What is Price Action????

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ton22

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Hi everyone!

I'm pretty new to all this and I'm not even sure if this is the correct section of the site to post this thread but I'm hoping someone can help. Currently I'm just looking around the site trying to get the inspiration I need to develop my own system. However, I often get the feeling that a lot of you guys think that the technical indicators are for beginners and that eventually, as traders gain more experience, they don't depend as much on indicators and instead they just follow the price action.

Sorry if this is a stupid question, but can someone please define price action for me and describe how one would follow it without the use of technical indicators? Many thanks!
 
try the ''similar threads'' right at the bottom of this page for starters.........
 
Thanks csmith87! this looks like a really comprehensive article and it should hopefully answer all my questions!

P.S. - Welcome to T2W!! It's a brill site, packed with loads of useful stuff and lots of people willing to answer my stupid questions!!
 
ton22 said:
I'm pretty new to all this ... Currently I'm just looking around the site trying to get the inspiration I need to develop my own system.
Click to expand...

Might I offer a suggestion?

If you are new to all this, my advice would be to follow someone else's simple system and become proficient with that. Then when you have some understanding of why the system is profitable and some experience of trading (including all the psychological factors) you can begin to develop your own system.

What you are trying to do (ie, a beginner developing their own system) is a bit like walking into a mechanic's garage, looking around at all the engine parts lying on the floor and saying "Just looking around before I build my own car. Can you tell me how the transmission works?"

If you develop your own system, you will go the way of many beginners (me included) and end up with a system full of indicators that you only partially understand and a chart covered in lines that you cannot read. If you are lucky you will lose a small amount of money (like me) and realise you don't know anything and go and look for a simple sysetm that has already been tried and tested. If you are unlucky, you will make money and end up with a false sense of confidence/how easy is this trading game, until one day you eventually blow up your account.

Here are some contenders for simple and profitable systems:

http://www.trade2win.com/boards/for...5-phil-newton-s-range-break-out-strategy.html

http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html

Oh, and both of these systems are based on price action.

Good luck.
 
Thanks for the advice PokerBrat!

I like your little mechanic story and i reckon thats the way i was headed, looking at every possible indicator and trying to "tweak" them until i found that elusive magic setting! Thanks to this site and helpful traders such as yourself, i'd like to think that I've at least avoided some of the most obvious abd basic rookie mistakes!

Can't wait to get stuck into the simple systems you've suggested......thanks again!
 
ton22 said:
Can't wait to get stuck into the simple systems you've suggested......thanks again!
Click to expand...
Did you really mean "can't wait to get STUCK into the simple systems"? Or you meant:
"Can't wait to get STARTED with the simple systems"?
 
ton22 said:
Hi everyone!

I'm pretty new to all this and I'm not even sure if this is the correct section of the site to post this thread but I'm hoping someone can help. Currently I'm just looking around the site trying to get the inspiration I need to develop my own system. However, I often get the feeling that a lot of you guys think that the technical indicators are for beginners and that eventually, as traders gain more experience, they don't depend as much on indicators and instead they just follow the price action.

Sorry if this is a stupid question, but can someone please define price action for me and describe how one would follow it without the use of technical indicators? Many thanks!
Click to expand...

Price action becomes clearer (at least, to some) on examining the chart for patterns in the movements within a certain timeframe. Examine enough of them and you will develop a preference for some. That is where backtesting comes in.
 
Splitlink said:
Price action becomes clearer (at least, to some) on examining the chart for patterns in the movements within a certain timeframe. Examine enough of them and you will develop a preference for some. That is where backtesting comes in.
Click to expand...

Thanks Splitlink! I presume that you are an active trader, do you just trade on price action or do you find certain indicators can be helpful?
 
I use price action all the time but, also, averages and a Bollinger Channel. These give me an indication of the trend that I should be in and the BB, whether the price is oversold/bought. The indicators on the chart are the only ones I use, because I compare them with price. The other indicators in the the box below the chart, stochastic, MACD, RSI, CCI, I don't use any more, although there was a time, like most people, when I did.

You have to be careful with the BB. It can give a bounce signal but, also, an indication that a trend is likely. I use a long average one, with a 2% band.

But the final decision I make is on the price pattern, or action.

Good trading

Split
 
Classical tape reading is interpreting price action without indicators. I would study some on tape reading.
 
