the fundamental issue that confronts him repeatedly
throughout the day is the decision of whether the market is trending
or not trending. If it is trending, he assumes that the trend will
continue, and he will look to enter in the direction of the trend ("With
Trend"). If it is not trending, he will look to enter in the opposite direction
of the most recent move ("fade" or "Countertrend"). A trend can be as
short as a single bar (on a smaller time frame, there can be a strong trend
contained within that bar) or, on a 5-minute chart, it can last a day or
more. How does he make this decision? By reading the price action on the
chart in front of him.
The most useful definition of price action for a trader is also the simplest:
it is any change in price on any chart type or time frame. The smallest
unit of change is the tick, which has a different value for each market. Incidentally,
a tick has two meanings. It is the smallest unit of change in price
that a market can make, and it is also every trade that takes place (so if
you buy, your order will appear on the Time and Sales table, and your fill,
no matter how large or small, is one tick). Since price is changing with
every tick (trade) during the day, each price change becomes an example
of price action. There is no universally accepted definition of price action,
and since you need to always try to be aware of even the seemingly least
significant piece of information that the market is offering, you must have
a very broad definition. You cannot dismiss anything because very often
something that initially appears minor leads to a great trade.