Learn Price Action
- Thread starter Dobbes
- Start date
fuzzymath...........maybe this will get the message across better.
Batterup
Registered: Feb 2006
Posts: 263
04-27-08 10:27 AM
Channels are for trains.
Trains do not need money management skills and trains do not have emotions.
Technical analysis is not hard to understand. Thats the easy part. The harder part is applying what the charts are telling you. Those that think they will only need to understand technical analysis and are "good to go" are fooling no one but themselves.
Example besides trading: GOLF..... Nobody to beat you up but yourself...... It's you and the ball.
Understanding TA all by itself is like buying a brand new convertible car for your 6 year old daughter. Change that to trading, you read a book on TA, does that mean you are ready to pull the trigger? The bigger question is what will you do when the time comes to pull the trigger. Will you continue to pull the trigger after you blow out your first account?
Will you blow out your first account? You betcha. ALL winners have been slapped around in this game. TA is just the beginning. Blow out the account, lose a couple hundred grand on expenses, time , and some stubborn trades, stupid trades etc. Maybe even a divorce. If your dog leaves you are in real trouble. Then check back in a few years with the results on how you are progressing.
My, my, if this was so easy where would the losers come from?
Batterup
Registered: Feb 2006
Posts: 263
04-27-08 10:27 AM
Channels are for trains.
Trains do not need money management skills and trains do not have emotions.
Technical analysis is not hard to understand. Thats the easy part. The harder part is applying what the charts are telling you. Those that think they will only need to understand technical analysis and are "good to go" are fooling no one but themselves.
Example besides trading: GOLF..... Nobody to beat you up but yourself...... It's you and the ball.
Understanding TA all by itself is like buying a brand new convertible car for your 6 year old daughter. Change that to trading, you read a book on TA, does that mean you are ready to pull the trigger? The bigger question is what will you do when the time comes to pull the trigger. Will you continue to pull the trigger after you blow out your first account?
Will you blow out your first account? You betcha. ALL winners have been slapped around in this game. TA is just the beginning. Blow out the account, lose a couple hundred grand on expenses, time , and some stubborn trades, stupid trades etc. Maybe even a divorce. If your dog leaves you are in real trouble. Then check back in a few years with the results on how you are progressing.
My, my, if this was so easy where would the losers come from?
Watch the chart of any market indice or sector SPDR during market hours. You can easily tell whether that particular indice or sector is trending up or down, or moving sideways, by just watching the patterns drawn by the candlesticks.
As a matter of fact, the candlesticks are your best indicator of price action within a given time-frame. They can tell you where price has been within the last 5, 30, 60 or 120 minutes. You can also check price action on longer-term time frames like 5 days, 10 days, 3 months or more.
Basically, any time you have price closing higher than the previous high for 3 or more consecutive candlesticks in any time-frame, price is trending up. Any time price is closing lower than the previous low for 3 or more consecutive candlesticks, price is trending down. Price is moving sideways when there is no clear pattern of consecutive lower lows or higher highs.
I am assuming here that you're a little familiar with Technical Analysis things like candlesticks, moving averages, indicators and the like.
Of course, how long price uptrend, downtrend or sideway movement lasts is anybody's guess. However, some price patterns - like round tops or bottoms - have been proven to be more or less reliable predictors of continued downtrend or uptrend.
Again, no one can tell for sure where price goes next because anything - like bad news - can happen and reverse the trend or accelerate it. Remember Bear Stearns? That's why it is always a good idea to have a working stop loss order in case things go wrong while you are still in a trade. In the case of Bear Stearns, though, a stop loss wouldn't have helped you much as it sank to hell almost overnight.
I hope this helps.
As a matter of fact, the candlesticks are your best indicator of price action within a given time-frame. They can tell you where price has been within the last 5, 30, 60 or 120 minutes. You can also check price action on longer-term time frames like 5 days, 10 days, 3 months or more.
Basically, any time you have price closing higher than the previous high for 3 or more consecutive candlesticks in any time-frame, price is trending up. Any time price is closing lower than the previous low for 3 or more consecutive candlesticks, price is trending down. Price is moving sideways when there is no clear pattern of consecutive lower lows or higher highs.
I am assuming here that you're a little familiar with Technical Analysis things like candlesticks, moving averages, indicators and the like.
Of course, how long price uptrend, downtrend or sideway movement lasts is anybody's guess. However, some price patterns - like round tops or bottoms - have been proven to be more or less reliable predictors of continued downtrend or uptrend.
Again, no one can tell for sure where price goes next because anything - like bad news - can happen and reverse the trend or accelerate it. Remember Bear Stearns? That's why it is always a good idea to have a working stop loss order in case things go wrong while you are still in a trade. In the case of Bear Stearns, though, a stop loss wouldn't have helped you much as it sank to hell almost overnight.
I hope this helps.
First step in learning JH stuff:
http://www.youtube.com/watch?v=0JfjtQpr1Vo&feature=related
Ok, more shopping to do. DA "Kimster" great F1 win today.
http://www.youtube.com/watch?v=0JfjtQpr1Vo&feature=related
Ok, more shopping to do. DA "Kimster" great F1 win today.
Ok, last one for today. This is spydertrader channel trading platform:
http://www.youtube.com/watch?v=szGr4ymfJEs&feature=related
http://www.youtube.com/watch?v=szGr4ymfJEs&feature=related
tradethetrade
Vendor
The easiest way to learn price action is to start by taking a stock that is trending up or down all day or several hours without following the direction of the market. You can´t take a thick stock but something around 250k to 500k shares daily will do. Why because the stock is slow and there aren´t too many participants involved so they are easier to understand.
Once you find this stock watch for recurring situations and levels where someone big like an institution shows up. Usually their job is to disguise their size so that they work the order without too much attention by running the price up but many times they are obvious and easily readable.
A large bid that steps up is a very easy way to start. The bid is at 20.15, then 20.20, then 20.25 and so on. That alone is not quite reading price action yet but it is moving the stock up. A large bid steps up while traders hit the offer. Price action comes handy when:
1. You notice that enough traders got in to match the bid so you know when to get out
2. If you missed the move you know when not to get in.
3. Whether your position can be reversed meaning going short.
4. If you can stay put since it is a returning buyer.
5. Add more shares at pullbacks, etc etc....
Now a 100 share bid refresher running up 2 pts might be a bit more advanced. How can 100 shares run up the stock 2 pts? That I´ll leave for another discussion but my point is that there are many scenarios at play but with common sense and time you will start to see them quickly capitalizing on them.
Once you find this stock watch for recurring situations and levels where someone big like an institution shows up. Usually their job is to disguise their size so that they work the order without too much attention by running the price up but many times they are obvious and easily readable.
A large bid that steps up is a very easy way to start. The bid is at 20.15, then 20.20, then 20.25 and so on. That alone is not quite reading price action yet but it is moving the stock up. A large bid steps up while traders hit the offer. Price action comes handy when:
1. You notice that enough traders got in to match the bid so you know when to get out
2. If you missed the move you know when not to get in.
3. Whether your position can be reversed meaning going short.
4. If you can stay put since it is a returning buyer.
5. Add more shares at pullbacks, etc etc....
Now a 100 share bid refresher running up 2 pts might be a bit more advanced. How can 100 shares run up the stock 2 pts? That I´ll leave for another discussion but my point is that there are many scenarios at play but with common sense and time you will start to see them quickly capitalizing on them.
M. Rasoir, I am happy to oblige. This is not rocket science. See the light blue lines.