How to Learn Price Action

Quote from Dustin:

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.
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I totally agree Dustin. Since I have started to trade with volume my trading has gotten much better and I understand why the market moves and doesn't. The only thing I would add is to find areas of S/R the you believe are relevant and watch PV as it approaches there. I am using market profile for S/R and PV and the two compliment each other well IMO. Good trading to all.
 
Quote from dandxg:

I am using market profile
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Highly recommended reading is "Steidlmayer on Markets: Trading With Market Profile" if you don't have it already. A friend of mine who is a pit trader recommended it to me. Great book. I don't use MP but his concepts of how markets works and react were very helpful.
 
Quote from Bingoking:

Highly recommended reading is "Steidlmayer on Markets: Trading With Market Profile" if you don't have it already. A friend of mine who is a pit trader recommended it to me. Great book. I don't use MP but his concepts of how markets works and react were very helpful.
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I own Dalton MOM and have read some of it. Right now I use MP just for S/R to supplement my price volume divergence set ups, but thanks just the same.
 
Quote from Dustin:

That's the easiest part. You can use a scanner, or just a gainers/losers list. For example anything +1%, >500k volume with >2 times relative volume would satisfy the strength criteria. After trading this stuff for a while you will begin to learn what is comfortable for you. Maybe you prefer thicker traded lower priced stocks that trade >1M/day, or maybe you like the thinner more wild high priced stuff. These are the things you learn to narrow down your style and become a pro at that one thing. That's all you need to make a living in this business.

EDIT: I want to add...if you are trading something that doesn't show higher than normal volatility on that day you are wasting your time. Find the volatility and trade that instead. There are great trends out there every day that anyone can easily be a part of with basic entry and trade management rules.
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Dustin thanks very much for your advice in this thread, it's been real helpful.

Could you please clarify: When you say:

">500k volume with >2 times relative volume would satisfy the strength criteria. "

Do you mean that at your buying/selling point, the stock has already traded 2x the volume of its average daily volume, or that it has just traded 2x what it would normally trade at that time of day?
 
Quote from mrsnap:

Do you mean that at your buying/selling point, the stock has already traded 2x the volume of its average daily volume, or that it has just traded 2x what it would normally trade at that time of day?
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Yes I mean at that point in the day it is already 2x+ average volume. This weeds out the thin stuff. All we are trying to do is find volatile stocks that are thick enough to trade and have reason to move. You can do that many ways...find what suits you.
 
Quote from Dustin:

Yes I mean at that point in the day it is already 2x+ average volume. This weeds out the thin stuff. All we are trying to do is find volatile stocks that are thick enough to trade and have reason to move. You can do that many ways...find what suits you.
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Thanks, makes sense.

I've been testing your strategy on some of the more active stocks this morning. short NVDA, long ADBE, short TMA (if it wasn't under $5), etc.

I've noticed today that many of the active, trending stocks slowed down and/or reversed at lunchtime (around noon EST).

Is this standard, and would you recommend looking to close out your positions as volume dries up around this time?

Would it then be a good idea to find a new "batch" of stocks to repeat the process at around 2 PM?
 
I incorporate overbought/oversold from ES into this style. I buy strong when market is weak, and sell weakness when market is strong. It's more art than science.

Stuff like CCOW INAP ABX worked well today. I prefer the lower priced stuff like this over NVDA type stocks.

I'm currently watching SINT ABX AGP for further breakdowns, but won't be selling them unless I get an overbought reading on ES. Hope that makes sense.

You can PM me if you have further questions as I would rather not get into more detail here.
 
Quote from SoCalTrader619:

Most say it's hundreds of hours of screentime, but looking for what? I'd appreciate any advice. Thanks!!!
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Try thousands of hours. Just watch movement, volume, etc, and where it happens. When it happens is also important, and to some extent, size of prints on DOM (I find this is only marginally important in futures. Different in equities).

I second the ES Journal thread. Good traders for the most part. They are all technical guys as opposed to fundamentalists, as most of em are day traders. You will see them selling when the market is going up, and visa versa. They do not often chase.
 
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