Well, I have had this in bits and pieces on my desktop for a while and this looks like a good place to firm it up and lay it out. This strikes me as a reasonable thread. Participants seem to be fairly mellow and looking at both sides of the coin. I have previously objected to a few pa Nazi’s who stomp onto an indi thread and insist that everyone abandon their methods and worship the one true god. But, I have noted that those tend to be followers, not leaders, of the pa movement. I will discuss here some other frustrations with pa, but will initially acknowledge that they may be the result of my own inadequacies. By way of assuring you I mean no harm, let me say that if you trade something called “price action,” tea leaves, or moon phases and it works for you, congratulations. You have joined the very small percentage of retail traders who are profitable. You deserve our accolades and respect. You have done what few have been able to do and it should only matter to others if you intend to help them learn how to do it. Perhaps that summarizes my personal frustrations with pa, I just haven’t been able to learn how to do it. You may have the grail, but you can’t seem to teach me to drink from it. Nor, am I yet willing to admit that’s all my fault.
I have forced myself to wade through a dozen “price action” threads on a half-dozen forums. Frankly, there is not one that did not drive me absolutely crazy. These usually run anywhere from 1,000 to 5,000 pages and I find myself wondering what you could possibly have to say that takes 20,000 posts. Are there still unanswered questions? Well, I know there are for me, but I don’t think another 10,000 posts will provide what I’m looking for. A couple of those threads warn me in advance that I am going to be looking at 100, 200, 300 subject areas before I get my head around pa. I have no doubt that many leaders of that movement are well-meaning and are doing their best to communicate what they see and how they trade. I have no doubt that many of them are successful. But, here are some of my gripes about so-called pa:
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A lot of threads that aren’t about pa may elicit a good amount of discussion, but they manage to maintain a concise summary of methodology within the first two or three pages. In the pa threads I have tried to understand, that feature is noticeably absent. No offense really intended here, but I can’t avoid the suspicion that there is no summary of methodology, concise or otherwise. When I get this lost, I start wondering if I’m just looking at hocus-pocus, seat-of-your-pants trading.
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And, “tried to understand” may be an understatement. I consider myself a reasonably intelligent guy, capable of understanding quite a bit. I tell myself that with all this manure, there must be a pony in here somewhere. But, usually about a quarter to half-way through one of those threads, I just want to throw my coffee cup at the wall. Remember, I have already conceded the possibility that my lack of grasping may be my own intellectual or patience limits. Having conceded, I’m not through griping.
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Where are the fxbook statements? Some pa threads don’t have those even from a couple of leaders who have multiple years of market savvy and know a move when they see it. I would expect them to be profitable and have no problem sharing their results. But, where are those from devoted followers who claim it is working so well for them? Especially those who seem to think they are missionaries to the lost on other threads.
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Another gripe. A major tenet of scientific method is framing your research in such way that it can be replicated by others. To that end, when you present a scientific paper, you must be very specific. Quantify, objectify, define, specify, and address the variables. If you can’t do that, it is not considered science and falls in another field. What are the pa specifics? If I decide I want to trade like you, how exactly would I do that? To me, and I will emphasis “me,” it ends up being incomprehensible mush that I cannot possibly replicate and I conclude that it is simply subjective trading with a few clues here and there. That, I will own as my singular opinion. The shortest doctoral dissertation I ever saw was a theoretical math hypothesis. Containing all the requirements to qualify as science, it ran all of eight pages.
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A final gripe that I will address in more detail has to do with definitions. In the extreme, I have actually heard pa enthusiasts argue that candlesticks, ema’s, s/r lines, etc., are not really indicators. Now, that irks me. If you are not guilty, don’t take it personally. But, who do think they’re kidding?
