Reading Price action ?


Active member
There has been quite a bit of talk recently on the board regarding trading just using price action, volume and watching every tick.

So what does this mean exactly?

Do people use tick charts with volume to monitor the action or +1min bar/candle charts.

What about the bid/ask spread, is it relevant.

Particular relevance to index futures would be appreciated.

Trading using just price and volume is an art, not a science.

You need to devote a lot of time to understanding the movements/price bars, which the majority are not prepared to do.

I use 10 min charts mainly, with 5 min charts to time entry.

Bid /ask spread is irrelevant on that timeframe.
can I add you also probably need to specialise in onlya few
instruments so that you understand their 'habits' and quirks'.

In any given instrument, the major players often trade in the same way ?
Skimble & Bonsai r right

learning to read price action bars does take more work & there is more responsability placed on your decision process......I think this is what attracts people to indicators in that it takes the responsabilty away & lessens the emotion involved.

If u learn to read the market from the price action u cannot go wrong as everything else is derived from this, Tick charts & price bars r particularly helpful.....especailly if u r trading a future index & as Bonsai says they all have their own it is best to learn your instrument

hey Jay,

you have read my mind.

I dont want to rely on the standard indicators as I have never found any suitable for me and find they lagg too much, so I am spending every day studying the action at tick level.

I can now build a picture in my mind of what the 2min bar chart looks like before looking at it so I can now see how a triangle etc is formed.

but there doesnt seem to be any mention on here of ppl looking at tick charts to read price action and I find it difficult to read the underlying action on a bar chart.
you can get too close. ?
one suggestion is to stand back and try to see a bigger picture
I find it may cover more than one day .

I know most people swear by them but I dont like candle bars
very much. I use line charts. Just want you to know that you
need to find the environment in which you are most comfortable.
you don't have to go with the mass.

know what you mean about getting too close.

I also have other charts 2m, 10m and 60m open for the bigger picture.

r u using line charts on a tick by tick?
ticks come every 10 seconds ?
I prefer a slower moving picture.
but I like to trade intra day swings

decide what sort of trader you are first,
then decide which instruments you want to concentrate on.

then try them all and discard those you dont like.
2m certainly has less noise.
10m and you wouldnt get many trades perhaps.
60m seems suitable for longer term issues ?

others may advise differently.
In the end it is up to you.

Do this exercise and you will learn a lot about price action ..

You need to have L2 screen ..

Choose a stock for trade such as ERTS ..
Chart the candle for the stock

Watch how players move in and get filled ( specially those who are well away from inside bid or ask ) then you see why candles open and close the way the do.. few days after close the L2 screen and just watch the Chart.. You get a strong feel of the players even though you are not watching L2...

You be amazed how quickly you would learn the price action .,,

In my mind u r thinking in the right direction..this is all I did. I tried to steer away from the norm of using indicators & general chart patterns, having enough faith in myself that if I watched these charts for long enough it would all start to make sense & would 'click' one day.........dont get me wrong I did study & have assistance.... but most of what I have learnt has come from watch & work.

doesn't matter what anybody says All indicators r derived from the price action.......after all this is the Market. like an indicator being discussed on another thread, very fancy but just exhaustion trade at the end of the day & nothing new.

not saying it is easy, but it is all there without indicators.

Tick charts& volume r very useful when trading a futures market especially when looking for a sharp entry.......but can be a bit close on their own, I use a 5min & 10 min alongside the tick chart......I did use a method of just using tick charts when I started & very successful but I was just running my averages.

think of it like this: all u want to do is to spot a potential trend, trend turn, move.............& then be in at the safest spot where u wont be noticed & trade 'with' the market.

Simple Price Action

Price action I find is the simplest way to read price movement. It is far better than indicators which tend to distract you from really absorbing price movements and understanding the flow of the market.

I trade forex so I can only give you my conclusions from that market. I use the 30 minute chart to trade, but I also use the 4 hour for a longer term view, especially to set my support and resistance barriers. Basically look at the struggle between the buyers and sellers. A candlestick chart tells a lot, looking at colours, size, wicks and tails tells you how this struggle is playing out. Also look at whether you're getting waves of higher highs and higher lows, or waves of lower highs and lower lows. And watch how price breaks through, falls shy of, or turns around at the support and resistance.

I trade exclusively on price action and I find it is the most profitable way to trade. It also gives you the flexibility to move with the market as the dynamics of the world economies change and traders' sentiments change.
o cant read price action from a chart, there is so many things wrong with that

Price action means watching all the trades that go through and what happens to all the bids and offers for a particular market. You can only do this with futures and cash equity's i believe where you can see market depth.

Price action is what gave locals their edge in the pits and is why pit traders pay lots of money to trade in the pit instead of in front of a screen.

Therefore its impossible to read price action if you spread-bet (unless you use futures betting) which is where maybe 90% of the forum goes wrong.