can price action predict market moves

[longandshort]

I still use Windows 7 pro and a pen and paper to jot down words and numbers during the trading session. I also use a paper "to-do" list daily.

Using Notepad does not add profitability, efficiency, or effectiveness to my world.

Using notepad doesn’t. Using a note taking app that allows you to tag and organize data in a more meaningful way can. But this is marginal. What I’m talking about is understanding what drives returns and where your edge comes from.

 

[Master Pu]

Stop telling people they can make money by drawing lines on a chart.

If you can't turn a profit trading a chart it shows your inability, not others. Nobody here says that chart based trading is a superior way of trading. Calm down

 

[Bad_Badness]

You have a bias that is severely coloring your perception.

I can think of dozens of locals off the top of my head who made fortunes on the floor and they chose to walk away and not bother with screen trading. You had about a half second to full second speed advantage in the pit. Which was enough time to pick off the paper orders held by brokers. Think about it from their perspective: they had an edge that worked for them and it made them very wealthy. If the edge is no longer there - go do something else with your life.

I personally was a large electronic proprietary trader (spread trader) and I knew (and know) a fair number of large electronic market speculators. They're not buying support and selling resistance. They could care less about a MACD. Their edges are more refined and sensible.

Banks make their money making OTC markets for institutional clients and syndicating private equity offerings and public offerings. It's a delusion to think that Goldman Sachs is scalping ES. Truly. There are easier ways for them to make far more money.

This is reality. So why do people not work with it? Just asking.

But to the OP, the key is know when PA does NOT tell you anything. Or more precisely, what probabilities it is telling you. Combine that 2 second accurate assessment, in real-time, under pressure, with real money, without fatigue, excellent tactical order execution and management, and you MAKE it work. You have to MAKE IT WORK. No Magic.

Trading is more like hand to hand combat. All the books and theory are just background. You should know them enough to teach them, but applying the concepts and methods, IN COMBINATION, in real time, artfully, skillfully, is required. You have to be able to do them while high, drunk, over caffeinated, sleepy, irritated, excited, astonished or just bored. You know them so well it makes all the pontificators look pathetic. If you cannot, you are not there yet.

There was some poser recently posting about "not trying" or "not thinking" as the "key". You can tell he was a egotistical poser because he forgot the most important part. The reason why you are not thinking-trying, is because it is so deeply burned into your mind you don't have to. He was like some bad version Yoda, thinking he can pose his way into mastery. Master techniques come from years of hard work, not by posing. There is no substitute.

PS: I am not exaggerating about being able to assess accurately in 2 second.

 

[Buy1Sell2]

hi all,

price moves because buyers and sellers interact with each other, continuously.
for price moves, it is irrelevant why market participants trade (i mean trade intension here), one side can be a short term scalper, daytrader, or a hedger, the other side can be a longterm investor.
they interact, and based on limit and market orders the price moves.

i know, some guys analyze the interaction of market participants. be it a pure bar chart with or without any indicator, or the trading DOM. the trader seeks to find an answer to which side is more dominant.

is there really a value in analyzing the interaction of sellers and buyers trade by trade or bar by bar?
some will say "yes, of course. you can see hidden orders, absorption, size entering the market ..."
my experience is somewhat different.

i think, it doesn't f..cking matter. i have seen many many times in the DOM, that if one iceberg order appears, there will be other market orders that will hit this order aggressively. which side the market will move next is a 50/50 coin flip. iceberg orders doesn't f..cking matter!

i used the jigsaw reconstructed tape for monthes to see size entering the market to catch moves before they happen. i could not find any edge with that. when size enters the market, it will drag the market up or down, but thats it. on the recontape you see what happened, there is no guarantee of follow through.

next comes the bar chart: i think the bar chart is a good tool to see how price moved from A to B, and how volatile price was within the bar period. i don't think there exist any bar to bar relation, it is 100% random.

i want to address one other issue, too.

give the technical trader a chart, and he will start drawing f.cking patterns and lines on it and draw scenarios: 1.scenario: if price breaks and retest, enter. 2.scenario:if price fails to breakout on good volume, fade the breakout when price bar closes back within range. .....

most technical traders do not even know what the underlying markets represent.
the technical trader will trade the ES like he trades CL.
The ES represents underlying stocks. there can be 500 reasons why ES moved 10 points within 1 minute or why one 100 lot market order moves the market and then the other 100 market order does nothing. it can be a hedge, margin call, options related, stop run, something related to one sector, arbitrage, intermarket correlation.
it can be something that just lasts for a minute, for 5 maybe.

my point is, i think previous price action might be useful, BUT it might also not be useful at all. making trading decisions based on what happened is a 50/50 coin flip IMO.

Huh?

 

[bone]

This is reality. So why do people not work with it? Just asking.

People do obvious things along with the rest of the retail mass herd (like buying S1 support). And there are successful apex predator traders and algos that exploit all of these low pain threshold just-doing-the-obvious system copy-cats. There's juice in a market where you have a crowded room filled with anxious pretenders risking scared money and that room has only one very small door. And that's when the algos and big specs pull the fire alarm.

Markets are all about pain. That's what I've come to learn over time. And using the default settings on common technical indicators whilst convincing yourself you have an edge is just another herd response. They're a school of baitfish.

 

[Buy1Sell2]

Aside from Madame Zorba and her crystal ball, nothing can predict the future. What competence in reading price action can do is let you know what is more likely to happen given certain conditions, that coupled with a solid trade plan based on said expectancy and the discipline to trade it is all a trader needs. All elements are easier said than done.

It's a WIND-UP thread.

 

[SimpleMeLike]

People do obvious things along with the rest of the retail mass herd (like buying S1 support). And there are successful apex predator traders and algos that exploit all of these low pain threshold just-doing-the-obvious system copy-cats. There's juice in a market where you have a crowded room filled with anxious pretenders risking scared money and that room has only one very small door. And that's when the algos and big specs pull the fire alarm.

Markets are all about pain. That's what I've come to learn over time. And using the default settings on common technical indicators whilst convincing yourself you have an edge is just another herd response. They're a school of baitfish.

This is good comment you stated.

This just the normal behavior of someone who makes money trading. People trade because they want to make money. So they will trade in away that "think" will make them money consistently, with ease just like going to work.

Markets are all about pain, it is not easy. Us retail traders have to trust and have confidence in what we are doing will make money and be enjoyable, and we have to bet the markets will react positivity in what we are doing for the next X to XX years.

 

[notagain]

Future price waves are unknown, sometimes indicators correctly coincide and give the illusion of an edge. Can you trade without a stop loss? Investors use options to survive drawdowns.

 

[murray t turtle]

Future price waves are unknown, sometimes indicators correctly coincide and give the illusion of an edge. Can you trade without a stop loss? Investors.... to survive drawdowns.

%%
And some use dividends;
+ different time frames.
NO such thing as a business without expences.
Good post...............................................................................

 

[SimpleMeLike]

they had an edge that worked for them and it made them very wealthy. If the edge is no longer there - go do something else with your life.

Their edges are more refined and sensible.

Hello bone,

Question for you. Where these Edges your friends had from price action, trading patterns, or volume profile, or market profile ,etc type edges?

Or were the edges more a glitch in the system or bug?

Just trying to understand where they get the edge from.