So been learning to trade now for coming up to 2 years in may. I use indicators to trade, just wondering will learning price action trading help me with trading using indicators
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Defiantly, indicators mainly follow the price so being able to read the chart will help keep a step ahead
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No because no one can definitively define what ‘price action trading’ even means. Although of course, my comment is bait…I mean an invitation, for someone to make an attempt.
Thanks for the reply, just wondering if you know any sites that possibly teach price action thanks again
See link in the post linked below.
Easier to define what price action trading is not than what it is - price action is not buying because an indicator says buy.
Without indicators, all that’s left of TA is price, and price always offers two options in any situation - buy because price has been rising, or sell because price has been rising. The outcome of the choice is possibly more dependent on the psychology of the trader and therefore how effectively the position is managed than on the quality of the chart features.
Price action takes into account market structure in their micro and macro forms. It also takes into account the fractal nature of price movements. It allows you to make almost pip perfect predictions and drastically reduces your risk and improves your R:R manifold.
Unfortunately people have sullied price action by drawing trend lines, considering chart and gartley patterns and candlestick formations. None of these things have any relevance to price action.
Psychology and trade management play a role in any form of trading. And, for obvious reasons, PA helps manage both of these aspects of trading better than other methodologies do.
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I’ll take the bait. How do you trade and why don’t you believe in price action??
Personally I am a price action trader and firmly believe it is the only way to trade.
Al Brooks is one of the best price actio traders and you should check him out.
Cheers
Blackduck
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You are correct there is no standard definition but in my eyes - as with probably many other forex traders it’s stuff like pin bars, fakeys, outside bars, and inside bars.- in fact the pantheon of all jap candle formations are probably price action too.
@Blackduck
His take that ‘every bar conveys information’ is a bit hard to accept (or disprove) and it seems like he tries to play many situations both ways but he does make falsifiable claims which puts him a step ahead of most ‘price action’ educators. I think I’ll make some summaries based on his books and thanks for the recommendation. How are you doing trading with his methods?
The problem is that you can create 1000 different systems using those simple building blocks and so what practical use is it to cite them as ‘price action’? Al Brooks is a good example. He says trend bars can be a sign of a trend. They can also be a sign of a countertrend. The context is everything. So yes, ‘price action’ is too vague.
If we can’t get a standard definition we should at least have ‘schools of thought’ where a research tradition/pedigree codifies a subset of beliefs. This works in academia, why not trading?
For example, Blackduck asks how I trade. I guess I would use Wyckoff>Hurst>Mandelbrot>Bernut as my pedigree. Brooks would use Edwards & Magee so Blackduck is a student of Edwards&Magee>Brooks. Most price action traders think ICT or Captain Jack are the beginning and end of theory and well you know how that ends up.
You make a valid point, there are so many options for creating a strategy - and this one of the things I found so frustrating for so long.
Everything seems to work sometime and fail spectacularly at others.
I think as traders we need to eliminate 99% of whats out there and concentrate on maybe two or three techniques that work for us.
I hear any newbies ask ‘should I trade price action?’ - well yes you should IMO but if you are a highly intellectual type you’d probably think it’s hocus pocus - so you will fail at it.
I make sense of the market with inside bars, and pin bars, smash bars (Larry Williams). They work for me because the are simple.
I also like to take out as much discretion as possible so opt for mechanical systems - I don’t trust my decision making skills.
I think it was Ed Sekyota who said we trade our belief systems.
Oh and though I’m a price action trader I cannot make sense of anything Al Brooks writes.
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Fantastic. My trading improved substantially once I started to look at each bar and understand what that bar is telling me.
It may seem like it’s hokus pokus but the charts tell a story and it’s like each bar is a chapter in that story.
Cheers
Blackduck
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Nothing wrong with Wyckoff. The Wyckoff method is very effective and it is a method I like for long term options trading where I am using Daily and weekly Charts.
Having said that I also pay close attention to price action even on a daily chart.
Blackduck
So who taught you to trade using price action?? What is your definition of price action?? How do you apply price action to you trading??
Just curious. I personally understand eveything that Al Brooks says and I follow his rules in my own trading.
Cheers
Blackduck
A combination of books and my own observations. I was heavily influenced by the work of Larry Williams - his long term secrets of short term profits is one of my all time favs.
I also picked up some Steve Nison books on candlesticks.
I only trade about 3 patterns and I don’t think you need to study all the work of Al Brooks to do that. I very much respect his in-depth work just found it hard going and ultimately not essential.
That said I will give him another go in the future.
As for definition - fully agree there is no set definition. I’ve even read some people who say Elliot wave is included - lol.
But for me it means concentrating on the most recent OHLC data that takes place at the hard right edge of the trading screen - no indicators trendlines support blah blah
I use no confluence of methods in my approach save a 15 bar moving average and maybe some sentiment analysis occasionally.
As for numbers of bars or candles that can make up a pattern - a smash bar or outside bar is a 1 bar pattern, a fractal pattern (as per trading chaos by Bill Williams) is 5 - so I rarely look past the 5th from the right side of the trading screen at all.
I think part of the confusion is the term price action because all technical analysis involves analysis of price in someway so some assume other TA is price action.
I am very much in the same camp as Al Brooks though when he says it is ‘analysing the market on a bar by bar basis’
Thanks for the reply.
Al Brooks is difficult and I can understand why people are turned away from him.
I don’t know why but from the first time I read his book what he said in that book made perfect sense.
I have read a lot of books and studied a lot of trading styles including Wyckoff (who’s style is very good) through to elliott wave Fibonacci to candle stick patterns.
They all have a place if they suit your personality and are easy for you to understand and apply to your trading.
Cheers
Blackduck
Yes it all really comes down to what suits your personality or belief system.
One example of this is I never ever use support resistance. im of the opinion of letting profits run until stopped out so the idea of SR doesn’t make sense - especially as both are supposed to stop price.
If I was to be concerned with every SR on a chart (not to mention multiple timeframes) I’d never take a trade.
I know lots would disagree with me - and for them it works which really means it’s all about trading your belief system - price action is a simple way to do that for me.
Paul Tudor Jones uses Elliot wave in his analysis and he is one of the greatest traders of all time!
For me it can’t be applied to trading - but who am I to argue with such a master?
I think the original poster of this thread asked is it worth learning Price Action? - I think it is just to see if it resonates with you - if it does use it - if it doesn’t don’t.
We all must find a way of interpreting the market with 100% conviction. That is the only way to execute our trades consistently.
I think the way we do it is secondary to what we actually believe about it - to a point.
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I have tried to read Al Brooks. It’s difficult for me for sure.
Would you say this is the “essence” of PA? 