Price Action Only

[jonbig04 10]

Price is our most direct link to supply and demand. Supply and demand are fueled by 2 immutable human behaviors: fear and greed. So in essence, by trading PA you are attempting to read and anticipate the natural reoccurring human behaviors that drive the market every day. Please don't make any mistake, I am no expert...Im just a noob, but when you get into PA the market starts to make sense in so many ways, its nothing short of amazing.

 

 

Hmmm

 

I said something similar....

 

[sep34 10]

Hi all,

 

This is my first post here. All though I have monitored, i.e. checked it out, this forum for some time. So far I have gotten a good vibe from this forum, which enticed me to post here, somthing that cant be said for most other trading related forums. Thanks to all for keeping this place at a higher level humanity and hope it stays like that.

 

Most new traders are intrigued with indicators, almost to the point that they think indicators have magic.

 

The truth is, Indicators are just another way of interpreting price action.

The problem is that you still need to know which combination of indicators to use and to know that, you must have a good undersating of the markets.

 

When I first started trading, I was mesmerized by indicators...it took several months to figure out their true nature and when that realization clicked in my head, well......

It was not hard to decide to learn to trade off of price action only. Im very grateful for making that decision, at an early stage of my trading, it was the right choice for me and my personality. I trade by Price action only no indicators not even volume.

 

As far as Price action traders thinking they are superior, yeah I agree they do have a tendancy to walk too tall in the trading community. If you ask me, its not an entirely valid assumption on their part, P/L is all that matters at the end of the day, week, month , year.

 

For me trading is both a Business and an Art. If a trader can be succesfull in both of these areas (business & art aspect) it really does not matter if they are doing it with indicators or trading by price action only.

 

The key is to understand our tools completely.

 

 

Regards..

Edited December 21, 2008 by sep34

[samhollander 10]

I agree. I just read a book by Tom Williams {TradeGuider System} that sheads a lot of light on PA. The problem with newbys is jumping from system to system in search of enlightenment.I am certainly one of them. If reading this book doesn't wake you up to what you are up against.[Professional Money]. It may even scare you into how can I win against these guys?

[sep34 10]

Yeah.. I heard some good things about that book from several people as it gives a good picture to how the markets work and particularly helpful for the incoming trader aside from talking about VSA basics.

 

 

Regards..

 

Do not fear the big boys, Infact I consider them my Friends....With out them I could not earn $1. --Anonymous

[jonbig04 10]

I wonder if 2 identical people started at the exact same time. One started trying to find the right indicator combo, and one started by trying to learn and understand how price moves...who becomes successful first?

[sep34 10]

I wonder if 2 identical people started at the exact same time. One started trying to find the right indicator combo, and one started by trying to learn and understand how price moves...who becomes successful first?

 

Thats a tough one.

 

depending on how you define success...

 

Personality make up has a lot to do with it. Some traders have a craving to really understand why price did this or did that...those type of traders usually are attracted to Price Action trading and will give up indicators.

 

I would venture to say, confidence has a lot to do with performance and anything that gives you greater confidence will be represnted in your overall performance/P&L and thats why in my opinion it really depends on the indivduals personality.

 

 

 

Regards..

[Hlm 10]

I wonder if 2 identical people started at the exact same time. One started trying to find the right indicator combo, and one started by trying to learn and understand how price moves...who becomes successful first?

Pappo had some good points...

 

...but it also would depend on what you mean by "right indicator combo". Do you mean throwing up random indicators and settings for running back tests on them looking to look for a historic positive expectancy? Or do you mean picking a very simplistic indicator such as the stochastic and/or a moving average and creating a rainbow type gathering of information to measure a large spectrum of time frames to which one can better analyze how they interact with one another. Though the latter is an "indicator combo", I would still consider it as reading price action. I personally feel that many people get confused with the concept of "lagging" information. Even if you are using pure price tick by tick you are comparing it to something that has happened in the past. People get in trouble with indicators when they mix and match different ones with random settings. I would guess that the major majority of people that play with indicators do so in this fashion which is why if one is new, it can be a slippery slope. However, if you simplify it by using one over different time frames, the fractal nature of the market can be seen and read no differently that using pure price action in my opinion.

