A:

Price action refers to the day-to-day fluctuation in the price of an asset. Traders gauge a stock's price action by monitoring patterns and indicators to help find order in the seemingly random movement of price.



Technical analysis is the study of past price movements. Hundreds of indicators have been designed to help predict an asset's future direction. Common chart patterns include the ascending triangle, the head and shoulders pattern and the symmetrical triangle.



In trading, no two people will analyze every bit of price action in the same way. As a result, many traders find the concept of price action to be elusive. Like other areas of active trading, gauging the price action of a stock is completely subjective. For more information on this topic, see Basics of Technical Analysis.



RELATED FAQS
  1. What types of data are necessary to make a technical analysis?

    Understand what technical analysis is, the basic theory behind employing it and what data inputs are needed to conduct it. Read Answer >>
  2. Are continuation patterns useful in forex trading and stock trading?

    Learn what a continuation pattern is in technical analysis and why it is useful in forex and stock market trading, and discover ... Read Answer >>
  3. Where do I place my target when the price of a stock breaks out of a technical chart ...

    Technical chart patterns such as ascending triangles, head and shoulders and double bottoms have rapidly grown in popularity ... Read Answer >>
  4. How do I find stocks developing ascending triangle patterns?

    Learn more about the types of computer programs and software packages that can help traders scan the market for specific ... Read Answer >>
  5. How effective is creating trade entries after spotting a Symmetrical Triangle pattern?

    Understand the symmetrical triangle pattern and the likely success of the most common breakout trading strategy implemented ... Read Answer >>
  6. What are the main opportunities that arise when a stock exhibits a continuation pattern?

    Learn about continuation patterns and the opportunities they can present. Use these trading strategies to profit from these ... Read Answer >>
Related Articles
  1. Managing Wealth

    Use Price Action Trading Strategy for Results

    Bored by the fixed rules of technical and fundamental analysis? Price action trading allows you to customize your own trading strategy.
  2. Trading

    An Introduction To Price Action Trading Strategies

    For traders who want a mix of technical analysis with their own control in decisions, price action trading offers the perfect fit. Here's how it works.
  3. Trading

    Continuation Patterns: An Introduction

    Those random movements in the charts actually form patterns. Learn the basics of what these patterns are.
  4. Trading

    Continuation Patterns: Introduction To Triangles

    The three types of triangle continuation patterns look different, yet provide similar information. Find out how.
  5. Trading

    Triangles: A Short Study In Continuation Patterns

    Learn how to read these formations of horizontal trading patterns.
  6. Trading

    Analyzing Chart Patterns: Triangles

    By Chad Langager and Casey Murphy, senior analyst of ChartAdvisor.com As you may have noticed, chart pattern names don't leave much to the imagination. This is no different for the triangle ...
  7. Trading

    Symmetrical Triangle

    Learn how to recognize and use the symmetrical triangle pattern to trade stocks.
  8. Trading

    How To Interpret Technical Analysis Price Patterns: Triple Tops And Bottoms

    Triple and double tops and bottoms may be tough to spot, but once you learn them, they can be powerful patterns.
  9. Trading

    Most Commonly Used Forex Chart Patterns

    These chart patterns provide entries, stops and profit targets that can be easily seen.
  10. Markets

    Breakout Stocks to Watch Right Now

    These three stocks are near major breakout points, which will affect the short-term, and potentially the long-term direction of the stocks.
RELATED TERMS
  1. Price Action

    The movement of a security's price. Price action is encompassed ...
  2. Pattern

    In technical analysis, the distinctive formation created by the ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Breakout Trader

    A type of trader who uses technical analysis to find potential ...
  5. Weekly Chart

    A chart where each data point is comprised of the price movement ...
  6. Ascending Triangle

    A bullish chart pattern used in technical analysis that is easily ...
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center