Could people please enlighten me as to why so many people on this forum think price action trading is so good. To me it seems like people strive to get to the ultimate naked chart price action god like status. Is it really the holy grail?
It helps to define exactly what you call price action. I have heard it said Elliot Wave is price action as is support resistance and trendline trading.
For me basically it means Japanese Candlestick type trading but without the 17th century feudal Japanese names.
I like price action because it’s simple - and I’m a simply guy who can’t really grasp the intricacies of multi time frames, multiple support resistance etc
But more importantly (for me) it actually works. I can pull out superior r muls with very little effort.
Price action can be incorporated into a mechanical framework. Whereas I feel S&R and trendlines can be subjective - we all see them differently.
I tend to trade inside bars and there is nothing subjective about that. It simply is.
As for things like divergences with indicators for every divergence set up that works I can show you one that does not.
I do find things like the Vix, market breadth, Put/calls, and CoT all interesting and sometimes incorporate them into my analysis but there really is no substitution for simplicity I believe.
@Johnscott31
Thanks for your reply.
I know what you mean about being subjective. For a while I subscribed to tradingview and it amazed me how unique some charts were that people shared so called buy or sell signals.
Also I see a lot of people here and in the BabyPips trade ideas and even in the BabyPips education section drawing unique trend lines.
If you are going to have something on your chart to help, make sure it is not unique.
Couldn’t agree more - which is why I never use support resistance or trendlines in my analysis.
I do throw up a moving average occasionally but to look at my method of trading most people would thing it’s far too simple.
Im not much of a technical analyst other than the few choice tools I use. I’ve been trading many years but often the newbies on the forum have a more in-depth knowledge of technical principles than me.
Lol
Price action tells you what is, indicators tell you what might be.
So price tells you when it is currently rising and when it is currently falling. Indicators tell you when price might be soon at some point maybe about to possibly start to rise, or vice versa, possibly start to fall. That doesn’t mean indicators are useless, but over-dependence on them is dangerous.
As I have said before an indicator buy signal only makes sense if you think its a good idea to buy a loaf of bread because the price of flour has fallen.
1 Like
Well said.
Cheers
Blackduck
@tommor
Thanks for your reply.
Totally agree with you that using an indicator as a buy or sell signal is destined for failure. For a while I tried coding a number of combinations of strategies from here on the BabyPips website and some other places. Upon back testing each strategy had only limited successes but overall each strategy I tried failed.
Full marks though for thoroughly doing your own research. Its also good to know what doesn’t work.