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Price Action Trading

  • #21
  • Nov 2, 2009 5:02pm Nov 2, 2009 5:02pm
Quoting enivid
All indicators are based on Price Action, so what can they offer that isn't present in Price Action analysis?
Not volume (based on tick data) :-)
  • #22
  • Nov 2, 2009 6:09pm Nov 2, 2009 6:09pm
Quoting philmcgrew
Getting in early is much less accurate than waiting a candle or two to let the market show its hand.
Not necessarily. I know many people wait for "confirmation", but it is overrated. Good early entries can be roughly as reliable, with the benefit of lesser risk and greater profit. In my analysis, waiting for "confirmation" is actually riskier, since it may not be able to bear movement that the early entry can by that stage.

Quote
Fibs, pivots, profit targets, support/resistance are all just bad guesses
The market uses these.

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Indicators can provide information that you would not otherwise have. Overbought and oversold markets and divergence are two quick examples that cannot be discerned from price action alone.
They can be to a trained eye. Price-based indicators use the same information as that shown on a price chart, and therefore anything an indicator shows is also shown on a price chart. The difference is that to people who aren't used to reading price charts, it's probably far easier to see in an indicator. Divergence itself obviously can't be shown on a price chart, but what divergence shows is shown in the price chart.

Quote
I'm not suggesting that someone can't trade price action. I just find it humorous that people think that they have some kind of edge by not using indicators. It's as if not holding onto the handlebar on a roller coaster while strapped in makes you more cool then the rest. We all end up at the same place at the end of the ride.
We don't end up at the same place though. I won't say that a price action trader will perform better than one who uses indicators, but I will say that price action is ultimately more efficient. I would hope that those who do use indicators would become adept at reading price action anyway. Indicators or no indicators, doesn't matter. Skill is what matters.
  • #23
  • Nov 2, 2009 6:21pm Nov 2, 2009 6:21pm
I'm not here to debate you. I stated my position and you stated yours. I respect that and wish you all the best in your trading.
  • #24
  • Nov 3, 2009 2:09pm Nov 3, 2009 2:09pm
All PA-lovers, let me start with saying that the info below is based on pure statistics and common sense, I have no hate towards PA just a big portion of skepticism of its efficiency.

Price-action (candlestick patterns) must be some of the most hyped ways to successful trading around FF. With some basic usage of statistics, you could explain why some of the common known patters like hammer (pin-bar), harami (inside bar) and engulfing bar (outside bar) to name a few, are so beloved on higher TF's like daily/weekly/monthly chart.

Take a look on d/w/m chart. Notice when price closes at extreme levels (absolute high/low). When price closes at these levels, there's a higher probability to see a continuation of the move.

The theory is as follow; it doesn't matter how the candle looks like, its all about the close. If it looks like a hammer or harami, it doesn't improve your odds.
Attached Image (click to enlarge)
Click to Enlarge Name: candle.jpg Size: 84 KB
Measure twice, cut once
  • #25
  • Nov 3, 2009 2:56pm Nov 3, 2009 2:56pm
Two points:

1. PA is not only candlestick patterns. CP is a subset of PA, but there are many other techniques in PA.
2. Not all of the presented patterns (on the chart) are signals as candlestick trading is not only about the pattern recognition but also about evaluating the overall market situation. Like shooting star works only after a bullish trend and a bullish engulfment works only after a bearish trend.

Quoting aediaz1
All PA-lovers, let me start with saying that the info below is based on pure statistics and common sense, I have no hate towards PA just a big portion of skepticism of its efficiency.

Price-action (candlestick patterns) must be some of the most hyped ways to successful trading around FF. With some basic usage of statistics, you could explain why some of the common known patters like hammer (pin-bar), harami (inside bar) and engulfing bar (outside bar) to name a few, are so beloved on higher TF's like daily/weekly/monthly chart.