I've got an idea on that. In Livermore's day there were few, or no charts freely available, therefore, the only option was to learn tape reading. I'm not sure that it is better than a tick chart. Still, if you are quick with numbers it could be good for you and you should be curious about everything.

Good trading.

Split
 
eddiea6987 said:
uh oh!!!i think this is exactly what im doing :(
Click to expand...

Hi eddiea6987,

I was like you too once but now i'm converted and will probably never look at an indicator again! Have a look at post #6 on this thread by PokerBrat, the second link that he offers is a thread by trader_dante and it completely changed how i look at trading, its a big thread but worth every min of it.

Happy reading!! (y)
 
ton22 said:
Hi everyone!

I'm pretty new to all this and I'm not even sure if this is the correct section of the site to post this thread but I'm hoping someone can help. Currently I'm just looking around the site trying to get the inspiration I need to develop my own system. However, I often get the feeling that a lot of you guys think that the technical indicators are for beginners and that eventually, as traders gain more experience, they don't depend as much on indicators and instead they just follow the price action.

Sorry if this is a stupid question, but can someone please define price action for me and describe how one would follow it without the use of technical indicators? Many thanks!
Click to expand...

Being a price action trader myself, I can offer my 2 cents. Just by being curious about price action first, you have just blown by 90% of other beginners and will hopefully be very successful much faster. Price action is the only indicator that is real and in real time. Everything else is lagging. Let me give you the truth. There are a lot of different systems out there that are making and losing money. Most of them want this to cross and that to face up while this moves down etc..... The good ones may give you three or four trades a day and and if you're
incredibly disciplined, you might make money. But by studying price action, chart pattern recognition, and support and resistance. The market will give you quality plays all day long. The key to price action isgetting in at theright price so that you can keep your stop losses tight. Master those three arts and read up on the guys who trade without indicators or "naked" as some say. This will change the way you trade forever. You might still use an indicatorfrom time to time to get a better picture of the markets framework. Butost times they'll just get in the way of what you're really watching. Price action.
 
Last edited:
ektrader said:
Being a price action trader myself, I can offer my 2 cents. Just by being curious about price action first, you have just blown by 90% of other beginners and will hopefully be very successful much faster. Price action is the only indicator that is real and in real time. Everything else is lagging. Let me give you the truth. There are a lot of different systems out there that are making and losing money. Most of them want this to cross and that to face up while this moves down etc..... The good ones may give you three or four trades a day and and if you're
incredibly disciplined, you might make money. But by studying price action, chart pattern recognition, and support and resistance. The market will give you quality plays all day long. The key to price action isgetting in at theright price so that you can keep your stop losses tight. Master those three arts and read up on the guys who trade without indicators or "naked" as some say. This will change the way you trade forever. You might still use an indicatorfrom time to time to get a better picture of the markets framework. Butost times they'll just get in the way of what you're really watching. Price action.
Click to expand...

Thanks ektrader,

That waas a really encouraging post! i am currently reading some good books on trading using price action only, can you recommend any that you found helpful?? i am assuming that you use price action to trade yourself, what makets do you usually trade and would you consider yourself successful at trading price action only? obviously i don't want to hear about specific trades etc but i'm curious to know are people out there consistently making money by trading price action???
 
ektrader said:
Being a price action trader myself, I can offer my 2 cents. Just by being curious about price action first, you have just blown by 90% of other beginners and will hopefully be very successful much faster. Price action is the only indicator that is real and in real time. Everything else is lagging. Let me give you the truth. There are a lot of different systems out there that are making and losing money. Most of them want this to cross and that to face up while this moves down etc..... The good ones may give you three or four trades a day and and if you're
incredibly disciplined, you might make money. But by studying price action, chart pattern recognition, and support and resistance. The market will give you quality plays all day long. The key to price action isgetting in at theright price so that you can keep your stop losses tight. Master those three arts and read up on the guys who trade without indicators or "naked" as some say. This will change the way you trade forever. You might still use an indicatorfrom time to time to get a better picture of the markets framework. Butost times they'll just get in the way of what you're really watching. Price action.
Click to expand...

I am using Indicators that fit on the chart, itself, ie Averages and Bollinger Bands, to get me an idea of overbought/sold situations. Do you take notice of this, or just trade with a clean chart, except for the price bars?

Split
 
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