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Price Action - Definition

  • #1
  • First Post: Jul 8, 2006 9:26pm Jul 8, 2006 9:26pm
Hi, I am a newbie who has read just about everything I could find on this forum that would help me to get started trading.

One thing I have run across is the concept of "price action", especially in James16 threads, but also others.

Price action is much lauded as a non-lagging method of entering a high probability trade from what I have read in this forum.

It would help me if I could get a definition of it, because I've just being assuming it's this and that and I know from experience assumptions can cost you big time.

Some statements I have run accross are - "MAs are not indicators and therefore can be used with price action." If someone could clarify this that would be cool.

My assumption at this stage is price action involves determining the likely direction based upon price bar or candle patterns and maybe ? chart patterns.

Thanks
  • #2
  • Jul 8, 2006 9:44pm Jul 8, 2006 9:44pm
Quoting minute
Hi, I am a newbie who has read just about everything I could find on this forum that would help me to get started trading.

One thing I have run across is the concept of "price action", especially in James16 threads, but also others.

Price action is much lauded as a non-lagging method of entering a high probability trade from what I have read in this forum.

It would help me if I could get a definition of it, because I've just being assuming it's this and that and I know from experience assumptions can cost you big time.

Some statements I have run accross are - "MAs are not indicators and therefore can be used with price action." If someone could clarify this that would be cool.

My assumption at this stage is price action involves determining the likely direction based upon price bar or candle patterns and maybe ? chart patterns.

Thanks
Whether it be Bars or Candles, {not line on close} Price Action {PA} is seeing the most recent bars as an insight to current Trader Sentiment.

Have the Bulls made a couple of attempts at New Highs only to be beaten back by the Bears as might be indicated by a number of closes in the lower 50% of the Bar.

Does the Last Bar have a much smaller Range from High to Low than normal suggesting equilibrium between Bulls & Bears.

To me, what is an indicator and what is not depends on what the majority of Traders think at that particular time.
If the majority think that if Indicator ABC is breached we will be off to the races, then I want to know where that indicator is. Sure Price is King, but sometimes even the King has to comply to his subjects.
  • #3
  • Jul 9, 2006 12:03am Jul 9, 2006 12:03am
Price Action is the succession of quotes: price only, and nothing else:

Price Action is (another word for) tick by tick data.

Anything else is an indicator.

A bar takes into account time (a time interval) to represent quotes and therefore isn't Price Action. When you re looking in real time at the ticks that are forming a bar, you're reading Price Action indeed, but the bar itself isn't Price Action.

More generally, any representation that can't be reverted to Price Action, that loses some information, is an indicator.

So MAs qualify as indicators as well.

Just a radical opinion...
  • #4
  • Jul 10, 2006 1:02am Jul 10, 2006 1:02am
That does seem radical ... since if that was the case then you have no filter to view the market. You are only looking at up and down in a tick by tick time frame. You would be lost.

What I have understood is that price action perception is trading naked without indicatorts, but can be done on any time frame, but at least you have the benefit of bar relationships as a guide to the next "likely" action.

Or maybe I'm missing the point.
  • #5
  • Dec 4, 2008 9:43am Dec 4, 2008 9:43am
Quoting minute
That does seem radical ... since if that was the case then you have no filter to view the market. You are only looking at up and down in a tick by tick time frame. You would be lost.

What I have understood is that price action perception is trading naked without indicatorts, but can be done on any time frame, but at least you have the benefit of bar relationships as a guide to the next "likely" action.

Or maybe I'm missing the point.
minute,
you are not missing the point.
price action is price action, indicators are not for price action.
they are to late, action is already finished.
  • #6
  • Dec 4, 2008 1:29pm Dec 4, 2008 1:29pm
It's what it does at certain points in relationship to what it's done before. If a pair consistently stops at a certain point that's price action. If a type of candle/bar produces a consistent movement in a certain direction that is price action.
  • #7
  • Dec 4, 2008 10:05pm Dec 4, 2008 10:05pm
This was posted by FXSurfer in LeonLorenzo's "Dead end" thread.

http://www.dacharts.com/articles/Buf...ice_action.php
  • #8
  • Last Post: Dec 5, 2008 3:26am Dec 5, 2008 3:26am
Thank you for the URL, although I need some time to get this right. Is it possible to automate that on metatrader ?
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