I completely agree with your statement .
I have found that trading is defining the "points" where price action has tended to consolidate, and trading the departure and arrival at those points. I would define this as "price action".
There is no such thing as price action.
- Thread starter LodeRunner
- Start date
I completely agree with your statement .
I have found that trading is defining the "points" where price action has tended to consolidate, and trading the departure and arrival at those points. I would define this as "price action".
While I certainly respect your opinion, and find value in some of your remarks, observing and knowing what "price" does at cetain historical price points is something that an indicator or black box is incapable of achieving, in my opinion.
Knowing if the price is on the north side or the south side of a price point is something that alg's and other indicators wont be able to discern.
Anyone new to this thread can stop right here. You'll thank me.
With all due respect, even the title of your thread is wrong. There absolutely is price action. But it is not the scenario that is commonly described on this thread. Most of what I see called "price action" by many traders on this forum is really just micro-trend continuation trading, where traders look for higher highs/higher lows of the bars on the way up (reverse for down). Or else it is just pattern trading off the chart formations.
What I believe to be true price action is what happens on the tape in real time, via the DOM. Particularly as price nears support or resistance levels. And it is not at all about how many contracts that sit at each price level, like most folks seem to think.
Rather, it is a matter of whether the bid or the ask is at that moment chasing after the last price AND the quantities of contracts going off on either the bid or the ask (that has just turned into "last")
In other words, buy vs. sell pressure, combined with velocity. Who is in charge at the moment, buyers or sellers? And with how much "oomph"?
It takes about 1000 hours of screen time on the same instrument to get it, but once you do, then all indicators become arbitrary and are no longer needed.
On a good day, I can turn off the charts altogether and just scalp off the DOM tape at about 80% hit rate. It's just that the charts are easier so you don't have to stare so much.
I'll put my "instinctive" price action trading up against any type of logorithmic anything because I can scalp, fade, breakout, chase, trend trade, reverse, scale in/out or exit at a moments notice. No mechanical system can have the same flexibility.
The real system traders I know of have at least several going at once. None of them work in anything but a particular type of market. The ones that work good in trending markets get stopped out too much on range days. The ones that work well on range days get killed in trending markets. But as a full discretionary PA trader, I adapt to the market type at that time.
So there is no delusion in this. There is no math-based system that even closely compares to a good PA trader's returns and win rate %.
I'm not worried about letting the secret out, because only 1 in a thousand traders will put in the effort to really learn how to trade.
I do agree that no indicators or price action lead the market, there is no such thing. The best you can do is "now".
This is all just my opinion, from my perspective, that works for me.
Best regards,
Paul
Quote from jack hershey:
I view PA as a commonly espoused "modus" or "technique".
Thus PA is a "system" by which the espousee's make money.
The OODA , adopted by Steenbarger from it originator, John Boyd, a famous fighter pilot instructor, introduces most of the nuances and baggage of PA "traders".
"differentiation" occurs as a consequence and the OP refers to this "differentiation" with many terms to tell his story.
PositScience's Brain Fitness Program in a well conceived way deals with inducing Thinking Faster, Focusing Better and Remembering More... This seems to be the definition of improving PA skills and the intrinsic knowledge upon which it is based.
As OODA shows, there is an inductive aspect (a sort of curve fitting common mistake) in the D and A portions. All PA traders recognized fully this is where "they do their thing". I won't characterize it with "my words" but it is uniformly characterized by several (3 major ones) ancillary things that go with and are made part of PA trading to deal with the inherent problem of being inductive in one's work and orientation.
The consequences of the mind building that occurs and the way it affects perception is stark and revealing. The OP is making the case as we see.
The elephant in the room is a dilemma. Induction in PA trading creates a perception that the human emotionally and continually finds deep needs to deal with. (The anxiety, fear and anger of PA trading). Steenbarger makes a living remediating this with his client population.
As for the ATS's of PA trading, they unremarkably, are spoken of as things that come and go as the market continually changes (they say, by no longer fitting the original curves).
Three things are apparent:
1. Using an inductively based feedback system for trading is a no no.
2. Perception is 90% inference from the mind's feedback that is merged with sensory (and emotion creating) 10% PA observations. (Inference is described by the OP using the word "instinct")
3. Differentiating the mind through repeated PA inductively derived drills (the act of trading daily) is a no win proposition, mentally and emotionally speaking.
What does Steenbarger do to affect repairs? LTD.
What an absolutely useless, irrelevant pile of crap.
Yes, LodeRunner - you are correct with this statement.
So the idea is to use price action in context with whatever indicator(s) you use to trade, until price action itself becomes your indicator.
Because as you have just stated:
"price action" is just a euphemism for "indicators that work"
***
Good trading
Slapshot,
Excellent post. Now that's I debate I want to have/see.
I've often gravitated to just making decisions off the DOM as that's what seems to be meant by true tape reading.
