Price Action Trading Myths: Did You Fall For Any Of It?

In my previous post

I said if you want to be a consistently profitable trader, you need to avoid indicators, news, and opinions.

Now you’re wondering:

“So what should I focus on?”

Price action.

I’ll explain…

Price action trading is a methodology that relies on historical prices (open, high, low, and close) to help you make better trading decisions.

Unlike indicators, fundamentals, or algorithms… price action tells you what the market is doing—and not what you think it should do.

But first, let’s dispel the biggest myths surrounding price action trading…

Myth #1: Price action trading doesn’t work on stocks or cryptocurrencies

The term price action is popularized by Forex traders.

Thus, it’s not surprising that stock (or even crypto) traders think it won’t work for them.

But don’t be fooled.

Price action trading can work across different markets.

Here’s why…

Price action trading takes into account the historical movement of prices, and then, use that to make an informed trading decision.


If a market is in an uptrend, then a price action trader can look for buying opportunities.

Here’s an example:

THC (Daily Timeframe)

As you can see, THC has made a series of higher highs and lows—so it’s in an uptrend.

As a price action trader, this is a market condition where you want to look for buying opportunities so you can trade along the path of least resistance.


If the market is in a downtrend, then a price action trader can look for selling opportunities.

Here’s an example:

Bitcoin (Daily Timeframe)

As you can see, Bitcoin is in a downtrend.

So if you want to put the odds in your favour, you should look for selling opportunities.

And finally…

If the market is in a range, then a price action trader can look to buy at support and sell at resistance.

EUR/GBP (8-hour Timeframe)

As you can see, EUR/GBP is in a range market.

So in this market condition, you can look to buy low and sell high using tools like support and resistance.

The best part?

Price action trading can be applied across different timeframes.

Earlier, you’ve seen charts from the daily timeframe, 8-hour timeframe, and 4-hour timeframe.

Now, let’s move on and destroy the next price action myth…

Myth #2: You must pay attention to fundamental news

I wish news trading could be as easy as…

  • Good news = buy
  • Bad news = sell

Unfortunately, that’s not the case.

Because the market can go up on bad news and go down on good news.

Let me repeat that once more.

The market can go up on bad news—and go down on good news.

Here’s an example…

During the 2016 presidential election, many thought if Donald Trump won the election, it’ll be bad for the country.

That’s because he has no experience in politics, doesn’t know what he’s doing, and is more emotional than logical.

But guess what?

He won the 2016 presidential election. 

The day the election results came out, the US stock market dropped 100 points in a matter of minutes—as most pundits predicted.


Within the next few hours, the market recovered from those losses and closed higher—and over the next few days, the market broke out to all-time high.

Here's what I mean...

S&P 500 (Daily Timeframe): Presidential election

So now the question is…

How do you “predict” the market reaction to the news?

Well, the secret is this:

Just follow the price.

That’s because if the market is in an uptrend, it’s likely to continue higher.

So if you want to predict what the market will do, predict it will move higher (and vice versa).

When you look at the market in this manner, news release no longer matters.


That’s because the market usually makes its move before the news.

Here’s an example…

European Central Bank rate cuts

On September 4, the European Central Bank cut interest rates to combat low inflation—which is bearish for the Euro.

But if you look at the chart above, the EUR/USD has been in a downtrend for a few months before the news release.

So based on the market’s price action, you can predict the news will be bearish for the Euro—even before it’s out.

But don’t take my word for it.

Study a trending market (on a daily timeframe or higher) and pay attention to how the news affects the price.

Does the price lead the news or, does the news lead the price?

Myth #3: You need to watch the markets all-day

You might think you need to watch the markets all day…

To stay updated with the news and to analyse every candle on the chart.

But the truth is, you don’t.

Here’s why…

The price leads news

As you’ve seen earlier, you don’t need to follow the news if you follow the price.

That’s because the price leads news (at least that’s my belief).

Higher timeframe

And what about analyzing every candle on the chart?

Well, you can pay attention to every candle on the chart without watching the markets all day.


By trading off the higher timeframe like the 4-hour and above.

This means a new candle is “painted” once every 4 hours—which means you don’t have to watch the markets all day.

And because you’re on the higher timeframe, your stop loss is wider and it’s enough to withstand most news releases in the market.

This means you get to stay in your trade longer without getting stopped out unnecessarily.

Here’s what I mean…

EUR/USD (5 Minutes Timeframe): Non-farm payroll (NFP) news release

As you can see, the price spiked up and down on the 5 minutes timeframe and you'll likely get stopped out of your trade.

However, look at the daily timeframe...

EUR/USD (Daily Timeframe): NFP news release

You can see the NFP news release is only a small blip on the daily timeframe.

So if you set your stop loss based on the daily timeframe, it's unlikely you'll get stopped out.

I'll teach you how to set a proper stop loss in my next post.

But for now, let's move on...

Myth #4: You need a lot of capital to start with

This is true in the early days when technology isn’t as advanced and commissions were high.

But today, things have changed.

Here’s why…

You can start Forex trading with as little as $200

Yes, you read me right.

You can open a Forex trading account with as little as $200 (and some brokers require less than that).


You don’t have to pay commissions when you buy/sell stocks

That’s because brokers like Robinhood and TD Ameritrade offers commission-free trading.

This means you don’t need a large amount of money to trade stocks as commissions no longer “eat” into your transaction cost.

And finally…

It’s smart to start small

When you’re new to trading, you’ll make many mistakes along the way (like pressing the sell button instead of buy, using the wrong position size, etc.).

The good news is…

If you start with a small account, the cost of your mistakes is small (in monetary terms).

However, if you start with a 6-figure account, the cost of your mistakes is a lot more expensive.