 

Getting a little off topic from the original quote above, one could ask the question...

 

I wonder if 2 identical people started at the exact same time. Both learned the basics of reading price action and put in the required screen time. At which point one kept on using nothing more than price action while the other simplified aspects of their process via indicators...how do their path to consistent profitability look as time progresses.

 

Note: I am all for spending a significant amount of screen time with just pure price on different time frames and truly learning the ebb and flow of the market. This is invaluable information that one should not take lightly. In order to be a good surgeon you need to first know how to hold the scalpel. However, I disagree very much with the concept that indicators cannot be used to simplify and potentially even make one more profitable. Just because it's not needed doesn't mean it can't be used. Different strokes for the different folks...and something about skinning a cat.

[samhollander 10]

Tradeguider gives the best definition of how the market works that I have come across. The book by Tom Williams on PA & Volume was invalueble. Wish I came across this 2 years ago.

[CandleWhisperer 10]

I wonder if 2 identical people started at the exact same time. One started trying to find the right indicator combo, and one started by trying to learn and understand how price moves...who becomes successful first?

 

I don't know who would become successful first, but from my experience, the number of indicator traders who turn into price action traders far exceeds the number of price action traders who turn into using indicators.

[Hlm 10]

I don't know who would become successful first, but from my experience, the number of indicator traders who turn into price action traders far exceeds the number of price action traders who turn into using indicators.

This would only make sense since the majority of traders go through a phase of reckless indicator behavior. Those that learn to trade pure PA first tend to be more frightened (rational and irrational) of indicators and stay away from them. However, I have seen many traders return to indicators to simplify and make mechanic aspects of their strategy after learning and spending a signficant amount of screen time with price alone.

[sep34 10]

Just wanted to add something,

 

Traders that I know that trade price action only and dont use indicators on their charts............. are really using indicators.

 

This is what I mean, they have learned to see the indicators in the price action.

 

For example.

 

They dont need a moving average to tell them the trend.

 

They dont need a oscillator or timing indicators to time there trade.

 

They don't need a momentum indicator to gage volatiltiy.

 

They dont need Bollinger or other similar bands to determine a breakout or

for expansion/contraction of price.

 

They dont need indicaors for divergence.

 

They dont need pivot points for support/ressistance.

 

 

 

Why???

 

Because over time they have learned to see all of that above in the Price action it self and its simpler for them to just watch the price action.

 

So my point is this, just because they dont have indicators up on their screens it does not mean that they do not see the same thing that another person would see with indicators.... they have become the indicators.

 

I personaly dont have a stigma about indicators. If something is useful I would gladly use it.

 

For example if you like to trade stocks, an indicator used in a scanning tool can be very efficient way to scan a large group of equities(or favorit markets) in a short period of time and then do your normal analysis on the screened findings.

 

indeed, many ways to skin a cat...so far I like the naked way.

[VolumeJedi 10]

I disagree.

 

Price Action only traders, of which there are many types, are not seeing indicators in price. They are seeing in price what indicators attempt to see in price. Price Action traders simply see it quicker and more purely.

[metalhead 10]

Seems like this thread was made a day after I made this thread over at ET:

 

http://www.elitetrader.com/vb/showthread.php?s=&threadid=146764&perpage=30&pagenumber=1

 

You may want to check that thread out, too. I'm trying to learn PA and have removed all indicators. So far I'm doing horribly :p

 

That thread is much longer, but is also full of a lot of guru fortune cookie BS which you have to wade through.

 

Glad to see there are some PA thread over here on TL.

[jonbig04 10]

I hate indicators because, to me, they engender laziness in us noobies who may be looking for a non existent shortcuts.

[DbPhoenix 42]

Seems like this thread was made a day after I made this thread over at ET:

 

http://www.elitetrader.com/vb/showthread.php?s=&threadid=146764&perpage=30&pagenumber=1

 

You may want to check that thread out, too. I'm trying to learn PA and have removed all indicators. So far I'm doing horribly :p

 

That thread is much longer, but is also full of a lot of guru fortune cookie BS which you have to wade through.