Let’s go into that last one a little more as we talk a bit about definition, specifically what a definition of “indicator” might be. Pa fundamentalists insist they use “pure price action, no indicators.” Well, perhaps you have a muddled definition of indicator. How many times do we get into a pa thread and the first thing we see are candlestick charts? I suppose you don’t think a candlestick is an indicator. Next are probably some moving averages and an s/r line or two. These are, they explain in a cloudy kind of way, not really related to their trading decisions, which are based on “pure price action.” They are only there to provide (mystery, shadow-talk, hocus-pocus) confirmation for the decision. By now, I feel like Alice. What the hell are you looking for when you stare at your charts? If you’re not looking for some INDICATION of where price goes from here then you might as well be watching youtube. We are looking for an INDICATION and the only thing that can possibly provide an INDICATION is something that INDICATES, otherwise known as an INDICATOR. A good working definition of an indicator for trading would be any derivative of price movement that provides some indication of where price might go from here. That is, ANY derivative. Forex is an electronic market. It is made up of electric pulses. Those pulses are “pure price action.” The advent of quantum computing notwithstanding, I have a sample of something that is at least one derivative from “pure price action,” that is, a piece of binary code where any number can be represented by any sequence of binary digits which, in turn, may be represented by any mechanism capable of being in two mutually exclusive states. In other words, your mechanism may “see” any of the following sequences as the number 667:
1 0 1 0 0 1 1 0 1 1
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x o x 0 0 x x 0 x x
y n y n n y y n y y
Ready to trade? Probably not, because this is virtually incomprehensible to the human perceptual set, especially within the time we need to be making decisions. So, let’s go another derivative level to the ever-popular price chart:
9/18/2013 4:00 0.83949 0.83984 0.83947 0.83977
Understand that what I am showing you are derivatives, images recognized by the human eye and assigned meaning by the human brain, but representations derived from what is occurring electrically in the binary guts of the internet. Can you trade these presentations? From what you see and how it is packaged, could you get an indication of where price will go from here? Would you want to try? A price chart is a derivative of the binary code, which is a derivative of those electrical pulses that are “pure price action,” which we are now two derivative levels away from and still not ready to trade. But, this is much more palatable to the human perceptual ability and we could possibly draw some INDICATION from this INDICATOR. Next, we would probably go to bar charts, line charts, candlesticks, heiken-ashi bars, range bars, Renko bars, all of which are formulaic presentations of electric pulses, i.e., “pure price action.” Then, we monkey with those pulses some more. We frame them up in m1, m5, h4, just to see what they look like to us. We consider averages and apply simple to complex math to them in order to get a different look, that’s all. From whatever derivative frames of reference we have attached and our own perceptual abilities, we draw an inference or indication and we make a trading decision. Pa, of course you use indicators. You use more indicators than the rest of us. We may be looking at two or three things that draw arrows for us, LOL, but you have to consider everything in your field of vision. Is this high an indication? What about this low? Are we moving into congestion? Are we near a major support or big round number? Does this qualify as a reversal candle? Maybe that’s why those threads get so long and convoluted.
I’m getting’ close to the end, promise. But, a word about “lagging.” Everything that is not those electrical pulses is a derivative. Any derivative may be used as an indicator. All indicators are lagging. They have to be, they only represent what happened and “happened” is past tense. You thought your price bar wasn’t lagging? What is it then, the future? We are all looking at indicators. We might as well admit that we just prefer some kinds of indicators over others.
I am ready to smoke the pipe of peace with all except you extremists and I will finish with this short story. I was perusing one of those threads started by a newbie, very tentatively suggesting a method she might look into further. Along comes Captain PA, “…visions of swastikas…plans for everyone…” to inform her that her little effort was “crap” and he knew crap when he saw it. After all, he had been trading for over five years. According to the Captain, he used only, “…naked chart, no indicators, just price action.” So should everyone else. See, this is what I find so objectionable. I’ll just bet if I ask the Captain how much of J. Welles Wilder, Larry Williams, Jake Bernstein, or John R. McGinley he has read, I’d get a blank stare. But, that’s not the end of the story. Some astute participants pressed the Captain to make a legitimate positive contribution. His first suggestion was to look at galaxytrades.
RFLMFAO!
Here is from the first page of the galaxytrades thread:
[B][U]I strictly stick to 3 indicators: [/U][/B]
1. Dynamic Fibonacci Retracements
2. Bollinger Bands
3. Simple Moving Average (once in awhile)
[B][U] [/U][/B]
In saying that, I’ve got a moving average on my chart, as it gives me a summary of where the price has been recently. Check out 
But I’ve read that volume on MT4 indicates the ticks, but in MT5 indicates a different thing…is this true? i’ve never tried mt5, but i might, if it’s not all too different… 