So, if you want to pay lesser tuition fees to the market, then it’s smart to start small.


Myth #5: You need a lot of time to learn price action trading

Can you recall the toughest exam paper you took?

No matter how long you stared at the question paper, you can’t seem to find the answer to it.

And let’s be honest, even if you were given 10 hours to complete, you still can’t get it right.


Now, it’s the same when learning price action trading.

If you don’t know what to look for, you can spend years trying to figure out how it works—without success.

But the good news is…

You don’t need to spend years to learn price action trading.

Because once you’ve learned the formula behind it, everything will instantly make sense—and you’ll never look at price action trading the same way again.

I’ll reveal the formula in my next email.

Stay tuned…

    • Thank u so much for ur dedication to help others succeed, I love ur way of teaching especially when u crack jokes to release tension, u are God gifted teacher and I really appreciate all ur efforts. Keep it up Ray.

  • Thanks so much Rayner…You have been a great help in developing my strategy

    Got to know about your site and YouTube channel two weeks back
    Now I have a strategy of my own

    Thanks to your PDFs and videos

  • I have seen most of your videos and results are amazing. I am amazed with price action strategy of yours. I follow you. Excited for next email. Thank you for your efforts.

  • Price action that I likes most is when the price reverse and change to bull or bear with kind of confirmation …the harami or engulfing or hammer type of candle stick …thats the particular to see…

  • this is a very good information i am new here
    looking forward to be a better trader i try before but lost it all this will be my second chance thanks

  • Wow interesting, well for me I love the price action more, and thanks for your videos and free really working on me am understanding forex more better just opened a demo

  • Thanks, Rayner. This is so helpful. I have learned a lot just from this.
    But I really need help in my trading psychology and also in putting my stop loss.
    Jeez, I really need help but thanks again.


  • RT. Thanks for sharing the years of knowledge and the skills you’ve accumulated with others. I’ve been a “part time trader” since I retired from my first career (after 30 years) and only after I grabbed a second full time career (double dipping now).

    PT trading has become a hobby and honestly, I’ve been trying to define my methodology and when I became a YT subscriber and a follower, I was hooked…this was it. You’ve helped me hone and sharpen the skills, you’ve given meaning to them, defined and named them and finally, the pieces of the puzzle are fitting into place. I have missed all of the smaller pieces, but not anymore. Can’t wait to get your first book and read it. I’m not a big reader, but this will be a must.

    Many thanks to the hours you put into your business.

    Added Bonus: This is all done in my retirement account so, enormous benefits not having to worry about short/long term positions and tax implications. Downside, or upside even…my 457B plan only let’s me allocate 50% of my savings into TDA.


  • hey hey hey Rayner! you really are a great guy. the language is so simple to understand, I guess when they coined KISS they had you in mind. cheers my friend.

  • Hi, I’m just start to learn trade.. Before trading I would like to learn as much I can… And you become a guidance us. I always waiting for your email to learn new information. Your experience is our education.

  • Thank you so mch sir….I have learned a lot…I’m just new and want to learn more before I start trading…I’m just practicing in virtual trading for 5 months…Thanks God I saw your youtube channel and I have learned a lot from your contents.

  • Thank you very much Mr Rayner I really appreciate your support by giving me this important information about trading all the best sir I FEEL REALY BLESSED TO KNOW YOU you are a very important person that can change the world and make it a better place for us

  • Rayner thank you so much for your article on price action. You have made the explanation very simple for a new trader like me to digest.
    I am Michael from Ghana and I appreciate your effort.

  • I really love your way of teaching. Much honor. For me you have opened doors. I started 6 months ago not knowing annything. But I am eager to learn.. and you serve me wonderfully! Big thank U Rayner, for making it possible 4 me to be where I am at ❤ ..can’t wait to repeat and learn more..

    • Thank you for your kind words, Missy Dizzy!

      We’re so happy to know you find our materials informative.


  • Hi thank you so much, this was quite helpful, but from recently watching your Sniper entry trading with the 20EMA(I’ve found with my current price action strategy. I would miss a lot of opportunities, unless I’m not fully understanding it), how do we now use just price action trading to get those sniper entries to minimise stop loss risk?

  • Thank you, your article is always helpful. Tho I still find it difficult with my entries, sometimes am too early or too late, still don’t know why, it may be my lack of patience or maybe I still haven’t gotten a proper understanding yet

  • Excited for your next lesson. I’m learning a lot reading your book(PATS) and watching your YT channel. Thank you so much.

  • helpful article, which timeframe would you recommend for daily trading (stocks,commodity)? combining 15min + 1h/4h maybe with 5/10 for placing the position?

  • Thank you for this Rayner, I have actually learnt a lot from you and I appreciate every piece of your information

  • Logically and great acknowledgment. Thanks Rayner Teo, waiting for your next email. Will try to understand and study the price action.

  • very informative, educating and good . i real learnt alot from it, but i will be very much grateful if you can send the formula behind the price action trading in your next post or and better still send as well directly to me via my e-mail

  • I just realised that you are a very honest and smart guy who can give the essence like ultra pro. I watched most of your youtube video and realized that I was in the wrong path of trading past couple of months and I further realized that nothing is inportant other than gaining ability to read the market and understand the real scenario behind the every price action. I was wrong that I went behind indicators and secret ways to predict the market future I really like what you are doing and keep doing It when I become a great trader one day I will not say I just learn alone Its clearly you clear my path ever.

    • Thank you so much for your kind words, Hasitha!

      We really appreciate what you’ve said. We’re so glad you find our videos useful.


  • I rarely write reviews unless I feel very strongly and I have to say Rayner comes across as really transparent. He manages to explain things pretty clearly and he is an inspiration. Keep up the great work. The book is great too