Basis of Price Action


📖 Basis of Price Action


Most traders start with a chart full of coluorful indicators. It looks like a Christmas tree 🎄 — moving averages, RSI, MACD, Bollinger Bands, and who knows what else.

But after some time, they realise something: all indicators are based on price.


So why not just study price directly?

That’s what Price Action Trading is all about — reading the story the candles are telling you.


🔹 What is Price Action and Why It Works


Price Action means trading without indicators. We simply look at how price moves — the highs, the lows, the candles, and the patterns.

It works because the market is always driven by one thing: buyers and sellers.

  • If buyers are stronger → price goes up.
  • If sellers are stronger → price goes down.

📌 Example 1:

Imagine Reliance stock is at ₹1000.

  • More and more people start buying → price climbs to ₹1010, then ₹1020.
  • You don’t need RSI to tell you it’s bullish. The higher highs (1000 → 1010 → 1020) already prove that buyers are in control.

📌 Example 2:

On the flip side, if price drops from ₹1000 → ₹990 → ₹980, that’s a clear downtrend. Sellers are stronger.

Price Action is simple: watch the swings, watch the candles. They tell you who’s winning the battle.


🔹 Retail vs Institutional Trading

This part is important.

  • Retail traders (normal traders like us):
  • Usually trade with small capital.
  • Depend too much on indicators or news.
  • Often buy at the top because of FOMO (fear of missing out).


  • Institutional traders (big banks, funds, prop firms):
  • Control billions.
  • Move the market in their favour.
  • Sometimes trick retail traders by making fake breakouts before moving in the opposite direction.

📌 Example 1:

Let’s say a stock is at ₹500. There’s resistance at ₹510.

  • Retail traders see price breaking above ₹510 and buy quickly.
  • Institutions push it slightly above ₹510, then sell heavily.
  • Price falls back to ₹495.
  • Retail traders get trapped. Institutions win.

📌 Example 2:

If you see equal highs on a chart (say ₹120 touched twice), that’s usually where stop-loss orders sit. Institutions often push price above ₹120 to grab those stops — then reverse the market.


📈 Reading Naked Charts (No Indicators)

A naked chart looks simple — just candles. But once you know what to look for, it’s powerful.

Here’s what to focus on:

Swing Points → Where price turns (tops and bottoms).

Wicks (Shadows) → Long wicks often mean rejection.

Example: Price goes to ₹200, but closes at ₹195 with a long wick up. That means sellers rejected higher prices.

Break of Structure (BOS) → When price breaks an old high or low.

Example: NIFTY breaks past its last high of 20,000. That’s a sign buyers are stronger.

Liquidity Zones → Areas where many stop-losses are sitting.

Example: Equal lows at ₹950? Expect price to dip slightly below, grab liquidity, then bounce back.


🔹 Market Types: Trending vs Ranging

Before placing any trade, ask yourself: Is the market trending or ranging?

1. Trending Market

  • Price makes higher highs & higher lows (uptrend) or lower highs & lower lows (downtrend).
  • Best strategy → trade with the trend.

📌 Example:

Infosys goes from ₹1400 → ₹1450 → ₹1500 → ₹1550.

That’s an uptrend. Each dip is a buying opportunity.

2. Ranging Market

  • Price moves sideways, bouncing between support and resistance.
  • Best strategy → buy near support, sell near resistance.

📌 Example:

TCS stock stuck between ₹3000 and ₹3100 for 3 weeks.

  • Buy near ₹3000.
  • Sell near ₹3100.
  • Until it breaks out, that’s the “range play.”


🎯 Key Takeaways For This lesson

  • Price Action = trading with just price, no messy indicators.
  • Institutions create traps — learn to follow their footprints.
  • Naked charts tell you everything: swings, wicks, breaks, liquidity.
  • First step before trading → Identify: Trending or Ranging.