Is price action reliable ? seems way too subjective to me.

[Attila the trader]

drawing a bunch of colored lines and candle patters , always seemed way too subjective to me, you can take 100 people and they will interpret it all differently . lot of people fool themselves thinking that they have a good trade but they just interpreted the market according to their preconceived bias . along with indicators and fundamentals it could be a good tool , but by itself it way too vague . I have seen so many videos of folks only using price action to make trades.

 

[Mumpsimus]

Of course it's subjective. By definition, the market is merely a reflection of perceived value and the realisation of entirely subjective views - which apply to both TA and News based approaches. Indicators are merely a different representation of what's happening on a chart and still based on that data and open to broad interpretations. If you mean that the interpretation of PA is apparently near random then the only arbiter is the method that produces a profit over time. I would argue that it's fairly easy to determine whether price is going up or down using simple MTF analysis and IMHO that is what matters. There is no intrinsic Right or Wrong, only plus or minus and there are endless strategies that aim to increase the probability of profit. It is up to the trader to select the ones that suits their temperament and resources. In the end, most strategies succeed or fail due to Risk Management. You might with advantage read up on the Turtle traders, not because the strategy is so fantastic but because of the approach to it.

 

[1nvest]

drawing a bunch of colored lines and candle patters , always seemed way too subjective to me, you can take 100 people and they will interpret it all differently . lot of people fool themselves thinking that they have a good trade but they just interpreted the market according to their preconceived bias . along with indicators and fundamentals it could be a good tool , but by itself it way too vague . I have seen so many videos of folks only using price action to make trades.

its subjective, but if the perception of that subjectivity works for you, does it matter that someone else can't perceive the same value?
why do you care that there are loads of videos of individuals who probably are only good at making those videos?
why do you care that there are loads of individuals who dont use technical indicators. If techincal indicators work for you?
What works for you or me, that same approach doesn't necessarily mean it will work for others, just as the same as those colored lines.
the idea is to find an edge that works for you, not for others
And the turtle approach if you read the book the other poster suggested, you will also find the same there. The same traders, the same rules, didnt work for every one of them. the same set of rules were either followed or not. A great book ("the way of the turtle" by curtis faith
they used squiggly lines by the way (indicators). it works, just because others can't doesnt mean it isnt real

 

[Attila the trader]

Of course it's subjective. By definition, the market is merely a reflection of perceived value and the realisation of entirely subjective views - which apply to both TA and News based approaches. Indicators are merely a different representation of what's happening on a chart and still based on that data and open to broad interpretations. If you mean that the interpretation of PA is apparently near random then the only arbiter is the method that produces a profit over time. I would argue that it's fairly easy to determine whether price is going up or down using simple MTF analysis and IMHO that is what matters. There is no intrinsic Right or Wrong, only plus or minus and there are endless strategies that aim to increase the probability of profit. It is up to the trader to select the ones that suits their temperament and resources. In the end, most strategies succeed or fail due to Risk Management. You might with advantage read up on the Turtle traders, not because the strategy is so fantastic but because of the approach to it.

I agree that risk/money management is the deciding factor , lot of great strategies underperform due to poor management and psychology .

 

[Attila the trader]

Price action is important as all indicators are derivatives of price, volume or time. So it's always advisable to work on it and get comfortable with it.

yes but the indicators (not all) presents a definite value which is same for everyone who looks at it at a given time , like the 14 period ATR reading 7 , but the price lines and candle patterns can be interpreted in may different ways.

 

[Attila the trader]

its subjective, but if the perception of that subjectivity works for you, does it matter that someone else can't perceive the same value?
why do you care that there are loads of videos of individuals who probably are only good at making those videos?
why do you care that there are loads of individuals who dont use technical indicators. If techincal indicators work for you?
What works for you or me, that same approach doesn't necessarily mean it will work for others, just as the same as those colored lines.
the idea is to find an edge that works for you, not for others
And the turtle approach if you read the book the other poster suggested, you will also find the same there. The same traders, the same rules, didnt work for every one of them. the same set of rules were either followed or not. A great book ("the way of the turtle" by curtis faith
they used squiggly lines by the way (indicators). it works, just because others can't doesnt mean it isnt real

i care because , when it doesn't work for you how do you know what precisely went wrong , since there are a myriad ways to interpret it , how could one say that a line drawn at this specific angle is better than another few degrees off ? how can you know whether an innate bias in you is always interfering with your interpretation and messing it up ? there is no way to quantify it and test it , so just by pure chance it could work for you but you don't know why it does .

 

[Mumpsimus]

i care because , when it doesn't work for you how do you know what precisely went wrong , since there are a myriad ways to interpret it , how could one say that a line drawn at this specific angle is better than another few degrees off ? how can you know whether an innate bias in you is always interfering with your interpretation and messing it up ? there is no way to quantify it and test it , so just by pure chance it could work for you but you don't know why it does .

It seems that we're going round in circles As I said earlier, if you choose a particular strategy and you rigorously respect Trade and Risk management then the determining factor of whether said strat is viable is whether you have demonstrated an edge over time. If it is not profitable for you over a series of like trades (say 20 or so) and your post-analysis shows that the set-ups were faulty then obviously it ain't workin'....so, move on to the next test.

There are myriad variations and tweaks to be used and I learned a looong time ago (very expensively) that it really is a question of the adage that "One man's meat is another man's poison". My own strats are based on PA and mostly S&R plus ATR, which I arrived at after a few years - by no means perfect but it suits me. I look at only the most basic patterns and leave the likes of the 7 Flatulent Gerbils to true aficionados as I personally found them to be no help but I'm aware that many others swear by them. In my own experience, what makes me money are Trade and Risk management which stop me making mistakes...and if one doesn't make mistakes (or at least, not expensive ones) then over time the result is a profit.

