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How to Trade with Price Action (Kickstarter) Trading Definitions, Concepts & Price Patterns Galen Woods ©2014 Galen Woods Contents Notices & Disclaimers . . . . . . . . . . . . . . . . . . . . . i Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . iv 1. Price Action Trading Primer . . . . . . . . . 1.1 Definition of Price Action Trading . . . 1.2 Origin Of Price Action Trading . . . . . 1.3 Markets For Price Action Trading . . . . 1.4 Essential Price Action Trading Concepts 1.5 Price Action Trading Methods . . . . . . 1.6 Beyond The Primer . . . . . . . . . . . . . . . . . . . 1 1 2 5 6 9 11 2. Beginner’s Guide To Reading Price Action . . . . . . . 2.1 One Price Bar . . . . . . . . . . . . . . . . . . . . . 2.2 Three Price Bars . . . . . . . . . . . . . . . . . . . 2.3 Reading Price Action . . . . . . . . . . . . . . . . . 2.4 A Rose By Any Other Name Would Smell As Sweet 12 12 19 20 22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. A Beginner’s Guide to Day Trading Futures Using Price Action . . . . . . . . . . . . . . . . . . . . . . . . 3.1 Choose The Futures Contract You Want to Day Trade 3.2 Get Your Trading Platform and Data Feed . . . . . 3.3 Learn How to Trade with Price Action . . . . . . . 3.4 Trade in Simulation . . . . . . . . . . . . . . . . . 3.5 Start Day Trading Futures Using Price Action For Real . . . . . . . . . . . . . . . . . . . . . . . . . . 24 24 25 26 27 27 CONTENTS 4. 10 Price Action Bar Patterns You Must Know 4.1 Reversal Bar Pattern . . . . . . . . . . . . 4.2 Key Reversal Bar . . . . . . . . . . . . . . 4.3 Exhaustion Bar . . . . . . . . . . . . . . . 4.4 Pinocchio Bar (Pin Bar) . . . . . . . . . . 4.5 Two-Bar Reversal . . . . . . . . . . . . . . 4.6 Three-Bar Reversal . . . . . . . . . . . . . 4.7 Three-Bar Pullback . . . . . . . . . . . . . 4.8 Inside Bar . . . . . . . . . . . . . . . . . . 4.9 Outside Bar . . . . . . . . . . . . . . . . . 4.10 NR7 . . . . . . . . . . . . . . . . . . . . . 4.11 What’s Next? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 30 31 33 35 37 39 41 43 45 47 49 5. 10 Price Action Candlestick Patterns You Must Know . 5.1 Doji . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Marubozu . . . . . . . . . . . . . . . . . . . . . . . 5.3 Harami Candlestick . . . . . . . . . . . . . . . . . 5.4 Engulfing Candlestick . . . . . . . . . . . . . . . . 5.5 Piercing Line / Dark Cloud Cover . . . . . . . . . . 5.6 Hammer / Hanging Man Candlesticks . . . . . . . 5.7 Inverted Hammer / Shooting Star Candlesticks . . . 5.8 Morning Star / Evening Star . . . . . . . . . . . . . 5.9 Three White Soldiers / Three Black Crows . . . . . 5.10 Hikkake . . . . . . . . . . . . . . . . . . . . . . . . 5.11 What’s Next? . . . . . . . . . . . . . . . . . . . . . 51 52 53 55 57 59 62 64 65 68 69 71 6. 10 Chart Patterns For Price Action Trading . 6.1 Head & Shoulders . . . . . . . . . . . . 6.2 Double Top / Double Bottom . . . . . . 6.3 Triple Top / Triple Bottom . . . . . . . . 6.4 Rounding Top / Rounding Bottom . . . . 6.5 Island Reversal . . . . . . . . . . . . . . 6.6 Rectangle . . . . . . . . . . . . . . . . . 6.7 Wedge . . . . . . . . . . . . . . . . . . . 6.8 Triangle . . . . . . . . . . . . . . . . . . 74 75 78 81 84 87 90 93 95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . CONTENTS 6.9 Flag . . . . . . . . . . . . . . . . . . . . . . . . . . 98 6.10 Cup & Handle . . . . . . . . . . . . . . . .