How to Think Like a Price Action Trader

Jasper Osita - Market Analyst

2025-07-18 10:42:09

Goal of This Lesson

To bring everything full circle, from the foundations of price action to strategic execution. This final chapter is about applying the full picture: narrative, levels, timing, confirmation, and most importantly, how to think like a trader, not just follow patterns.

Quick Recap of What You’ve Learned

Let’s rewind the key building blocks of this Price Action Series:

Introduction to Price Action

You learned that price action is the language of the market.
It's not about prediction—it's about reading behavior, context, and intent.
Indicators lag. Price leads.

“If you can read price, you can trade anything—forex, gold, indices, even crypto.”

Price Action at Key Levels

You learned how to identify decision zones: highs, lows, session opens, and psychological numbers.
Price slows, rejects, or breaks strongly at these zones because liquidity and attention are concentrated there.
Not all levels are equal—confluence and context matter.

Breakouts and Fakeouts

A real breakout = structure + momentum + timing.
A fakeout = a trap without confirmation, often designed to hunt stops.
You learned to avoid chasing the first break and instead wait for proof.

Retest vs. Pullback

Retests happen after a breakout, usually at the same key level.
Pullbacks happen within trends, often deeper.
You learned that confirmation on the retest gives you a cleaner, higher-R trade.

Trading Reversals with Price Action

Reversal patterns aren't about guessing tops and bottoms—they're about reaction to exhaustion.
You looked for sweeps, rejections, and structure shifts.
You learned to wait for traps to spring and follow through before entry.

From Pattern Follower to Tactical Trader

This is your final transition.

Most traders stop at step 3:

Step 1: Learn patterns.
Step 2: Memorize names.
Step 3: Wait for perfect textbook setups.

But pros move further:

Step 4: Understand price action context and narrative.
Step 5: Combine time, level, and price behavior.
Step 6: Execute based on what price proves, not what it “might” do.

The 7-Layer Price Action Thinking Model

Here’s the real framework to apply going forward:

Layer	What to Ask Before Every Trade
1. Narrative	What is the market trying to accomplish? Who’s in control?
2. Structure	Are we trending or ranging? Has there been a recent BOS?
3. Key Level	Are we reacting at a significant support, resistance, or session level?
4. Liquidity Context	Has price just swept liquidity or is it about to?
5. Session Timing	Is this move happening during a valid session (e.g. NY Open)?
6. Candle Behavior	Are we seeing rejections, engulfings, or signs of exhaustion?
7. Confirmation	Is there a follow-through signal: retest, structure shift, or BOS?

If 5 or more align, the setup is likely worth taking.
If only 2–3 align, skip it. Stay patient.

Note: Confirmation is crucial and imperative. No confirmation, no trade.

What Price Action Traders Actually Do

You now:

Wait for price to react at your level, not guess the turn.
Let price prove its direction with confirmation, not chase impulse.
Think in layers: time, level, structure—not candle names alone.
Act like a strategist, not just a chart reader.

How to Apply This Moving Forward

1. Screenshot Your Trades

Before and after
Mark the 7 layers: what was present, what was missing

2. Create a Playbook

Breakout setups, retests, reversals
Group trades by session and type
Journal your decision-making process

3. Plan “If–Then” Scenarios

“If price sweeps last week’s high during NY Open and rejects, then I’ll drop to M5 and wait for a BOS for a reversal short.”
This makes your process mechanical and reduces emotional bias.

Check this out: Scenario Planning in Trading: How to Forecast Both Bullish and Bearish Moves with Risk Control

Final Thought

“Trading isn't about spotting patterns. It's about recognizing where the market is vulnerable—and reacting with precision.”

This is what separates consistent traders from confused ones.

You now have the tools, mindset, and structure to trade with clarity and conviction.

Your Next Step

Don’t just finish this series. Live it. Apply it.

Revisit each chapter monthly.
Build your own decision checklist based on this framework.
Keep your charts clean. Let price action speak.

This is how professionals trade. And now, you do too.

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This content may have been written by a third party. ACY makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or other information supplies by any third-party. This content is information only, and does not constitute financial, investment or other advice on which you can rely.

Autor

Jasper has been in the markets since 2019 trading currencies, indices and commodities like Gold. His approach in the market is heavily accompanied by technical analysis and of course, supported by fundamentals. He has a background in trading proprietary firms and has been teaching students how to navigate themselves in the markets from basic to advance concepts.

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How to Think Like a Price Action Trader

Goal of This Lesson

Quick Recap of What You’ve Learned

Introduction to Price Action

Price Action at Key Levels

Breakouts and Fakeouts

Retest vs. Pullback

Trading Reversals with Price Action

From Pattern Follower to Tactical Trader

The 7-Layer Price Action Thinking Model

What Price Action Traders Actually Do

How to Apply This Moving Forward

1. Screenshot Your Trades

2. Create a Playbook

3. Plan “If–Then” Scenarios

Final Thought

Your Next Step

Start Practicing with Confidence - Risk-Free!

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