Need for price action trading
- Fundamentals of price action trading
- Tools of price action trading
- Backtesting and evaluating price action trading strategies
- Automating price action trading
- Interactive Q&A
---------------------------------------------About the Speaker:

Varun Kumar Pothula (Quantitative Analyst at QuantInsti)
Varun holds a Masters degree in Financial Engineering. He has experience working as a trader, a global macro analyst, and also an algo trading strategist.

Currently, working in the Content & Research Team at QuantInsti as a Quantitative Analyst, his contributions help in creating offerings for learners in the domain of algorithmic & quantitative trading.
---------------------------------------------
Link to our Blog: https://blog.quantinsti.com/
Like us on Facebook @ https://www.facebook.com/quantinsti/
Follow us on Twitter @ https://twitter.com/QuantInsti
Follow us on LinkedIn @ https://www.linkedin.com/school/quantinsti/
Follow us on Instagram @ https://www.instagram.com/quantinstian/
E-mail us @ sales@quantinsti.com
-----------------------------------------
#priceaction #priceactiontrading #technicalanalysis #chart #chartpatterns #pivotpoints #technicalindicators

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Price Action Trading - An Introduction

  1. 1. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Introduction to Price Action Trading Varun Kumar Pothula (Quantitative Analyst at QuantInsti)
  2. 2. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. ● Basics of price action trading ● Tools of price action trading ● Chart patterns ● Pivot Points Key Takeaways
  3. 3. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Process of studying basic price behaviour across time to make trading decisions ○ No technical indicators involved ○ Popular among retail traders ○ Intraday trading and swing trading Price Action Trading
  4. 4. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Example 90 80 120 81 119 80 82
  5. 5. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Example 90 80 120 81 119 80 Buy ? Sell ? 82
  6. 6. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. ● Supply and Demand Analysis ● Support and Resistance ● Chart Patterns ● Pivot points PAT - Tools
  7. 7. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis
  8. 8. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Price Action $100 $200
  9. 9. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Price Action $100 $200 $125 $175 $150 $115 $120 $160 Imbalance in supply and demand forces
  10. 10. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply ● Sell orders ● Buy orders < Sell orders ● Sellers are dominant ● Decline in prices Demand ● Buy orders ● Buy orders > Sell orders ● Buyers are dominant ● Increase in prices Supply and Demand
  11. 11. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis
  12. 12. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis
  13. 13. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis Sellers
  14. 14. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis Supply Zone
  15. 15. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis Buyers
  16. 16. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis Demand Zone
  17. 17. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Supply and Demand Analysis Demand Zone Supply Zone
  18. 18. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Trades Trade-1: Buy Trade-1: Sell Trade-2: Sell Trade-2: Buy
  19. 19. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Support and Resistance
  20. 20. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Support and Resistance
  21. 21. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Support and Resistance Resistance
  22. 22. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Support and Resistance Support
  23. 23. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Chart Patterns
  24. 24. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Chart Patterns Demand Zone Supply Zone
  25. 25. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Chart Patterns
  26. 26. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Chart Patterns Reversal Patterns Continuation Patterns
  27. 27. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Patterns Patterns
  28. 28. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Reversal Patterns Bearish Reversal Bullish Reversal
  29. 29. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Bearish Reversal Patterns Bearish Reversal Pattern Uptrend Trend Reversal Signals a supply zone and indicates a possible reversal of the uptrend
  30. 30. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Bearish Reversal Patterns Top-1 NECKLINE Top-2 Top-3 Head and Shoulders Double Top Triple Top
  31. 31. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Bullish Reversal Patterns Bullish Reversal Pattern Downtrend Trend Reversal Signals a demand zone and indicates a possible reversal of the downtrend
  32. 32. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Bullish Reversal Patterns NECKLINE Bottom-2 Bottom-3 Bottom-1 Inverse Head and Shoulders Double Bottom Triple Bottom
