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How Read PRICE ACTION on Candlestick Charts (with ZERO experience)

If you’re like me and you’ve ever looked at a chart and thought, “What is going on here?” you’re not alone. Some days, price action is so clean it feels like everything clicks. Other days, it’s a mess. In this guide, I’m walking you through how I look at price action, know when to trust it, and when to step aside.

What Is Price Action and Why Does It Matter?

Before diving into strategies, let me explain what price action really means. Price action is simply how a stock moves — up, down, or sideways — without relying on indicators. It’s just you, the chart, and what the candles are telling you.

Price Action, Defined

When I say “price action,” I’m talking about how price behaves over time. No RSI, no MACD (unless I’m checking for confirmation). Just clean candlestick movement.

It’s what most of my trading decisions are based on. If the candles are communicating clearly — big green moves with light red pullbacks — that’s clean action. And I’m far more likely to trust a setup in that environment.

Clean vs. Choppy Price Action

The difference is night and day. Clean price action gives you strong breakouts, obvious trends, and logical pullbacks. Think of a textbook bull flag: it pulls back neatly, holds VWAP, and then rips.

Choppy price action? That’s when you see things like topping tails, failed breakouts, and big flushes right after an entry.

TVGN was, without a doubt, terrible. The price action was just awful, and as the day went on, it just got more difficult. It sold off, and I’m glad that I stopped trading it.

How I Use Price Action To Make Trading Decisions

Now that we know what clean price action looks like, let’s get into how I actually use it in real-time.

Recognizing High-Probability Setups

When I’m trading, I’m looking for confirmation through price and volume. If a stock breaks out on high volume and pulls back on lighter volume, that’s a green light. Patterns like the bull flag or micro pullback work best in these moments. Take VVPR, for example — clean move, great volume, and I was able to scale early.

Avoiding Bad Setups

When things aren’t clean, I step back. TVGN looked good at first, but there was no catalyst. It flushed multiple times, couldn’t hold above VWAP, and gave me nothing but fakeouts. I said it live: This was just awful price action, and I was glad I stopped trading it.

Managing Risk Based on Price Action

Your trading success isn’t just about entries — it’s about knowing when not to trade.

Position Sizing Based on Market Conditions

I always start my day capped at 5,000 shares. I don’t size up unless I’ve earned it, meaning I’ve already booked $1,000 in profit. If I never get to $1,000 in profit, I remind myself that I will never increase my size. If I go red early, I stay small. It’s that simple.

Knowing When To Walk Away

If I take three losses back-to-back, I walk away. If I see topping tails or the MACD crossing against me, I walk away. Today, I hit $600 in profit and decided to stop. I started looking around at the price action, and I was like, I don’t see anything to trade. I think I’m playing with fire here.

My Go-To Price Action Patterns

These setups are the core of my strategy, but only when price action is clean.

Bull Flags

One of my favorite patterns. A strong initial move, a light pullback, and a breakout continuation. It works because it builds on momentum without giving too much back.

Micro Pullbacks

These are great during fast-moving markets. Quick dips that last one or two candles, followed by a snapback. Perfect when paired with volume surges.

Common Mistakes Traders Make With Price Action

Even after all these years of trading, I still see traders — and sometimes even myself — fall into the same traps. These mistakes can turn a solid setup into a losing trade faster than you’d expect.

Misreading the Setup

This one’s big. Just because a chart shows a breakout doesn’t mean it’s tradable. I’ve jumped into trades just because it “looked” right, without checking volume, news catalysts, or whether it had already made its move. You have to be honest about whether the setup really has follow-through potential.

Trading in Choppy Conditions

One of the most dangerous things a trader can do is force trades in bad price action. I’ve done it. You take one trade, and it fails. You try again. It fails again. That’s when I remind myself that if the market isn’t giving clean resolution, it’s not worth the risk. Step back. Let the market come to you.

Ignoring Risk Rules

Sizing in too soon, especially on the first trade of the day, is a recipe for regret. I’ve had days when I went red right away because I ignored my own size cap. Now, I won’t size up unless I’ve locked in at least $1,000 in profit.

Recognizing these mistakes — and actively avoiding them — is just as important as learning new strategies.

Conclusion

Price action trading strategies aren’t just about what you see — they’re about how you respond. If the action is clean, I lean in. If it’s choppy, I walk away.

The more disciplined I’ve become with this, the more consistent my results. Trading is risky. My results aren’t typical. Manage your risk, take it slow, and I’ll see you back here for the next one.

And if you’ve been following my journey, you know I believe in full transparency. That’s why I publicly share my validated trading statements every single day. If I’m going to talk about what works, I’m going to back it up with real trades.

Stay smart, trade safe, and trust the price.