How to Learn Price Action

Quote from riskfreetrading:

I know what you mean, but I think the reason is that people do not know why such things work. In your case you follow it probably because you know it worked for you (proof of the pudding is in the eating), but for someone else who does not see it the way you see it, he will never follow it consistently. He needs proof (not trading proof, but another proof). There is one for the stocks you suggest. It is just not provided/understood.

Learning to trade is harder than swimming. First the person has no reason to trust that winning in trading is possible (he does not see others making it, he has just words). Once he sees it (like swimming), he still needs to believe that there are fundamental laws that make it work. These laws are usually not known to the new trader, and he does not know what to look for (the thread poster is an example). It is not his fault. Trader do not write their laws and why they work. Then the new trader has to internalized the laws, and deeply understand them. Finally he has to apply them consistently. So it is long process, and it needs many things to work right for the whole thing to work right.
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Most new guys make trading so complicated, because they don't know any better. The problem is they need a strong base, or starting point. I just provided them that in an incredibly simple statement.

"ONLY buy strong stocks, ONLY sell weak stocks."

Do I ever do countertrend trading? Yeah every day, but I can tell you it's 2-3X harder then trend trading and about half as profitable. As a new trader they should forget the idea completely. In fact they should ban themselves from it.

Forget the proof. Take the idea and trade it small for a week. If you (anyone reading this) aren't profitable yet then what's the harm? Don't try to backtest, just trade it small. I can't stand backtesters. You don't learn to trade that way.

Take all the indicators off of your charts except volume. Forget T&S, LII, Open Book, ticks, candles etc. Forget anything else you think you know, and just try it. And use charts, lots of them.

I know from reading this board for ten years that nobody will actually do this, but I was compelled to write it anyway.
 
Quote from SoCalTrader619:

Now I'm all confused. Some traders use minute bars, others use volume bars. I feel that both sides have their perks, but I'd like to use whichever is more effective in learning Price Action.
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Synic is correct, most use minute bars but then again, most lose money too.

Any chart that is grounded in a variable environment will produce varying results. Charts that are grounded in a fixed & stable environment should give you consistent results but will AT LEAST give you less noise to make your decisions from.
 
Quote from rjv27:

People use different ways (time, volume, etc..) to look at price. They are all looking at price but with different view points. Just pick one way and learn it well. They all work.
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Correct?

Hey why watch HD TV when you can watch the same movie on an old analog low definition screen.
 
Quote from SoCalTrader619:

Funny that you say that. I think I'm in the "range bar" phase right now. It's easier to see movement, vice all the long consolidation and periods of no movement. Maybe I'm looking in the wrong direction. I don't see why time is neccesarily a factor. It's all about "price action" and stock movement.
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The problem I had with them was that the range bars always gave "false" signals, false breakdowns in an uptrend and false breakouts in a downtrend.

However, when I compared range bars with minute bars in side-by-side RTH analysis (somthing I highly recommend for any and all of the categories that you are interested in) I found that I was able to interpret the range bar action much better, and the signals were so consistent that the proof was indefatigable.

The bottom line?

It's really about the signals you're getting in your brain, not on the screen. :p
 
Quote from MandelbrotSet:

... and there's the rub.

You're going to have to use whatever speaks to you.

For Prof Logic, there's nothing better than a volume candlestick. That and a cup of coffee just makes his day ... so what he actually needs to see is price and volume

Whereas I realized a long time ago that I had to see price action without the element of Time (because it distorts pure price action), so for the longest time I would only use range bars.

However, there are traders who like to see the price action within the context of a time bar, and I found that when I tried this, I liked the way it felt, so that's what I like to use now (something about the dual bars that takes all the thinking out of the equation).

GL
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Candlesticks need to be interpreted and price movement needs no interpretation. No candles for me. :D

Nix the time too. Yuk! Agreed, it distorts price action.

Agreed as well that some like the combo of Volume Bars/Range Bars and some like Volume Bars/Time Bars. Whatever floats your boat an makes seeing the price action easier. I simply like CVB charts.
 
Quote from SoCalTrader619:

Ok... I know that most "successful" traders will agree that Price Action is the basic key to trading. I have been doing a lot of research into price action recently, staring at charts forming, watching the L2, T&S, etc. But sometimes I feel like I don't really know what I'm looking for. I'm hoping that some Price Action traders can chime in and give a bit of advice. What exactly do you look for in Price Action that gives you the information you need to place a trade? What can I do to enhance my Price reading skills? Most say it's hundreds of hours of screentime, but looking for what? I'd appreciate any advice. Thanks!!!
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* Volatility Analysis

* Intermarket Analysis

* Support / Resistance Zones (not levels)

* Position Size Management

* Yearly Seasonal Tendencies

* Intraday Tendencies

* Japanese Candlestick Analysis

(above in order of importance to me)

All the above under the umbrella of Technical Analysis due to the fact I derive the info via analyzing what I see on charts.

In addition, I use minute charts and I do not use indicators (e.g. cci, rsi, macd et cetera) nor volume.

Yes, it takes thousands of hours of screentime (not hundreds) to put the entire puzzle together and the above is just parts of the puzzle because there's other stuff that price action traders use as a critical aspect of their trading.

Last of all, I mention in the list above Position Size Management.

I just want you to understand that profitable price action traders that don't use indicators usually see other things that are more important than their entry signals.

In fact, I'm a strong believer if those other variables (e.g. position size management, proper capitalize, proper trade management after entry, proper trading equipment, discipline, market experience or trader psychology et cetera) are not in place...

You are at a huge disadvantage before the appearance of any Entry Signals.

Mark
 
Quote from ProfLogic:

Synic is correct, most use minute bars but then again, most lose money too.

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Most traders lose money period. There is no evidence that traders who lose use minute bars and that those who win use something else. Indeed, minute (time-based) bars provide information that volume bars do not. If volume bars work for you, great.

One must be careful not to confuse correlation for causation.
 
Quote from Dustin:

"ONLY buy strong stocks, ONLY sell weak stocks."

Forget the proof. Take the idea and trade it small for a week.

Take all the indicators off of your charts except volume. Forget T&S, LII, Open Book, ticks, candles etc. Forget anything else you think you know, and just try it. And use charts, lots of them.

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How do you decide what is a strong stock or weak stock?
 
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