new_trader
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Anyone know any articles describing trading based on price action?
I'm pretty sure I do it already based on S&R bounces but just wanted to review it...
..or if some can explain
http://www.trade2win.com/boards/psychology/10672-journey-basement.html
Read everything you can posted by SOCRATES and you will have everything you need to know to become successful at trading. But it requires hard work, effort and shock horror, some THINKING of your own!!...not constantly crying in this forum "Waahh...Waahh...why does my STOP keep getting hit....Waahh...Waahh"
intradaybill
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I am working on a book about the history of trading and price action is an interesting subject. It is a vague term. It can mean different things to different people since on a chart you see only price and volume. The output of the markets is price action.
Some refer to signals from chart formations as trading based on price action. For example trading S&R bounces, trendline and range breakouts etc. I think this is not price action as the people that invented the term meant it, but simply trading based based on chart patterns.
Price action has been traditionally associated with very short term patterns, like a swing high or a swing low, key reversals, etc. This is I believe how the concept became popular when traders like Linda Rasche and Larry Williams started using it in seminars:
Price Action | Trading Strategies.
Price action can be modelled exactly and the resulting trading system can be used to generate signals. From the point of view of very short term price patterns the subject has been beaten to death. Michael Harris in the late 1990's and soon after Linda Rasche and Larry Williams popularized price action developed a program that can discover every possible pattern with statistical significance that could model price action. This is useful info for beginners in this area:
Tradingpatterns.com Michael Harris article
There are other definitions of price action including its association to a cognitive process involving tape reading and monitoring price change for the purpose of anticipating responses. LInda Rasche has lately referred to this process in articles:
Tape Reading by Linda Bradford Raschke
'"Tape reading is at the heart of swing trading. When looking for short-term moves, price-based derivative indicators will be too late to be of value. "
This is the essence of price action. I agree with her.
Some refer to signals from chart formations as trading based on price action. For example trading S&R bounces, trendline and range breakouts etc. I think this is not price action as the people that invented the term meant it, but simply trading based based on chart patterns.
Price action has been traditionally associated with very short term patterns, like a swing high or a swing low, key reversals, etc. This is I believe how the concept became popular when traders like Linda Rasche and Larry Williams started using it in seminars:
Price Action | Trading Strategies.
Price action can be modelled exactly and the resulting trading system can be used to generate signals. From the point of view of very short term price patterns the subject has been beaten to death. Michael Harris in the late 1990's and soon after Linda Rasche and Larry Williams popularized price action developed a program that can discover every possible pattern with statistical significance that could model price action. This is useful info for beginners in this area:
Tradingpatterns.com Michael Harris article
There are other definitions of price action including its association to a cognitive process involving tape reading and monitoring price change for the purpose of anticipating responses. LInda Rasche has lately referred to this process in articles:
Tape Reading by Linda Bradford Raschke
'"Tape reading is at the heart of swing trading. When looking for short-term moves, price-based derivative indicators will be too late to be of value. "
This is the essence of price action. I agree with her.
When using swing trading (3 bars), an indication of a reversal is often lagging.
Does swing trading rely purely on waiting for ranging and trading the breakout because that doesn't fit with my S&R and trendline trading.
Also, volume indicators are useless in forex as the volume amounts are not centralised - I can only get my brokers' volume.
