Price Action - what then are deemed to be the most reliable indicators?

Hi Fellow Pipsters,

Okay, I’m on a roll now - here’s my second question. And it’s relevant (I feel) because I’m currently looking at the chart(s) and I don’t want to look at every Tom, **** & Harry. I only want to look and learn what is relevant to Price Action - which seems to resonate and strike a cord with me (even though I don’t know what I’m doing yet - that’s the way I want to go)…

I’m leaning towards P/A as it seems to be the cleanest, perhaps easiest ‘to read’ - of course once I know what I’m doing, that is. I don’t want my head (and my charts) to be all complicated and just filled with ‘stuff’. I want to learn from the outset a clean and simple method, and then try and perfect it over time.

So, seeing as there’s so many options (ie indicators), which ones please are the most relevant and indeed reliable, when it comes to Price Action.

As always, I hope I made sense with that??

Thank you :slight_smile:

PS. I checked out ICT’s first video last night on YouTube - where he talks about money management etc - now ‘that’ I can comprehend and follow no problem. If I could understand the charts and techie stuff as easy as I can understand the money management and risk aspect, I’d be dandy!!! Anyway, I liked the video - it was clean and well laid out so I’m looking forward to more of those - it definitely builds on what I learned in BP School…

Oh - the system just put stars where the name was?? I didn’t mean anything rude by that, it’s a well known saying!!!

Unfortunately, you are asking questions that have no definitive answers. All indicators are reliable to a certain extent while at the same time, none are reliable. It all depends on how you use them or mis-use them.

Personally, I do not use indicators. Never saw the need.

Indicators are great at telling you what has already happened but no indicator signal, taken without other analysis, can lead to results better than a coin toss. Profitable traders using indicators, and there are many, just to be clear, never take indicator signals in complete isolation.

You say you want to trade price action – so, learn price action and start with the very basics. First, learn what actually drives the market (supply & demand) and second, who actually drives the market (a relative handful of large financials). Then learn the relatonship between the two. When prices are going down, who is buying? When prices are climbing, who is selling? Hint: it is not the average retail trader. Who is making money in forex? Another hint: it’s not the average retail trader.

You will not have enough capital to manipulate markets as large financials do, nor can you copy their movements. You can, however, learn to follow closely behind, or jump out just in front of them, when they reveal their intentions (check out any of Petefader’s threads to see what predictive powers are possible in forex – many of his predictions of price movements, made in advance, are absolutely mind blowing. He uses supply & demand zones, volume, fibs, trendlines and little else. It just goes to show that indicators aren’t necessary. Unfortunately, his VSA style of trading is NOT a simple and easy method to learn let alone master).

If you insist on using an indicator and want a simple, profitable method, try this –

  1. Pick any oscillator (RSI, CCI, Stochastics, QQE, etc.).

  2. Reduce the standard settings from 14 to 7 (you can leave the standard setting alone for stochastics).

  3. Learn how to spot a divergence (go to the BabyPips school for that) – it is when price action and the oscillator disagree. Price is making higher highs, for example, while the oscillator is making lower highs.

  4. If there is a reversal bar at the point of divergence, take the trade. A reversal bar is, in an uptrend, a bar that exceeds the high of the previous bar but closes down. If you are in a downtrend, it is a bar that goes lower than the previous bar but closes up.

This method is very easy to learn and has close to a 70% win rate at a R:R of 1:1. It works on all time frames from 15 minutes on up. The only drawback is that signals are relatively far and few between. The longer the timeframe the better the win rate but the rarer the signal.

I do not use the above method (I use supply & demand zones, tick volume and currency correlations) but I have tested it extensively and it is a simple, profitable method. Again, not many signals so you will find yourself staring at charts endlessly. As soon as you leave your computer to walk the dog, you return to find you’ve missed the signal and repeat the endless watching again :31:

Best of luck.

I agree with what John said, right down to using oscillators for reversal (and continuation) divergence. This will give you a clean price action system which works well if used properly.

Another option is to trade around pivot points. There are a lot of systems out there that DONT work, but using them as key support resistance levels and looking for second entries (ie. price breaks through, comes back to retest the level before
continuing) can get good results.

Again, learn to pick and choose the best trades - don’t take a trade when there’s a key horizontal level between you and your profit target. Try and line up several horizontal levels to support your trade, eg. entering on a pivot bounce which also has historical significance, and maybe is a fib level too. The more confluence you have to support your trade criteria, the better.

Morning JohnLeonard and DayTrader,

Thank you both for the above - John - very informative post - lots of stuff in there - I’m grateful to you both.