I can also see why this might be the real meaning of PA. It seems like traders in the early part of the century referred to PA as tape reading.
Now, agreeing that many hours of screen time is needed to make this work, can you explain a little more about your method of determining velocity? Also buy vs sell pressure and how you like to judge it based on whether the sales are occuring on the bid or the ask?
I would think that your method works well when you know one stock or trading vehicle intimately as it has its characteristics on the DOM. In other words, though all stocks create the same patterns on charts and may have their own characteristics, on the DOM, there own personalities are even more evident.
Thanks in advance for your answers and getting this thread back on message.
Excellent post. Now that's I debate I want to have/see.
I've often gravitated to just making decisions off the DOM as that's what seems to be meant by true tape reading.
I can also see why this might be the real meaning of PA. It seems like traders in the early part of the century referred to PA as tape reading.
Now, agreeing that many hours of screen time is needed to make this work, can you explain a little more about your method of determining velocity? Also buy vs sell pressure and how you like to judge it based on whether the sales are occuring on the bid or the ask?
I would think that your method works well when you know one stock or trading vehicle intimately as it has its characteristics on the DOM. In other words, though all stocks create the same patterns on charts and may have their own characteristics, on the DOM, there own personalities are even more evident.
Thanks in advance for your answers and getting this thread back on message.
1. Correct . . . price bars (if volume built) are pure unadulterated data.
2. 4 Outcomes not 3. Enter a trade, exit a trade, Stand aside or adjust your stop. An indicator should be simply used to confirm the direction of the price bars and their relative strength.
Price action is simply price movement. Price action applied to worthless indicators produces worthless information. Price action applied to a consistent and simple indicator that works is a thing of beauty.
We interupt this regularly scheduled thread to bring you this bulletin: This just in!
By this point, I think it can be agreed by all, even the OP, that in fact PA does indeed exist, and in fact, in many forms.
Price action, has to exist in any and every instrument that trades. Any movement in any instrument equates to PA. In fact, even no movement in an instrument can be considered PA, the fact it has no movement is in fact a form of PA, (not very good PA, but PA nonetheless).
The only instrument where PA dopes not exist, is the instrument that does not trade. Period.
Now, PA can and does mean various things to various constituencies of traders. For the scalper, such as , it may be the rapid changes reflected on the DOM, in the very shortest of timeframes, in the highest resolution possible.
For a intraday swing trader, PA may represent the changes in P relative to recent price consolidations, supports / resistances.
For an entirely different group, PA may be a function of other factors entirely, such as fundamental factors they consider valid predictors of possible future PA.
For the sake of what I percieve to be the main tenet of the majority of posters to this thread, that PA refers to shorter-term price movement, on a form of intraday movement, whether it is seconds, minutes, or longer, I conclude that PA does in fact exist, in fact, it does so in many forms.
For example, not only does it exist in various timeframes, in any timeframe anyone chooses to represent it in, it also does so in various methods of PA perceptions, or filtering representations. One may prefer to use DOM as their preferred vehicle, another may prefer to interpret and recieve the PA data via charts. Yet another, may at times visualize what and how PA may manifest, through mental visualizations, roadmapping what may occur and lay ahead.
That leaves room for just about everyone, regardless of their chosen methods of recieiving, interpreting, and processing PA data.
We now return you to your regularly scheduled programming.
By this point, I think it can be agreed by all, even the OP, that in fact PA does indeed exist, and in fact, in many forms.
Price action, has to exist in any and every instrument that trades. Any movement in any instrument equates to PA. In fact, even no movement in an instrument can be considered PA, the fact it has no movement is in fact a form of PA, (not very good PA, but PA nonetheless).
The only instrument where PA dopes not exist, is the instrument that does not trade. Period.
Now, PA can and does mean various things to various constituencies of traders. For the scalper, such as , it may be the rapid changes reflected on the DOM, in the very shortest of timeframes, in the highest resolution possible.
For a intraday swing trader, PA may represent the changes in P relative to recent price consolidations, supports / resistances.
For an entirely different group, PA may be a function of other factors entirely, such as fundamental factors they consider valid predictors of possible future PA.
For the sake of what I percieve to be the main tenet of the majority of posters to this thread, that PA refers to shorter-term price movement, on a form of intraday movement, whether it is seconds, minutes, or longer, I conclude that PA does in fact exist, in fact, it does so in many forms.
For example, not only does it exist in various timeframes, in any timeframe anyone chooses to represent it in, it also does so in various methods of PA perceptions, or filtering representations. One may prefer to use DOM as their preferred vehicle, another may prefer to interpret and recieve the PA data via charts. Yet another, may at times visualize what and how PA may manifest, through mental visualizations, roadmapping what may occur and lay ahead.
That leaves room for just about everyone, regardless of their chosen methods of recieiving, interpreting, and processing PA data.
We now return you to your regularly scheduled programming.