Price Action Trading Framework — Step-by-Step Guide & Transcript

[00:01] retail traders lose money, and pretty better indicator. It's not. I've been trading for 16 years, and every trader I've watched finally turn the corner did the same boring thing. They stopped

[00:14] trying to predict the market and started reading it. And this next part should was never complicated. It got complicated because the internet buried it under 100 indicators and 1,000 options. Strip all of that off, and

[00:28] the next few minutes, I'm going to show you how I actually read a chart. The exact things I look for before I risk a simple dollar, and why, once this clicks, the most of your setups are going to start looking obvious. By the

[00:42] the way that someone with real screen time does, instead of guessing the loop something that might sound familiar. You've got five indicators on your chart. Three of them say buy, two say sell. You're sitting there staring at

[00:55] take the trade, it goes against you immediately. So, you go looking for the find one, you add it to the chart, and the whole cycle starts over. I've watched this exact loop more times than I can count, and I've lived a version of

[01:09] there's no simple framework underneath the decisions. So, every chart is a guess dressed up as analysis. The traders who turn the corner don't add more to their screen. They strip it down. They read the same few things the

[01:23] same way every single time. And before I go any further, simple does not mean safe. Trading carries real risk, and you can lose money. That doesn't change. What simple means is repeatable, and repeatable is the only thing that gives

[01:35] things for me was when I pulled up a chart I'd been watching for weeks, disagreeing, and I just deleted everything, all of it. Left the price, left the candles, and drew one horizontal line at a level that had

[01:49] clearly held multiple times, and suddenly the chart made sense. Not because I'd stopped adding noise on top of what was already there. What changed what it actually is, a record of decisions made by buyers and sellers at

[02:04] everything else off, those decisions become visible. You can see where You can see where buyers stepped in and held the level. That information was through everything I'd put on top of it. So, what does that simple framework look

[02:19] like? It's four things. They fit together and the first one is the only map you actually need. Pillar one, the map. When most people look at a chart for the first time, they see noise. Candles going up, candles going down, no

[02:31] logic, no pattern. So, they react to every little wiggle and get chopped up actually happening underneath that noise. Price is not random. It moves have already shown up there. Support is where buyers keep stepping in, price

[02:46] consistently enough to stop the move lower. Resistance is where sellers kept stepping in, a price where supply has come in consistently enough to stop the move higher. Those levels are your map and here's why this is pillar one. Once

[02:59] the levels are drawn, the chart stops being noise. You're no longer guessing where the price might go. You're watching how it behaves at a level that different kind of trading. The map doesn't predict a move, tells you where

[03:12] everything about how you read a chart. Now, how do I actually draw these levels? I'm looking for areas where price has touched, reacted, and moved interesting, two touches makes it real

[03:25] I draw one clean horizontal line, not a wide zone, a very specific price. need to know exactly where you're going to act. I also pay close attention to level, not just where they touch it. A wick that tests a level and a close that

[03:41] confirms it are two very different things. The setups I actually trade off levels are straightforward. The first is a hold above a level that was previously resistance. Once that level flips as support and the price holds above it on

[03:54] a retest, I want to be long above that level. The second is a reclaim. Price breaks below a level, comes back above it, holds a close, and I enter on the confirmation of that reclaim. The third is a rejection at resistance. The price

[04:06] approaches a significant overhead level. It shows me a rejection candle there on a daily candle, and I can trade the short side on that right under that have in common. They all start with a level. I didn't look at a random price

[04:18] and decide to trade. I found a level the market had already proved it cared about, and I waited for the price to tell me what it was going to do when it got back there. The level is just a location. Price action at the level is

[04:30] what gives me the permission to act. One thing I want to be clear about, a level is not a guarantee. The price can still slice right through it. That's exactly why the next three pillars exist. The map alone is not the trade. Pillar two,

[04:42] most expensive lesson I've learned in 16 years of trading. Early this year in years of trading. Early this year in 2026, I tried to buy the dip futures. I bought when it dipped from $120 down to 95, and I bought 30 lots, and I just

[04:56] bought too early before there was confirmation of a bottom, and silver confirmation of a bottom, and silver dipped to about $67, and I was down $3.7 in about 3 hours. Fortunately, I was able to catch a small bounce, and I

[05:09] secured a loss at 1.9 million. But, the lesson here is that you have to read the thought buying the dip during a falling knife was a good idea. At the time, I thought silver couldn't dip any more than 20% in a day, but it clearly did.

[05:24] Silver dipped, I think, 40%, [music] and that caused me to have the biggest loss I've ever incurred in one day. And the lesson that came out of that, the one I will never forget, predictions cost, reactions pay. And that's what

[05:36] pillar two is, confirmation. Here's what it looks like without it. You see price going to bounce, you buy early. You are front running a move that hasn't the chart is doing, you're trading what you think it should do. These are two

[05:49] completely different things. Confirmation fixes this. Before you enter, you decide exactly what the price has to do at your level before you're allowed in. Not it looks strong, specific action. A hold, a reclaim, a

[06:01] break and retest, [music] something that actually happen and nothing you're hoping it's about to do. The level tells you where to watch, confirmation tells you when to act. The distinction is a line between betting on your opinion and

[06:13] reacting to proof. And once you internalize that, you stop taking half the trades you used to take. Not because you got more selective, because the ones anymore. Here's what confirmation looks like on the reclaim setup. The price

[06:26] weekly support that has held three times before and it closes below it. Now I'm watching. I'm not entering. I'm waiting to see what the price does when it comes it comes back, pushes above the level and then closes back above on the daily,

[06:40] that's confirmation. The level has been retested and held. The market has shown me specifically that the buyers are defending that price. What I'm not doing is entering when the price approaches a level. I'm not entering because it looks

[06:52] it's shown me with the close that it held. That one distinction is the entire difference between confirmation and prediction. And [music] that situation I described with silver earlier with predicting cost me a lot of money.

