Is price action trading the most insightful(& most accurate)?

[S-Trader]

Many of the various debates here in the forums seem to be based largely on semantic arguments, and I'd like to add my 2 cents (or less) here:

Rather than applying the word "prediction" to trading approaches, I'd suggest that the word "expectation" is generally more appropriate, particularly in the mathematical, probabilistic sense. Even when rigorous math/statistics is not applied (as it might be say, in algorithmic trading), most successful trading approaches seems to rely on traders developing a theory ("edge"), making a large number of observations ("experience," "testing") which confirm that theory/edge, and thereby developing "probabilistic" expectations based on those observations that they can use to trade off of. Anything can happen -- but in each trade there exists an expectation based on experience/stats that a certain outcome (a profitable trade) is likely X% of the time.

From Wikidiff: "As nouns, the difference between prediction and expectation is that prediction is a statement of what will happen in the future while expectation is the act or state of expecting or looking forward to an event as about to happen."

 

[volpri]

Many of the various debates here in the forums seem to be based largely on semantic arguments, and I'd like to add my 2 cents (or less) here:

Rather than applying the word "prediction" to trading approaches, I'd suggest that the word "expectation" is generally more appropriate, particularly in the mathematical, probabilistic sense. Even when rigorous math/statistics is not applied (as it might be say, in algorithmic trading), most successful trading approaches seems to rely on traders developing a theory ("edge"), making a large number of observations ("experience," "testing") which confirm that theory/edge, and thereby developing "probabilistic" expectations based on those observations that they can use to trade off of. Anything can happen -- but in each trade there exists an expectation based on experience/stats that a certain outcome (a profitable trade) is likely X% of the time.

From Wikidiff: "As nouns, the difference between prediction and expectation is that prediction is a statement of what will happen in the future while expectation is the act or state of expecting or looking forward to an event as about to happen."

As you say it is largely all semantics. I personally favor the word anticipate. But bottom line: regardless of our language we are all projecting out into the future by the positions we actually accumulate or we would not accumulate those long or short positions if we thought otherwise.

 

[murray t turtle]

It is so funny to read this post because it is extremely accurate. 15 years ago if you told someone that you trade only using price action you were thought to be wearing a tin foil hat and practicing pseudo science.

%%
I see your points;
but nobody would trade oil the same as stock ETFs, wednesday moves, earnings...……………………..…………………………………………………..Even a sometimes hi positive correlation, is not near the same thing+ oil has no earnings

 

[Reactive Analytics]

Murry, I just meant in general. I remember having conversations with people 15 to 20 years ago about trading price action and they looked at me like I had a third eye in the middle of my forehead and now it is main stream.

 

[bone]

Murry, I just meant in general. I remember having conversations with people 15 to 20 years ago about trading price action and they looked at me like I had a third eye in the middle of my forehead and now it is main stream.

“Price Action” is a fluid definition that has most definitely changed over time. So is “scalping” for that matter. I’ve been following this thread and am convinced that there are at least three separate conversations running in parallel.

Of course, I started out in the Bond Pit scalping and transitioned to the screen and a few HF / Prop / Commercial Desks so I’ve seen quite a bit of change.

 

[cornerstone]

People trade using all sorts of indicators from moving averages to MACDs and RSI, and all of those might provide for a good and profitable trading strategy, but you don't really know what's actually happening.

Trading price action for me means using no indicators, only the naked chart. It consists of really in-depth knowledge of TA, that is; the candles and how they work, support&resistance levels(of all sorts) and tracking the market structure(lows&highs).

I also don't look at one chart only, but the market as a whole. Correlation and overall dynamics of the market are important. I don't look at volume, but i might use it as confluence, i find open interest far more interesting to see what's actually happening.

I've only been trading for about a year now, but i have probably few thousand hours of staring at the charts behind me. Also worth mentioning i track mostly crypto. And i would say a day in crypto might equal to a week or maybe even a month in traditional markets, but the principles are the same. So you get to learn every trick in the book(read as: you get screwed), much faster.

And even I, myself am surprised to the extent and reliability that the market moves can be predicted. So the question is, is PA trading, the most insightful and most accurate for predicting price moves? I believe so, and i also think that's how sophisticated trading bots work.

I also think predicting is the easy part. The hard one is to actually execute and trade properly, which i am struggling with at the moment. I don't think it can be done without a thorough trading plan/system. That's the good thing about moving average crossovers, MACDs, RSIs and what not... they are simple - you see a crossover, you buy.
The accuracy can also be a bad thing, because the fact is, you don't know what's actually going to happen and when you get on a streak and you think you know what's coming, you will bet big and blow it(speaking from experience lol).

Just a rant.. what are your thoughts? What would you attribute your trading success to(or lack thereof)? Is it based on good read on the market, having a good trading strategy, both, or something else?

price action is the basic of trading and it helps a trader to get instant decisions, but it can't help put stop loss or take profit. a great tool that I use, which combines PA and TA is Bookmap. I see there where the big buyers or sellers are and have a notion of how the price will act there.

 

[tomorton]

This predict question gets lost in semantics every time but its fundamental to what TA is.

The real question is, if the chart shows me price is going up, do I follow price and buy or do I not follow price and sell?

 

[volpri]

This predict question gets lost in semantics every time but its fundamental to what TA is.

The real question is, if the chart shows me price is going up, do I follow price and buy or do I not follow price and sell?

To buy and follow price or to sell and not follow price when price is going up depends on the larger context and the more immediate market phase which the market is in at that moment. For instance, if there has been 15 or 20 bars in a sideways range and price is racing to the top of the range I am shorting on the high of the bars starting in the upper third of the range and will just keep adding as it goes up. Why? 80% of BO’s attempts of a range fail and price goes back into the range. That is good odds. But most new traders see the move up and go long and a bit later are whipsawed right out as their SL gets tapped.

 

[tomorton]

To buy and follow price or to sell and not follow price when price is going up depends on the larger context and the more immediate market phase which the market is in at that moment. For instance, if there has been 15 or 20 bars in a sideways range and price is racing to the top of the range I am shorting on the high of the bars starting in the upper third of the range and will just keep adding as it goes up. Why? 80% of BO’s attempts of a range fail and price goes back into the range. That is good odds. But most new traders see the move up and go long and a bit later are whipsawed right out as their SL gets tapped.

Yes, you have summarised the question in another way but you have focused in a specific context, price ranges. I don't trade these as it involves prediction, i.e. that price will go down although it is now going up. This is of course based on past evidence or past history and will work much of the time.

I only follow trends, and so I get long when prices are rising. This is based on current evidence and inherent market tendencies.

Range trading depends on predicting a change in behaviour of the market participants from buying to selling, although there will be no evidence that they will do this today because this is in the future. If they were already selling price would be falling and this would be a trend-following short, not a range trading short. So though you're predicting a change in behaviour, I'm not predicting any change in behaviour.

Taking the parallel position of the weather forecaster, what would you say of a forecaster who simply said the weather tomorrow will be just the same as it is today? And the weather next Friday will be just the same as the weather next Thursday? That's what I'm saying in trend-following. You'd probably say that such a weather forecaster wasn't forecasting at all. I would agree.

Anyway, I'm happy to be able to say I don't get whipsawed as I don't regard a weakness in a trend as a reversal signal, plus I trade long-term.

 

[Reactive Analytics]

You said you "only follow trends".
So what is your specific and exact definition of "TREND"?
I'm a 25 year veteran trader and not a newbie. I know what mine is but am curious when individuals say this statement, many don't it defined. Thanks in advance.