Price Action Traders
- Thread starter bearmountain
- Start date
I have a price action "journal" here but I'm the only poster, so other than myself, the thread wouldn't have a heart beat. If you use indicators WHAT so ever, your NOT a price action ONLY trader. Even I'm not because I use a 200ema, but I could probably take it off and be just fine, I still like to have it on.
The truth is people don't understand what price action only really is, even though it says it right in the name, lol derp!!. I hear people talk all the time on here about they're price action only traders, then make a reference to the 20ma, or some MACD indicator and I laugh. For traders who started trading with indicators, its hard for them to imagin how anyone could possibly trade without them, and i know because i was once one of those people. And because of this, they relapse, and go right back to their indicators because they cant make PA only trading work. Possibly PA only trading is the hardest form of trading to most people, even though its the "easiest" because to them its like riding a bike without the training wheels, and time after time they keep falling off. Because 90% of traders lose, obviously even the "training wheels" dont help in many cases, and one just starts to feel retarded. This is when they come on the forums asking about price action only, and they try it for a while, but again they cant get it to work, and once again its back to the indicators. It's an endless cycle. I speak from past experience.
kon
The truth is people don't understand what price action only really is, even though it says it right in the name, lol derp!!. I hear people talk all the time on here about they're price action only traders, then make a reference to the 20ma, or some MACD indicator and I laugh. For traders who started trading with indicators, its hard for them to imagin how anyone could possibly trade without them, and i know because i was once one of those people. And because of this, they relapse, and go right back to their indicators because they cant make PA only trading work. Possibly PA only trading is the hardest form of trading to most people, even though its the "easiest" because to them its like riding a bike without the training wheels, and time after time they keep falling off. Because 90% of traders lose, obviously even the "training wheels" dont help in many cases, and one just starts to feel retarded. This is when they come on the forums asking about price action only, and they try it for a while, but again they cant get it to work, and once again its back to the indicators. It's an endless cycle. I speak from past experience.
kon
Lets get the legal requirements out of the way. Nodoji in no way, shape or form has approved of the following.
I don't think it is so much prediction but more so having an open mind that anything can happen at anytime. Predicting (bias) tends to marry us to an outcome and once we lose our flexibility we tend to ignore information (PA) that could tell us its time to reevaluate.
Obviously there are a bunch of possibilities as to what PA can do but that is where your trading rules come in to guide you in the heat of the moment.
I believe someone mentioned in this thread that entering, trade management and exiting are important parts of trading but more important is what we bring to the table. Trading, as is life, is a journey not a destination, eliminate the things that are not helping you on your journey.
Take it one step further.
Are you a:
1. Pure Price Action trader (constant volume bar chart & no indicators)
2. Price Action trader (time or tick chart & no indicators)
3. Pure Price Action Trader with a single confirming indicator (constant volume bar chart & one single indicator)
4. Price Action Trader with a single confirming indicator (time or tick chart & one single indicator)
5. Pure Price Action trader with multiple indicators (constant volume bar chart & multiple indicators)
6. Price Action trader with multiple indicators (time or tick chart & multiple indicators)
There are many ways to gain an edge trading charts. This is one reason there are so many opinions here on ET because there are many here succeeding use one of the alternatives above. I do commend those that are moving toward trying price action as an alternative to the mass confusion of indicators but think about something. The exact reason one moves away from indicators (confusion and inconsistencies) is the very foundation of time & tick charts, inconsistent bar weight and volume confusion. If one would simply test the value of constant volume bar charts they would see this chart type further simplifies and clarifies price action. Once one sees the consistent flow of price action on these charts the clarity is amazing.
I prefer then to add a single indicator not as a signal generator but as a tool to help me confirm what I see in the pure price action of the chart I am trading. Is this single indicator needed in order to successfully trade the chart? No but I use it anyway the same way I use a thermometer to insure my steaks are cooked perfectly on the grill.
Are you a:
1. Pure Price Action trader (constant volume bar chart & no indicators)
2. Price Action trader (time or tick chart & no indicators)
3. Pure Price Action Trader with a single confirming indicator (constant volume bar chart & one single indicator)
4. Price Action Trader with a single confirming indicator (time or tick chart & one single indicator)
5. Pure Price Action trader with multiple indicators (constant volume bar chart & multiple indicators)
6. Price Action trader with multiple indicators (time or tick chart & multiple indicators)
There are many ways to gain an edge trading charts. This is one reason there are so many opinions here on ET because there are many here succeeding use one of the alternatives above. I do commend those that are moving toward trying price action as an alternative to the mass confusion of indicators but think about something. The exact reason one moves away from indicators (confusion and inconsistencies) is the very foundation of time & tick charts, inconsistent bar weight and volume confusion. If one would simply test the value of constant volume bar charts they would see this chart type further simplifies and clarifies price action. Once one sees the consistent flow of price action on these charts the clarity is amazing.