 

Glad to see there are some PA thread over here on TL.

 

An interesting thread, but a bad beginning. If you believe that discretionary trading is all guesswork and hate guessing and if you think that volume is useless and if you believe that useful trendlines can't be drawn in real time (and, it follows, are therefore useless), then you are virtually guaranteeing your own failure, or, if you prefer, the failure of anyone else to "prove" the value of trading price (i.e., that which is created by the "market" and not by the trader, such as MAs, trendlines, pivot points, Fib, and the vast array of other indicators).

 

In short, if you're genuinely interested in learning how to trade price, you can't expect to do so if you approach the subject with the attitude that it's all a crock. On the other hand, there's no particular reason why you or anyone else ought to feel as though they are morally obligated in some way to learn how to trade with price alone. Trading by price has no absolutely higher or lower value than trading with indicators. If you believe in your heart of hearts that indicators are the way to go, then stick with them and work it through. Only when you are prepared to address trading by price alone with an open mind will you be prepared to learn how to do it.

[sep34 10]

VolumeJedi

They are seeing in price what indicators attempt to see in price.

 

 

Either I did a poor job of explaining what I meant in writting or you really didnt read the entire post clearly.. regardless.

 

By the way pure price action traders dont need to use volume, they can see it in the price action it self.... its called volatility.

 

If I could edit my post I would add this line that your wrote (They are seeing in price what indicators attempt to see in price. ) instead of this linewhich i mentioned in my original post-->" they have learned to see the indicators in the price action "....

 

because it say sexactly what I meant to say at the top of my post.

Thanks for the line I will borrow it.

 

 

Regards..

Edited December 24, 2008 by sep34

[metalhead 10]

An interesting thread, but a bad beginning. If you believe that discretionary trading is all guesswork and hate guessing and if you think that volume is useless and if you believe that useful trendlines can't be drawn in real time (and, it follows, are therefore useless), then you are virtually guaranteeing your own failure, or, if you prefer, the failure of anyone else to "prove" the value of trading price (i.e., that which is created by the "market" and not by the trader, such as MAs, trendlines, pivot points, Fib, and the vast array of other indicators).

 

In short, if you're genuinely interested in learning how to trade price, you can't expect to do so if you approach the subject with the attitude that it's all a crock. On the other hand, there's no particular reason why you or anyone else ought to feel as though they are morally obligated in some way to learn how to trade with price alone. Trading by price has no absolutely higher or lower value than trading with indicators. If you believe in your heart of hearts that indicators are the way to go, then stick with them and work it through. Only when you are prepared to address trading by price alone with an open mind will you be prepared to learn how to do it.

 

Corrections:

 

I've never found volume to be useful, and the successful traders I've spoken with say they don't use it, either. I also say I am leaving it up on my charts just in case I am able to finally get something from it.

 

Re: trendlines. 99% of the posts on ET by "gurus" show beautiful trendlines drawn after the fact, and trades made based on trendlines that could not possibly have been drawn at the time. I'm not saying it's impossible to draw trendlines in real time, just that many, many people draw them after the fact and act like they were there all along.

 

If I sound cynical in that thread, it's because there is so much BS on ET. Fake gurus like to lead newbies astray and try to get them to pay for their courses that don't even backtest profitably (i can name 5 ET'ers off the top of my head who are known for this... and I have them all on my ignore list). I'm putting in a lot of work, I just have my BS detector on from the beginning.

[DbPhoenix 42]

Corrections:

 

I've never found volume to be useful, and the successful traders I've spoken with say they don't use it, either. I also say I am leaving it up on my charts just in case I am able to finally get something from it.

 

Re: trendlines. 99% of the posts on ET by "gurus" show beautiful trendlines drawn after the fact, and trades made based on trendlines that could not possibly have been drawn at the time. I'm not saying it's impossible to draw trendlines in real time, just that many, many people draw them after the fact and act like they were there all along.

