Can you trade by price action alone?
- Thread starter slipchamber
- Start date
Quote from anglagard:
Actually what I find comical is that you must go through the trouble of annotating your entries and exits when almost every package does it for you automatically.
Things that make you go hmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmm.
Those are ninjatraders default buy sell arrows on my chart....
I can't trade and I lose money everyday. Happy? Ok lets move on.
In response to the thread's question, you can trade by anything alone as long as you do your research, create a profitable trading plan based on that research, then follow the plan.
In response to GAZ, if you trade pure price action, how do you go about finding out what's causing buyers to overwhelm sellers or vice versa? Even if you could find out what's causing more institutional traders to buy than sell (or sell than buy), by the time you got that information, the trending move may be weakening and a reversal may be setting up.
The movement of price in real time is telling you everything you need to know about the imbalance between buyers and sellers in your trading time frame and you can capitalize on it by joining a demonstration of new (trend reversal), renewed (trend continuation from a pullback), or continuing (trend continuation out of consolidation) strength/weakness.
News data can be a hindrance. If an early morning economic news release misses the estimate and the market breaks out of the upper end of a range on the news and runs hard, what do you do?
Do you fade the move up and even average down against a continuing trend because you assume "they" are causing a short squeeze so "they" can then sell into strength?
Do you trade the price action but only if it sets up to the short side because you're afraid to trade against the news? Do you just sit on your hands, then, if price continues to trend higher for the rest of the day?
Or do you trade the price action and look for long entries as long as the price behavior tells you the buyers remain in control, and once the price behavior throws some reversal signals, switch to the short side?
You have no idea why buyers are overwhelming sellers on a "bad" news release, and trying to figure that out might keep you out of some profitable trades.
Anyone can trade based on price alone. This is the way most neophytes do trade.
A more interesting question is whether there is anyone out there that can trade by volume alone?
One of the best traders I ever met, for fun, devised a system where he traded via volume alone. He did have to prep by studying prior volume patterns. He didn't have many trades with this system. But when he saw what he was looking for he piled on big and made what I would consider almost clairvoyant trades.
A more interesting question is whether there is anyone out there that can trade by volume alone?
One of the best traders I ever met, for fun, devised a system where he traded via volume alone. He did have to prep by studying prior volume patterns. He didn't have many trades with this system. But when he saw what he was looking for he piled on big and made what I would consider almost clairvoyant trades.
Most neophytes, wannabe traders, understand no math and cannot figure out what an ATR, RSI or MACD, even an MA does so some snake oil salesmen sell PA to them because every future loser thinks he understands support and resistance and a breakout.
This is basically fraud. PA without detailed backtests and historical analysis is fraud.
This is basically fraud. PA without detailed backtests and historical analysis is fraud.
Can you bake a cake with flour alone? Or sugar? Why do these threads come up all the time? This isn't rocket science, don't be lazy or try to oversimplify, use everything relevant you can to tilt the odds. Besides, price action is one facet you eventually don't even think about, it just becomes a reflex, like driving, you got the rest of your brain to focus on the scenery. And if you don't like my mix of metaphors, that just furthers my point entirely.