I prefer then to add a single indicator not as a signal generator but as a tool to help me confirm what I see in the pure price action of the chart I am trading. Is this single indicator needed in order to successfully trade the chart? No but I use it anyway the same way I use a thermometer to insure my steaks are cooked perfectly on the grill.
After investigating PA for couple of weeks, it is readily apparent that PA methology is highly subjective and most people need a indicator or two. Al Brooks uses a 20EMA on 5 min charts, proflogic the erotic indicator on volume charts.
Most people (including myself) seem to discover PA much later in their trading careers, Al Brooks after 10 years as a failed trader. Those that stick with it, seem to do rather well. Steve Cohen of SAC made the cover of Bloomberg magazine few months ago, that indepth article said he taught himself PA while at Wharton.
Most people (including myself) seem to discover PA much later in their trading careers, Al Brooks after 10 years as a failed trader. Those that stick with it, seem to do rather well. Steve Cohen of SAC made the cover of Bloomberg magazine few months ago, that indepth article said he taught himself PA while at Wharton.
I have to disagree with this...PA can be objective (e.g. japanese candlesticks) or subjective (e.g. trendlines) depending upon the method used unless you meant to say there are so many traders using PA differently in comparison to each other that there's really not a norm.
Is it possible your opinion is based upon being able to use something in automatic trading or mechanical trading as in computer codes.
Also, I believe (no real facts) that most traders that switch to price action trading are surprised to find out it's a big area. There's dozens and dozens of different types of price action only methods that do not involve any indicators. Also, many years back most of the PA traders I've met online didn't use nor believed in indicators. However, in recent years I've seen a new crop of traders calling themselves price action traders via using 1 - 2 indicators even amongst the veteran traders.
Kind'uv like some people I meet that call themselves vegetarians but they eat chicken and no other meat.
I've also seen a new crop of traders at various discussion forums say they don't use TA nor believe in it but after digging into their trading you find out they do "chart analysis for illustration purposes only"...
Whatever.
Mark
Yes, I think you picked up on something. My background in trading is all about systematic, mechanical, automatic trading.
Wanting to shift gears, move towards discretionary trading, having the thinking hat on during the trading day, to fight fear and greed all day is hard work. So far after three weeks and losing about 1% of my equity, I haven't been able to settle on a good set of PA rules....
I'm wondering, HH/HL and candlestick patterns -- well isn't that just trendfollowing with candlesticks? (just semantics, not here to say one label is better than another)
JMO but here goes: what I label "Price Action" in my mind is exactly that -- how price acts. It is not enslaved to trend. It is for the most part "unscannable". A chart is unnecessary if you've been watching for some time. It can involve nuances in behavior that only reveal themselves to those who trade that market day in, day out (aka it's not acting "right"). But most importantly, it is contextual. I always thought of myself, if I was forced to choose a label, as a PA trader. But "pure PA" is nearly worthless in isolation (unless you are specifically referring to bid/ask/print trading), there is always context against which price acts -- relative to itself (past PA), another market, in light of newsflow etc. So sometimes you'll look to sell into LL's, but other times you'd want to buy it instead. That to me differentiates PA trading from other forms of TA trading.
JMO but here goes: what I label "Price Action" in my mind is exactly that -- how price acts. It is not enslaved to trend. It is for the most part "unscannable". A chart is unnecessary if you've been watching for some time. It can involve nuances in behavior that only reveal themselves to those who trade that market day in, day out (aka it's not acting "right"). But most importantly, it is contextual. I always thought of myself, if I was forced to choose a label, as a PA trader. But "pure PA" is nearly worthless in isolation (unless you are specifically referring to bid/ask/print trading), there is always context against which price acts -- relative to itself (past PA), another market, in light of newsflow etc. So sometimes you'll look to sell into LL's, but other times you'd want to buy it instead. That to me differentiates PA trading from other forms of TA trading.
Price has memory, so keep previous support/resistance pivots on hand for reference.
I sold the 75.43 low in crude oil Friday because next support was 75.21, followed by pure airspace until 74.25. This gave me room to exit the trade for a scratch if price failed to break 75.21 (which I did when it bounced off 75.25).
If previous support had been 75.41 or 75.38 or anything 10 ticks or less, I would've instead had my sell stop at 75.20 because a failed breakout or double bottom off a support level so close to my entry price would've likely resulted in a loss (I use 10-tick initial stops on b/o trades).