How do you trade based off of "price action"
- Thread starter ET873
- Start date
And there's the answer. Price action is an opinion and not a fact.
Whatever works and puts money in your pocket consistently over a long period of time in a market that changes constantly. That's my price action.
The indicator phase is something that probably everybody probably has to go through, whether it's MAs, stochastics, MACD, %R, VWAP, MP (if you're looking only at the form), Pivot Points, Fibonacci, Bollinger Bands, chart patterns of one sort or another, candles, or even the price bars themselves (range bars, CVBs, tick bars, VSA, etc). And if one can make that endeavor successful by going through the necessary testing and developing the necessary plan, then there's absolutely nothing wrong with settling into that phase for the rest of one's successful trading life.
Since all of this depends on its existence on the movement of price, however, it is all "price action", hence the confusion over what is meant by "price action". But trading by price means simply that one is following price flow (not order flow, but the movement of price) and the imbalances between buying pressure and selling pressure that prompt that flow. It has nothing to do with any kind of indicator or any sort of bar or even any kind of chart. Is it superior? Yes, if it makes more money than an indicator-based approach. If it doesn't, then no. Does it get one into moves earlier than an indicator-based approach (including those which focus on bars)? Yes, if one understands the buying-selling dynamics mentioned above. But getting in early is only part of what is required to make a profit. Otherwise, all counter-trend traders would be rich.
Though there are undoubtedly price action people who look down their noses at indicator people, the PA people have no reason to feel superior. And contrary to the beliefs of some indicator people, the PA people do not fail to understand indicators; they just don't see the point (other than perhaps scanning a database for price movements). In most cases, the latter have in fact gone through all this, as mentioned earlier, and had insufficient success with it, just as they've been dissatisfied with the chat room phase and the newsletter phase and the advisory service phase and the red-green arrow software phase and the seminar-course-workshop-DVD phase and the trade-the-news phase and the chart pattern phase and have instead found a more comfortable fit with a focus on price flow.
It's all about the money and how one chooses to go about getting it. There is no inherently better way, particularly if the trader doesn't care to do the work. A good fundamentalist, after all, will beat a bad technician any day. Therefore, if one is using indicators but has no idea how they're calculated, much less done the testing necessary to make the most of them, he is unlikely to reap the full -- or any -- benefit. If one is trading price flow but embraces irrational views of what constitutes support and resistance, he is similarly unlikely to reap the full benefits of that approach. Either way, it's all about study and testing and screen time. Without that, it makes absolutely no difference how one goes about the process of entering and exiting a position.
Since all of this depends on its existence on the movement of price, however, it is all "price action", hence the confusion over what is meant by "price action". But trading by price means simply that one is following price flow (not order flow, but the movement of price) and the imbalances between buying pressure and selling pressure that prompt that flow. It has nothing to do with any kind of indicator or any sort of bar or even any kind of chart. Is it superior? Yes, if it makes more money than an indicator-based approach. If it doesn't, then no. Does it get one into moves earlier than an indicator-based approach (including those which focus on bars)? Yes, if one understands the buying-selling dynamics mentioned above. But getting in early is only part of what is required to make a profit. Otherwise, all counter-trend traders would be rich.
Though there are undoubtedly price action people who look down their noses at indicator people, the PA people have no reason to feel superior. And contrary to the beliefs of some indicator people, the PA people do not fail to understand indicators; they just don't see the point (other than perhaps scanning a database for price movements). In most cases, the latter have in fact gone through all this, as mentioned earlier, and had insufficient success with it, just as they've been dissatisfied with the chat room phase and the newsletter phase and the advisory service phase and the red-green arrow software phase and the seminar-course-workshop-DVD phase and the trade-the-news phase and the chart pattern phase and have instead found a more comfortable fit with a focus on price flow.
It's all about the money and how one chooses to go about getting it. There is no inherently better way, particularly if the trader doesn't care to do the work. A good fundamentalist, after all, will beat a bad technician any day. Therefore, if one is using indicators but has no idea how they're calculated, much less done the testing necessary to make the most of them, he is unlikely to reap the full -- or any -- benefit. If one is trading price flow but embraces irrational views of what constitutes support and resistance, he is similarly unlikely to reap the full benefits of that approach. Either way, it's all about study and testing and screen time. Without that, it makes absolutely no difference how one goes about the process of entering and exiting a position.
The only two sentences in this thread worth reading.
Google "Ross Hook".
Why?
'price action' and now 'price flow', well my term is 'price movement' . . . however . . .
definitions - opinions - are required in order to put some much needed clarification
of just what 'Price Action' is - to wit -
'definition' ch 1 p 1 : 'Reading Price Charts Bar by Bar: The Technical Analysis of
Price Action for the Serious Trader' Al Brooks
"There is no universally accepted definition of price action
and since you need to always trying 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.
The broadest definition includes any representation of price movement during the course
of trading."
http://www.brookspriceaction.com/kb.php?mode=article&k=1
see: 'BAR BY BAR -- Al Brooks ' : http://www.elitetrader.com/vb/showthread.php?s=&threadid=167971
how to trade ~ 'Price Action - The Footprint of the Money' Judy MacKeigan - Buffy
http://www.dacharts.com/articles/Buffy_on_price_action.php
imo 'price action' trading â trading the price movement Has To include Time in the
analysis/calculation of trades, a personal choice
definitions - opinions - are required in order to put some much needed clarification
of just what 'Price Action' is - to wit -
'definition' ch 1 p 1 : 'Reading Price Charts Bar by Bar: The Technical Analysis of
Price Action for the Serious Trader' Al Brooks
"There is no universally accepted definition of price action
and since you need to always trying 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.
The broadest definition includes any representation of price movement during the course
of trading."
http://www.brookspriceaction.com/kb.php?mode=article&k=1
see: 'BAR BY BAR -- Al Brooks ' : http://www.elitetrader.com/vb/showthread.php?s=&threadid=167971
how to trade ~ 'Price Action - The Footprint of the Money' Judy MacKeigan - Buffy
http://www.dacharts.com/articles/Buffy_on_price_action.php
imo 'price action' trading â trading the price movement Has To include Time in the
analysis/calculation of trades, a personal choice
