Is Price Action really King?

For the past two weeks or so, I’ve been looking over trading strategies from the Holy Grail forum and it seems that most systems are entertained as a thought but not taken too seriously from the senior members. The consensus appears to be that a reliance on indicators is not a viable strategy and there is more emphasis on identifying S/R levels, candle formations, harmonic movements etc.
Do most agree price action is King?

It’s one of those (many) questions about which there are two very different consensuses of opinion, depending on which group of people is answering it.

I’m generalising, and there are doubtless occasional exceptions, but broadly speaking, the large group of “traders and aspiring traders” generally has one answer (which revolves around an “indicator-based” perspective) and the [U]very[/U] much smaller group of “traders [I]who are making a living[/I]” has another (which is more or less that price action is king, as you’ve worded it).

We all speak from our own experiences, perspectives and influences. Mine is the fairly common one (it seems to me) that my trading became steadily and consistently profitable only when I abandoned indicators and based my trading on price action. There are other people here - as in all forums - with different perspectives.

[I][U]Most[/U][/I] people I know who are making their living this way aren’t indicator-dependent.

I also know two people who are making their living from routinely trading with indicators. I [B]think[/B] that both of them would probably agree with the perspective that price action is king, and that their indicators are an aid to interpreting direction and trade-availability rather than determining all their entries and exits. But I may be mistaken about that, because I’m kind of “putting words into their mouths”.

I’m [I][U]not[/U][/I] trying to detract from “technical analysis” in any way.

On the contrary, [B][U]all[/U][/B] my own trading is TA-based.

(It’s just the “indicator” components of TA that I don’t use. I mention this because sometimes, in forums, there’s a little bit of confusion between “TA” and “indicators”, which are of course two different things: there are plenty of [B][U]non[/U][/B]-indicator aspects of TA, as well, and I’m certainly dependent on some of those. :wink: ).

I don’t think the issue is really solely whether “Price Action” is better or worse than “Indicators”, rather the “crown” sits firmly on the head of the trader who knows how to use these tools. Because tools, or job aids, is all these things are. It doesn’t matter what kind of lines you draw, whether they wobble, curve, slant or go straight across the screen, they do not have a life of their own or any kind of mystical control over where the price must go next, nor do special candle patterns, charts, MACDS, RSIs or anything else (apart from maybe a minor self-fulfilment from a widely-observed level) and they will not serve you well in the longer term unless you have a good understanding of what they are really telling you and what the overall price movements underneath them are suggesting

Personally, I do not see any reason to place these two broad approaches into separate camps like oil and water. There is no reason why one cannot benefit from the best of both. The only real criteria is that whatever combination of tools one is using there should be a logical and calculated reason justifying them and a clear understanding of what they are actually representing and that they produce a coherent whole picture (along the lines of the concept behind the Ichimoku).

Just about anything would work if all markets happened to move in smooth, undulating and regular cycles, like the tides in the oceans, but that is far from the case. Therefore, I think we can conclude that no combination is going to work all the time in all kinds of market conditions and this is why it is essential (in my opinion, anyway) to look at the prices with a brain as well as a set of tools.

It is of my opinion that all TA is indicator based even if you dont use a classically labled indicator. A price chart in itself is just an indicator showing a history of price movements. Support and resistance, trend lines, even candle formations are all based on previous price action just like any indicator in the indicator drop down box in your trading software. Its all the same its a tool.

Tools are great to use but knowing what tool to use and when is the key. For example a screw driver is a great tool to have around the house and you can do many things with a screw driver but try to paint the house with said screw driver and let me know how it works out for you. A saw you can do great things with but again try to paint your house with it and see how it works out. Then again try to cut a board with a paint brush and you will quickly realize its about using the right tool for the job. Trick is in trading is to understand what these tools are good for and how to use them. Thats where a lot of traders fail is they see all these fancy tools in there tool box but never truly take the time to actually learn how to use them. Its a lot more than a quick you tube video. I can watch a your tube video on how to use a saw but that dont make me a carpenter. It takes experience and there is only one way to gain the experience. Demo hopfully as you have a long road ahead.

You are right, price action is the king indeed, if you search for some price action threads you will actually see some great trading and setups that are taken purely using price action and such threads are great in adopting this method of trading.

Hmmmm,
Strange really. Having traded for (many) years in apparent blissful ignorance of the “error” of my ways, using basically just a handful of MA’s, I joined here to share some thoughts and ideas and see what others out there are doing. Ever since then, I have only found out that everything I have been doing has seemingly been total junk and that there is only one way in this trading world, and that apparently is “Price Action” - seems that’s all there is, and seems everyone’s convinced only PA guys and gals make the money.

Oh well, since I have nothing else to offer than an indicator-based approach I guess it is time to admit that I am pretty much an extinct dinosaur in the trading world. So, being totally redundant here on BP, I guess I’ll just quietly slip back into my anonymity and hope no-one notices that I am [I]still [/I]using MA’s. :slight_smile:

All good things must come to an end. Wishing you all very happy and successful trading, [I]whatever [/I]the means that you use. :8:

Manxx

Do you know what makes price action so difficult? It is a discretionary system. You create the rules and you must live with your decisions. Our minds are so conditioned to structure and listening to authority that when we are exposed to the freedom of trading and the opportunity to make millions it becomes difficult to reign yourself in and be disciplined.

I would say that indicators assist with the discipline of making decisions on when to enter and exit. Pure price action has nothing to rely on except for the greatest indicator of all…your mind.

Yes I think if we know what we doing hence although using price action also can possible to get earning from our effort, but indeed required discipline with our own rules trading might we can trade only few hours and we catch opportunity for short term trade.

I am really confusing with the indicators. How ever now I am using only Bolinger Band with it’s default settings.

Indicator are good if you like to use them. But they will limit your profit or sometime they will increase your losses, if you are believing indicators , ignoring price action.
Because of that I don’t like to use indicators.

I think that “king” is whatever helps an individual trader trade the best, which may widely differentiate from trader to trader. It’s best to experiment with all the available tools at one’s disposal and figure out which ones help the most to be profitable and then go from there.