What does it mean when there is "price action"?

By Investopedia Staff AAA
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 exactly is being done when shares are bought and sold?

    Most stocks are traded on physical or virtual exchanges. The New York Stock Exchange (NYSE), for example, is a physical exchange ...
  2. How does FINRA differ from the SEC?

    With all the financial organizations out there, knowing what they all do can be as complicated as knowing where to invest. ...
  3. What is the difference between the Dow and the Nasdaq?

    Because of the way people throw around the words "Dow" and "Nasdaq," both terms have become synonymous with "the market," ...
  4. What is the downtick-uptick rule on the NYSE?

    To ensure orderly markets, the New York Stock Exchange (NYSE) has a set of restrictions that it can implement when experiencing ...
RELATED TERMS
  1. Bulldog Market

    A nickname for the foreign bond market of the United Kingdom. ...
  2. Forex Spread Betting

    A category of spread betting that involves taking a bet on the ...
  3. Mass Index

    A form of technical analysis that looks at the range between ...
  4. Money Flow Index - MFI

    A momentum indicator that uses a stock’s price and volume to ...
  5. On-Balance Volume (OBV)

    A momentum indicator that uses volume flow to predict changes ...
  6. Negative Volume Index - NVI

    A technical indicator that relies on changes in a security’s ...
comments powered by Disqus
Related Articles
  1. Playing Penny Stock-Like ETFs
    Stock Analysis

    Playing Penny Stock-Like ETFs

  2. Hypothesis Testing in Finance: Concept ...
    Active Trading Fundamentals

    Hypothesis Testing in Finance: Concept ...

  3. Technical Top-Down Investing: Analyzing ...
    Retirement

    Technical Top-Down Investing: Analyzing ...

  4. Spotting A Market Bottom
    Bonds & Fixed Income

    Spotting A Market Bottom

  5. Using the Coppock Curve to Generate ...
    Technical Indicators

    Using the Coppock Curve to Generate ...

Trading Center