The whole idea of me looking at Price Action is because I don’t want to get bogged down with indicators - as you can see, I am still very confused by it all and have a longgg way to go…

I know that Nikitafx and Chris (Skies’) are both very good and post regularly here on Price Action - however, I’m not up to speed yet (understatement) and so I’m not easily able to follow what they’re saying…

I did find Niall Fuller’s site on Price Action and I may take a look at that… I’m sure that ICT will also touch on it/cover P/A when I get to that particular video on YouTube. I was just trying to get a handle on what I should be looking at when I’m looking at charts (since I’m very new with that - I wanted to be looking at the most relevant things, so to speak)…

I think I may have phrased my question wrong John - it’s ‘not’ that I want to use indicators per se - I was just asking ‘which’ indicators I use for P/A and it seems that answer is not really any - alas I have much to learn but again, thank you both very much for the above info…

Happy Tuesday to you both :slight_smile:
Jessey

Hey Lovely Jessey,

I just wanted to ask why do you need an indicators for if your strategy is for price action?

I think JohnLeonard already outline the indicators that you can use. Any of those will be fine. I’m sure eventually you will find the right one for your set up.

Have a good-day.

Sheryl

Hey Jessey

There is a thread in here FOREX PRICE ACTION that you might be interested in. No indicators at all just pure PA.

Hope to see your posts in there

These is probably the thread that Spongybob referring too.

http://forums.babypips.com/newbie-island/39634-pure-price-action-dummies.html

Hi Pip :), lovely to see you sweets…

Good question and the answer is ‘I am still confused and still learning…’ lol. I didn’t know that P/A didn’t use indicators - as John has now pointed out - clearly I have a lot to learn - I don’t remember that much about P/A here in BP school to be honest… Hence me digging around for some ‘basic/easy to learn stuff on P/A’ to get me started :slight_smile:

I know there are several people on here who do use P/A and that is what I’m really interested in - I just don’t understand it yet or what I’m supposed to do with it - ho hum and lot’s more studying me thinks…

Thanks hon and have yourself a fabulous day :7:

Hi Spongybob (I like your name by the way)

Thanks for that info- I’m going to see if I can find it - at this stage, I’m just looking for simple/easy to follow stuff on P/A - ‘then’ I should be able (at some future stage) to follow the current threads on P/A - at the moment however they mean nothing to me as I need to learn from the ground up, so to speak.

Thanks again, I appreciate that :slight_smile:

Thanks hon for the link - I have actually checked this out before… I didn’t get very far because I really didn’t understand it at the time; however, seeing as I’ve now got a few weeks under my belt, I’m going to go back into it and see if it now makes any sense to me…

Jessey :slight_smile:

Wrong thread by Pipnroll

Here is the thread by Johnothan Fox. It is simple easy to follow PA.

http://forums.babypips.com/free-forex-trading-systems/42378-forex-price-action.html

No problem honey…

I know its hard…I’ve been there…and… I am not done yet…lol

Just takes time…

Hug and kisses for you :slight_smile:

Sheryl

Opps sorry about that… Thanks though…

What is meant by supply and demand zones?

hi everyone,
I agree with JohnLeonard and DayTrader. Nowadays I am not used to Inicators, the best indicator is the price itself, but in my earlier days in Trading I started with an strategy based on Divergences with MACD. And I remembered it Worked very well well. when a Divergence was confirmed with a Reversal Pattern in the 4h chart, I tried to find a breakout point in 15m and 1h charts, and get into the Market.

Supply and demand zones are areas where buy and/or sell orders are stacked up. When price reaches a level where supply (sell orders) exceeds demand, price will fall. When price falls to a level where demand (buy orders) exceeds supply, price will rise. When supply and demand are balanced, you have a range – price just goes sideways.

There is another thread where you can learn simple price action from the perspective of reading the order flow behind it called Understanding Forex Price Action.

In this thread I teach you the base model for reading price action and order flow, and how to trade PA using simple methods, but highly effective.

Feel free to visit it as I also post trade setups along with several of my exact trades on the day.

Look forward to seeing you there.

Chris

Luister - nice info - sounds like you’re doing well…

JohnL - nicely explained for us newbies - thank you!

Chris - many thanks for the link here. I know you’re well respected (and followed) here on BP. Your thread was on my ‘hit list’ but being a complete newbie, I didn’t understand most of it unfortunately… Just not to that level yet. Anyway, I shall check out your link, thank you.

Jessey :slight_smile: