Price action trading is a strategy used in financial markets that relies on the analysis of price movements and patterns without the use of traditional indicators. The key principles of price action trading revolve around interpreting raw price data to make informed trading decisions.

Firstly, price action traders believe that all relevant information is already reflected in the price. They focus on studying historical price movements and patterns to identify potential future price movements.

Secondly, support and resistance levels are crucial in price action trading. Traders look for areas where the price has historically struggled to move above (resistance) or below (support). These levels help in determining entry and exit points.

Thirdly, trend analysis is a fundamental principle. Price action traders seek to identify trends in the market and make trades in the direction of those trends. This involves recognizing higher highs and higher lows in an uptrend, or lower highs and lower lows in a downtrend.

Additionally, candlestick patterns play a significant role in price action trading. Traders analyze the shapes and formations of candlesticks to gauge market sentiment and potential reversals.

In summary, the key principles of price action trading involve understanding the significance of historical price movements, identifying support and resistance levels, recognizing trends, and interpreting candlestick patterns for informed decision-making in the financial markets.