[07:05] Reacting to what price actually does is the only version of this game that gives doesn't make you right, it makes you disciplined. You're still going to lose trades. You just stop losing the ones that were never trades to begin with.

[07:17] Pillar three, invalidation. I want to describe a feeling that every trader going against you. And instead of getting out, you start negotiating with yourself. Maybe it comes back, maybe this is just noise. So you slide your

[07:30] stop lower or you add to the position. Now what was a small loss is turning into something that actually hurts. That feeling, the moment of negotiation, that's what happens when you didn't have the invalidation before you enter.

[07:43] Pillar three is simple. Before you enter a trade, you already know the exact price that proves you wrong. Not a feeling, not if it goes much lower, a specific level. If the price loses that level or breaks a structure that you got

[07:55] in, you're out. No discussion, no renegotiation, out. Here's why this is a pillar and not just a footnote. Knowing where you're wrong does two things at the same time. It makes the decision automatic. You're not trying to figure

[08:08] You've already decided while you were calm before any emotion was involved, and it makes the sizing safe because your invalidation point tells you how much you can risk on this trade. The math controls the size, not your

[08:21] confidence level in the moment. The dollar amount is just what happens to follow from that level given my size. On the reclaim setup, my invalidation is below the level I just bought. Specifically, if the price closes back

[08:33] below the level I just reclaimed on the daily, my thesis is wrong. The market told me that level was reclaimed. I entered on that read. And if it loses that level again on a closing basis, the read was incorrect and I'm out. That is

[08:45] I'm in the trade. That's a decision I made before I entered. The reason I think about it as a close rather than a tick below it is that intraday noise can actually breaking it. A close below that level is a market making a statement. A

[09:00] wick below it is a market testing that level. I give price room to test. I do not give it room to close below and come back. If it closes below, the level is broken and I treat it as broken until the market proves otherwise. A stop

[09:12] protects you from a small loss turning into an account ender. The difference is the whole game. Pillar four, context. Here's a mistake I've seen cost traders real money. They find a clean setup on a single name. Everything looks right,

[09:25] level's there, confirmation's there. They get in and then they get run over over the same time and they never looked up from the one chart they were focused on. That's what pillar four is about. A single chart doesn't exist in a vacuum.

[09:38] Before I size into anything, I check the bigger picture. The three context checks I run before I size into any trade in the order I actually run them. First, what is the overall market doing right now? I pull up SPX or QQQ on the daily

[09:51] chart and ask whether it's in a clear trend, extended after a big run, or in a choppy sideways range. A long setup on a stock into a market that is rolling over is fighting the tape. I want the broader market moving the same direction as my

[10:03] trade or at a minimum not actively working against it. Second, how extended is the move I'm entering? If the stock has run five days in a row without a meaningful pullback, the risk profile on a new long entry is completely different

[10:16] three-week consolidation. Same setup, different context. The extended move gets smaller size or I pass it entirely. Third, is there a catalyst nearby? Earnings after the close, CPI tomorrow morning, a Fed speaker this afternoon.

[10:29] These events change the risk profile of any trade regardless of how clean the setup looks. I do not avoid all news, but I do size down into known catalyst. A setup I would take at full size on a calm Tuesday gets half the size or less

[10:43] going into a number. The chart setup might be perfect, but the news events can override anything. Context decides whether a clean setup deserves full size, half size, or a pass. Same setup, different context, completely different

[10:55] trade. Context won't make a bad setup good, but ignoring it will turn a good setup into a loss you never saw coming. The payoff. Let me put all four side by side. The hard way looks like this. 12 indicators predicting tops and bottoms,

[11:08] 10 browser tabs, a different plan every single session. No framework underneath any of it. Just guessing with extra steps. The simple way looks like this. already proven themselves? Confirmation, what does price have to do at that level

[11:21] before I'm allowed in? Invalidation, where am I wrong? Decide before I enter while I'm still thinking clearly. Context, what is the broader market doing and does this setup deserve full size, half size, or a pass? Four things

[11:34] run the same way every single time. Notice what's not on the list. No secret indicator, no prediction, no trying to be smarter than the market. You're not guessing anymore. You have a process. A complicated system falls apart the

[11:47] second real money is on the line. A simple one is the only kind you can actually run under pressure. And running it the same way every time is exactly never noise. Once you strip your own

[11:59] noise off of it and read these four things, the setups worth taking start looking obvious. And the ones you used to force just disappear because they didn't have a framework to see that. Now you do. What changed for me was that I

[12:12] stopped reacting to noise. Before I had this framework, every wiggle on the chart felt like something I needed to respond to. Every candle was potentially I was either catching or missing. It was exhausting and it was expensive. Once

[12:25] these four things became the filter, the map, the confirmation, the invalidation, the context, the noise disappeared. Not because the market got cleaner, because question that actually mattered. Does this qualify or doesn't it? And when the

[12:38] answer is no, I do nothing. When the answer is yes, I know exactly what I'm doing and why before I ever click buy. The clarity is what the four pillars actually give you. Not a prediction, not a guarantee. A repeatable process you

[12:50] can run the same way every time. And that consistency is where the edge comes from. But reading the chart is only half of it. The other half is what happens inside your head the second real money is on the line because that's where most

[13:02] traders freeze, move their stop, and hand it all back. Even the ones who can read a chart perfectly. I broke that entire side down in the video on your screen right now. Go watch that one next.