Is that what they call price action trading? i checked a site about it , it looks good , they seem to use setups who are entirely based on price and also use some S&R , i think i learned some of these but there are more tricks.
How important are basic trendline and price pattern analysis?
- Thread starter Wach80
- Start date
Is that what they call price action trading? i checked a site about it , it looks good , they seem to use setups who are entirely based on price and also use some S&R , i think i learned some of these but there are more tricks.
I definitely Agree.
I kind of hate these kind of simple technical analysis questions that ask if it's good or bad, or something like that.
You have to be well-rounded, and open-minded...while seeing the big foresight picture, yet having cold tactical precision w/o hesitation.
-- I know it may sound like generic mumbo jumbo philosophy, but there's truth to it.
I've said it before, and i'll say it again: Trading is part art, part science
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You can backtest anything you ever wanted with programming if you can define it with hard codes rules.
So let's say I define a trend line as follows( this is just random gibberish. Every language would have a way of doing something like this).
Point A = lowest low value of daily lows for past 50 days.
Point B = next lowest low value of daily lows for past 50 days.
Line = draw from point a to point b.
Buy = low touches line.
Sell = 10% stop loss or 10 percent profit target.
That's complete gibberish but basically it has a set of rules. A computer can take the logic, go bar by bar over the data, and record every trade where buy/ sell occurs.
You going into a chart and drawing s trend line is not going to say anything. What can a computer tell you about your randomly discretionary drawn line?
Patterns like head and shoulders can be very difficult to give it hard rules that we can program. Theirs just to many if,and,or,nots that you'll get a mix of what you expect and miss a lot that you that would fit in.
In words could you describe a head and shoulders pattern? How many bars does it go across, how big should the shoulders be to the top, should the shoulders be the same size? how much allowance for different size? Can should it be in a range, top of a trend? Do we allow large gaps In the data to form the head? What defines a break of the neckline? Should the span from shoulder-head-shoukder be equal amount of bars or what is the amount allowed here.
These are the issues your going to find.
So let's say I define a trend line as follows( this is just random gibberish. Every language would have a way of doing something like this).
Point A = lowest low value of daily lows for past 50 days.
Point B = next lowest low value of daily lows for past 50 days.
Line = draw from point a to point b.
Buy = low touches line.
Sell = 10% stop loss or 10 percent profit target.
That's complete gibberish but basically it has a set of rules. A computer can take the logic, go bar by bar over the data, and record every trade where buy/ sell occurs.
You going into a chart and drawing s trend line is not going to say anything. What can a computer tell you about your randomly discretionary drawn line?
Patterns like head and shoulders can be very difficult to give it hard rules that we can program. Theirs just to many if,and,or,nots that you'll get a mix of what you expect and miss a lot that you that would fit in.
In words could you describe a head and shoulders pattern? How many bars does it go across, how big should the shoulders be to the top, should the shoulders be the same size? how much allowance for different size? Can should it be in a range, top of a trend? Do we allow large gaps In the data to form the head? What defines a break of the neckline? Should the span from shoulder-head-shoukder be equal amount of bars or what is the amount allowed here.
These are the issues your going to find.
Everyone in the net treat very highly this price action thing you are talking about like it is the *ultimate secret* for successfull ta trading and then they underate indicators , they seem to use candlesticks , they check charts to identify swings and w/e.
anyway im confused now , im pretty sure trendline analysis,ma and price patterns studied the price so whats the difference between price action trading and ma/pattern trading? also i read price action traders study past data and not the last price only but they seem to avoid indicators , cant make any sense out of this.
Lol. This thread I'll have 1000 posts now that you asked the question of what's the difference between price action and technical analysis.
Indicators, trend lines, support/resistance, their all derivatives of price action in my mind.
Where is price relative to previous price. What is this telling you?
But their is a mythical war to me of which one is better and how their different. Traders seem to like to make this little groups of styles, each has their own description of them.
Indicators, trend lines, support/resistance, their all derivatives of price action in my mind.
Where is price relative to previous price. What is this telling you?
But their is a mythical war to me of which one is better and how their different. Traders seem to like to make this little groups of styles, each has their own description of them.
They seem to use a very simple method , they make moves based on S&R , they dont use any tools other than the chart itself but why does this have a different name? why is this called price action trading ? does this imply that other style of trading isnt price action? they could use another name for this style of trading.
I not trying to question if the drawing of trend lines can be programmed or not as you mentioned. But just FYI I've attached what TradeStation, eSignal and another came up with when trying to program the drawing of trend lines. More misses than hits! But maybe you can do it better than they can.
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Those are some pretty crazy lines lol. The simple logic I used would do the exact thing. Connect lows on some look back period, most would come out random. I think theirs a lot of discretion involved with something like a trend line. Which can sometimes be the issue since our eyes like to make up patterns that are irrelevant.
I tihnk 'price action' is really just looking for patterns when it comes down too it.
Be it 'shapes' (say, head and shouilders) or certain bars like Dojis etc.
End of the day, it's all visual if we are trying to predict the future from looking at price charts.
Small point of clarification Sir
Doesn't break the "tool" - it simply reforms / reshapes the tool
It breaks the trader's expectations using said tool
But..., if trader is able to appreciate the uncertainty - then there are no expectations
RN