 

If I sound cynical in that thread, it's because there is so much BS on ET. Fake gurus like to lead newbies astray and try to get them to pay for their courses that don't even backtest profitably (i can name 5 ET'ers off the top of my head who are known for this... and I have them all on my ignore list). I'm putting in a lot of work, I just have my BS detector on from the beginning.

 

There may be a fine distinction between not finding volume useful and finding it useless, but it may not be worth pursuing. What may be more pertinent is your concern with what the "successful traders" you've spoken with say. I've spoken with successful traders who can't live without it. But none of that is particularly relevant to your situation. If you don't find volume to be useful, then don't use it. But dismissing it without understanding what it is and what it can do for you, much less because of what other traders who very likely will not share your goals, risk tolerance, etc. are doing or not doing, may be short-sighted.

 

As for gurus and ET and so forth, your thread there is over 500 posts long, so there must be something in it that encourages you to continue. What have you learned so far about trading price action?

[za_xc03 10]

Hi db I beginners in this trading, I very keen to use volume in my trading.But I not know what book should I read to understand use volume in my trading. Can you tell me what book superlative as reference for those beginners. Tks

[DbPhoenix 42]

Hi db I beginners in this trading, I very keen to use volume in my trading.But I not know what book should I read to understand use volume in my trading. Can you tell me what book superlative as reference for those beginners. Tks

 

Volume is too simple to warrant a book, though a number of people have attempted to make more of it than there is, resulting in books of questionable value.

 

The shortest distance to your goal may be to begin with the stickies at the Wyckoff Forum. These will enable you to put what you learn about volume in a context. If you want to go further, look into the quickie overview of the Forum's content. If you're still hungry, you may find the attached chapter on Volume Studies from Wyckoff's original course helpful, particularly pp. 4-8.

W VOLUME STUDIES (14M).pdf

[za_xc03 10]

Thank you very much Db for the information and i already see your thread at t2w and elitrader.Can I course with you pass email and how many cost necessary for me to pay please email me at za_xc03@yahoo.com

[DbPhoenix 42]

Thank you very much Db for the information and i already see your thread at t2w and elitrader.Can I course with you pass email and how many cost necessary for me to pay please email me at za_xc03@yahoo.com

 

No course. Not necessary. There's an enormous amount of information right here, for free, Market Profile in particular. The most important element is practice, and that's entirely up to you.

[za_xc03 10]

No course. Not necessary. There's an enormous amount of information right here, for free, Market Profile in particular. The most important element is practice, and that's entirely up to you.

 

Hai Db i already learn some indicator like stoch, rsi , macd but this all indicator cannot help me to increase my skill in trading so i decide to search indicator for measure behavior in market i see this volume can help me but the problem is to learning this indicator very difficult because this one i search some guru to guide me.Tks

[DbPhoenix 42]

Hai Db i already learn some indicator like stoch, rsi , macd but this all indicator cannot help me to increase my skill in trading so i decide to search indicator for measure behavior in market i see this volume can help me but the problem is to learning this indicator very difficult because this one i search some guru to guide me.Tks

 

No need to search for a guru. Just stand still and they'll be all over you.

 

But there's nothing particularly difficult about volume. Volume reflects trading activity. As trading activity increases, so does volume. And vice-versa. As for whether the volume is "bullish" or "bearish", i.e., buying pressure is greater than selling pressure, or vice-versa, just look at what price is doing. If it's rising, buying pressure has the upper hand. If it's falling, selling pressure has taken the lead. If they're more or less equivalent, price sits.

 

That's pretty much it. The pdf I posted will elaborate, as will the other links I provided.

[samhollander 10]

PRICE ACTION,I am on the quest to rid myself of indicators.Since i have been trying a method using Stochastics & inside candles, with S/R, Double tops, Bottoms & Fib.Have not been as profitable as when i was using 3 MA, Bol. Bands, RSI, Macd.The impulse is to revert back & add indicators {of which I have,2 MA}.Has it been successful? No.So I am reading Wychofs book[ThanksDBPhoenix} & also have read Tom Williams insightful book on the Tradeguider site.If i could afford there program,as a novice it seems the way to go, I would .But $2995.00 is a bit much.