Take a look on...
  • #26
  • Nov 3, 2009 3:16pm Nov 3, 2009 3:16pm
Quoting aediaz1
Price-action (candlestick patterns)
Price action is simply price movement. As for candlestick patterns, a candlestick is just a summary of the price action of a faster timeframe. A candlestick pattern is just a summary of a larger sample of that faster timeframe. The patterns themselves simply represent what is going on in faster timeframes, which can give clues to what may happen on slower timeframes.
  • #27
  • Nov 3, 2009 3:19pm Nov 3, 2009 3:19pm
A lot of experience and wisdom here !
Measure twice, cut once
  • #28
  • Nov 3, 2009 4:36pm Nov 3, 2009 4:36pm
Price action, modern techical analysis, fundamental analysis, news trading, quant trading, etc, etc ... all rubish - there's no ultimate trading method. It's the trader who makes it work for him. Or not.
  • #29
  • Nov 21, 2009 2:47pm Nov 21, 2009 2:47pm
Quoting philmcgrew
PA trading is basically a term used by traders who delude themselves into thinking they can trade successfully without a system.
You are very bitter, whoever deceived you with price action!
But I think there is still merit in studying it. For me the real
trouble starts when you tell me it's the only observable, as I saw somewhere.
I would have mentioned name, but I feel good today. Don't want to use
anyone's name in vain
Mystery Is The Final Product Of Ignorance. Hey! What's ma chart doin'
  • #30
  • Feb 2, 2011 3:38am Feb 2, 2011 3:38am
price action strategy.....looking for pin bar ...rite ? in which TF ? m1 . m5 or m15?
  • #31
  • Feb 2, 2011 9:38am Feb 2, 2011 9:38am
Quoting siti
price action strategy.....looking for pin bar ...rite ? in which TF ? m1 . m5 or m15?
A pin bar is relative regardless of timeframe, the only difference is spread effects and size of moves.

Spread will effect smaller timeframes were the size of the risk is impacted by spread, also you will not be aiming for 200 pips off a 5 min PB which has an overall risk of 10 pips.

RT
  • #32
  • Feb 3, 2011 9:00am Feb 3, 2011 9:00am
Thank you for replying. Am I right if I say that if I were to trade the kiwi whose spread is usd 15. It is better to enter the trade at higher tf?
  • #33
  • Oct 30, 2011 12:46am Oct 30, 2011 12:46am
it is technical.I also under study.
  • #34
  • Oct 31, 2011 8:18am Oct 31, 2011 8:18am
Skip the silly indicators and jump right into PA...you'll avoid some six months normal people waste trying to find an unfaillable system. I did.
  • #35
  • Oct 31, 2011 9:48pm Oct 31, 2011 9:48pm
where can i find the best price action book... suggestion anyone?

thanks
  • #36
  • Nov 1, 2011 6:04am Nov 1, 2011 6:04am
Quoting Dmessenger
where can i find the best price action book... suggestion anyone?

thanks
I suggest reading some steve nison stuff, but nothing beats getting on a simulator and watching candles for hours and hours. It's like learning how to swim, there's no guarantee but you should slowly get the hang of it...
  • #37
  • Nov 1, 2011 2:32pm Nov 1, 2011 2:32pm
Quoting Dmessenger
where can i find the best price action book... suggestion anyone?

thanks
Try the james16 thread on FF, its free and has all you need, the only problem is that its now massive, thousands of pages. If you can find his PIN definition thats a good start, some of the other stuff people have posted isnt that great and can become confusing but James' basic stuff is all you need.
  • #38
  • Nov 2, 2011 2:21pm Nov 2, 2011 2:21pm
No discussion of trading price action would be complete without mentioning the Deadly thread. http://www.forexfactory.com/showthread.php?t=206723

I am a recent convert but like this one because its written like a course/guide from first principles.
I am usually Wrong
  • #39
  • Nov 15, 2011 9:24am Nov 15, 2011 9:24am
hey just adding my 2 cents,

i trade without indicators (not to say that indicators dont work), however i naturally prefer a plain chart, i found that having indicators on my chart just meant more for me to analyse before pulling the trigger and stop sometimes that analysis paralysis stopped me from executing the trade. unfortunately i cant offer any advice on which indicators to use, however if you only learn one thing in your trading i would suggest you learn to identify support and resistance levels on a plain chart, look for level where the is a supply/demand imbalance and see how you can take advantage. if you need any more help please do not hesistate to ask again
  • #40
  • Nov 17, 2011 2:06pm Nov 17, 2011 2:06pm
Quoting philmcgrew
PA trading is basically a term used by traders who delude themselves into thinking they can trade successfully without a system.

I disagree 100%
PA should be the foundation, and using sto's or anything else should be nothing more that help. If you learn to us PA and read bars, you will be a far more successful trader than one who depends of slow sto's or lagging indicators, IMO.
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