  33. 33. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Continuation Patterns Continuation Pattern Uptrend Uptrend In an uptrend, a continuation pattern signals the formation of a demand zone and indicates the continuation of the uptrend
  34. 34. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Continuation Patterns Bull Flag Pennant Ascending Triangle
  35. 35. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Continuation Patterns Continuation Pattern Downtrend Downtrend In an downtrend, a continuation pattern signals the formation of a supply zone and indicates the continuation of the downtrend
  36. 36. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Continuation Patterns Bear Flag Pennant Descending Triangle
  37. 37. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Patterns - Price Action
  38. 38. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. HH HH HH HH Patterns- Example
  39. 39. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. HH HH HH HH LH Patterns- Example
  40. 40. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. HH HH HH HH Patterns- Example
  41. 41. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. HH HH HH HH LH Patterns- Example
  42. 42. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Head And Shoulders HH HH HH HH LH HEAD LEFT SHOULDER RIGHT SHOULDER UPTREND NECKLINE DOWNTREND
  43. 43. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. ● Indicates weakness in an uptrend ● Possible reversal of an uptrend Head And Shoulders
  44. 44. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. HEAD LEFT SHOULDER RIGHT SHOULDER UPTREND NECKLINE DOWNTREND Lower High Indicating Weakness in an uptrend Breakout of Support Indicates Strength of Sellers Price Action
  45. 45. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. UPTREND NECKLINE Stop-Loss Above the Right Shoulder Enter short at breakout of the neckline SL Entry H TAKE PROFIT H Trading Head and Shoulders Pattern
  46. 46. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Pivot Points
  47. 47. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Pivot Points are significant levels used to determine directional movement and potential support/resistance levels. Pivot Points
  48. 48. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Calculation of Pivot Points
  49. 49. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Calculation of Pivot Points
  50. 50. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Calculation of Pivot Points
  51. 51. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. ● Leading indicator → Has predictive power ● Helps to identify support and resistance levels in advance → Can be used for planning entries and exits Benefits of Using Pivot Points
  52. 52. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. ● Traditional ● Woodies ● Camarilla ● Fibonacci Different Kinds of Pivot Points
  53. 53. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Woodies Pivots PP = (High + Low + 2*Close) / 4 R1 = (2 * P) - Low R2 = P + (High - Low) R3 = High + 2 *(P - Low) S1 = (2 * P) - High S2 = P - (High - Low) S3 = Low - 2* (High - P) Traditional Pivots P = (High + Low + Close) / 3 R1 = (2 * P) - Low R2 = P + (High - Low) R3 = P + 2 * (High - Low) S1 = (2 * P) - High S2 = P - (High - Low) S3 = P - 2 * (High - Low) Different Kinds of Pivot Points
  54. 54. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. L1 = Close - Range * (1.1 / 12) L2 = Close - Range * (1.1 / 6) L3 = Close - Range * (1.1 / 4) L4 = Close - Range * (1.1 / 2) L5 = Close - (H5 - Close) L6 = Close - (H6 - Close) H1 = Close + Range * (1.1 / 12) H2 = Close + Range * (1.1 / 6) H3 = Close + Range * (1.1 / 4) H4 = Close + Range * (1.1 / 2) H5 = Close * (High/Low) H6 = H5 + 1.168 * (H5 - H4) P = (High + Low + Close) / 3 Camarilla Pivots
  55. 55. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. R1 R2 R3 S1 S2 S3 P R6 R5 R4 R1, R2, R3 S1, S2, S3 P S4 S5 S6 Woodies vs Camarilla Pivots Weekly Intraday
  56. 56. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. ● Calculated using Fibonacci series ● 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144……. ○ 0 + 1 = 1 ○ 1 + 1 = 2 ○ 1 + 2 = 3 ○ 2 + 3 = 5 ● Fibonacci ratios → 23.6%, 38.2%, 50%, 61.8%, and 100% Fibonacci Pivots
  57. 57. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. 0, 21 / 34 = 61.8% 34 / 55 = 61.8% 55 / 89 = 61.8% Fibonacci Ratios
  58. 58. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. 0, 21 / 55 = 38.1% 34 / 89 = 38.2% 55 / 144 = 38.2% Fibonacci Ratios
  59. 59. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. 0, 21 / 89 = 23.6% 34 / 144 = 23.6% 55 / 233 = 23.6% Fibonacci Ratios
  60. 60. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Fibonacci Ratios
  61. 61. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Fibonacci Ratios
  62. 62. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Fibonacci Ratios
  63. 63. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Fibonacci Ratios
  64. 64. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Complete Webinar Recording
  65. 65. All rights reserved. ©QuantInsti Quantitative Learning Pvt Ltd. Not to be distributed without written permission from QuantInsti. Thank You!

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