One of the many hurdles that afflict the trader is cognitive overload. If you start from a blank slate and learn just one strat and apply it properly there is a good chance that it will make money.... but what generally happens is that one doesn't have a teacher/mentor to direct your progress in a logical way and one chooses other strats in a more random search for the Holy Grail. This gets you knowing too much about too many things without having properly absorbed the rules that allow you to make clear and realistic judgments. If you don't have someone to guide you then this process is based solely on experience which as we all know can be distressing and costly. That's why I suggested that you look at the Turtle traders, which was essentially an experiment where an almost random group of "blank slaters" were taught to trade in a closed environment and which demonstrated quite clearly that it is entirely possible to go from Zero to Hero provided that one can follow the rules. It also showed that some of the guinea pigs just could not do this and failed miserably.

 

[1nvest]

i care because , when it doesn't work for you how do you know what precisely went wrong , since there are a myriad ways to interpret it , how could one say that a line drawn at this specific angle is better than another few degrees off ? how can you know whether an innate bias in you is always interfering with your interpretation and messing it up ? there is no way to quantify it and test it , so just by pure chance it could work for you but you don't know why it does .

I can only agree with @Mumpsimus above. He makes some very sound points and says it in his first post
whatever you look at, whether its price action or indicators its all relative to what works for you.
I would hate the idea of trading with price action unless i could quantify everything. if you are trading pullbacks in a trend, i've got to be able to define what a trend is, how deep is the pullback. I cant do that without a quantifiable number, which there will be a indicator for.
but that doesnt mean the indicator also isnt subjective. Just because a moving average has a value, which period of moving average (10, 20, 50) what type (simple, exponential, weighted). someone is always doing something different. its what works for you.
I dont give a toss for anyone who says dont trade with indicators as its lagging. what an absurd comment. Just because i can, they can't doesnt make something wrong or right. If it works for me, its right!!
I'll know when it stops working because statistically i will have some reference point. how many trades produced a winning trade and how many losing trades did i have in a row. over a certain sample size, i'll know whether im going wrong. the subjectivity of what i do isnt guiding my decision because every one of us will likely be doing something different.

 

[Attila the trader]

I can only agree with @Mumpsimus above. He makes some very sound points and says it in his first post
whatever you look at, whether its price action or indicators its all relative to what works for you.
I would hate the idea of trading with price action unless i could quantify everything. if you are trading pullbacks in a trend, i've got to be able to define what a trend is, how deep is the pullback. I cant do that without a quantifiable number, which there will be a indicator for.
but that doesnt mean the indicator also isnt subjective. Just because a moving average has a value, which period of moving average (10, 20, 50) what type (simple, exponential, weighted). someone is always doing something different. its what works for you.
I dont give a toss for anyone who says dont trade with indicators as its lagging. what an absurd comment. Just because i can, they can't doesnt make something wrong or right. If it works for me, its right!!
I'll know when it stops working because statistically i will have some reference point. how many trades produced a winning trade and how many losing trades did i have in a row. over a certain sample size, i'll know whether im going wrong. the subjectivity of what i do isnt guiding my decision because every one of us will likely be doing something different.

i agree that its all relative; i never said that indicators are purely objective , but price action in general has a larger room for purely subjective interpretation, sometimes to a point that its fully made up ! I've seen people telling that this candle patter means this and that without context , and cheery picking winners. if you look at a real chart the said patters would mean 100 different things depending on time and location . further indicators are much easier to back test and quantify .

 

[Mumpsimus]

i agree that its all relative; i never said that indicators are purely objective , but price action in general has a larger room for purely subjective interpretation, sometimes to a point that its fully made up ! I've seen people telling that this candle patter means this and that without context , and cheery picking winners. if you look at a real chart the said patters would mean 100 different things depending on time and location . further indicators are much easier to back test and quantify .

....and back round to the beginning again. If you don't find that a naked chart is of use to you then nothing else matters. Unless trading is for entertainment purposes only, then see what works for you. It really doesn't make any difference what particular approach you use and you'll find the internet is full of folk who claim to have the mother lode but firstly one has to consider their motivations for sharing this info and then (if you've decided that they're genuine) you have to satisfy for yourself that it's going to help you make money. If you can't do that then just move on.

 

[sharabela]

drawing a bunch of colored lines and candle patters , always seemed way too subjective to me, you can take 100 people and they will interpret it all differently . lot of people fool themselves thinking that they have a good trade but they just interpreted the market according to their preconceived bias . along with indicators and fundamentals it could be a good tool , but by itself it way too vague . I have seen so many videos of folks only using price action to make trades.

Trading price action is not about drawing hundreds lines. It is about spotting support/resistance, reversal and of course trend. I find this is the easiest way to trade. You may want to devote yourself to learn more about price action trading. You will surely love it. I am wishing you all the very best.

 

[Farm Yard Forex]

There is a massive element of subjectivity to all methods of reading the markets. This is exactly why I don't think off the shelf trading strategies work or anyone can say this or that strategy is right or wrong aside from obvious things like flipping a coin on long or short. If you find something that subjectively works for you then stick with it.

 

[Jungletrader]

It's all subjective but if you find Price Action patterns that appeal to you along with understanding Market Structure, once it gives you an edge that's all that matters buddy