Price Action!!!

[BanditDJB]

I hear everyone referring to "price action". I am a new trader and I am wondering does price action refer to the direction of a trend or how fast a price moves? Or is it volatility or something else that I am missing? This is probably an elementary question but I am teaching myself to trade and your incite is very welcome. Thanks to anyone who replies to my thread.

 

[EmotionIsTheBigEvel]

In general "price action" only means that you only look at the movements of the price, it's the only chart you have on your screen, no indicators, no volume, nothing else than a chart with price bars (or in what graphical way you display them). And within the term price action you have all kinds of ways / methods / systems to handle price action. For example, you can look at break outs or patterns or trends. Price action is just a general method. The only thing you often use with price action are trend lines, and sometimes multiple time frames.

But there is a lot of information to find on the net about price action.

 

[86834H]

Price action generally refers to the tick by tick action of price. An example would be say you had resistance in emini SP500 at 800, if every time we tick up to 800, and the market immediately becomes offered and ticks off a little, then this 'price action would suggest that resistance level is holding.

One thing that a lot of new traders tend to do is that they get too caught up with price action, the general tick by tick movements of the market. This causes the 'seeing the trees before the forest' syndrome which causes a lot of traders to get caught out and whipped out of the market by the noise of price on the small time frames. The key is to identify the areas in the market where momentum is likely to be on your side. An increase in momentum will help build the strength of market direction, which in turn should load the dice more in your favor when entering a trade, providing that you're not trying to fight it.

Hope this helps and good luck.

 

[price777999]

YouTube - Forex Price Action trading methods - GBPUSD

Price Action and the Price Patterns they create

some good info here

 

[Rossini]

Price action generally refers to the tick by tick action of price. An example would be say you had resistance in emini SP500 at 800, if every time we tick up to 800, and the market immediately becomes offered and ticks off a little, then this 'price action would suggest that resistance level is holding.

Wrong, price action can refer to the general movement of price, it does not refer specifically to any up tick or down tick, although it can do.

One thing that a lot of new traders tend to do is that they get too caught up with price action, the general tick by tick movements of the market. This causes the 'seeing the trees before the forest' syndrome which causes a lot of traders to get caught out and whipped out of the market by the noise of price on the small time frames. The key is to identify the areas in the market where momentum is likely to be on your side. An increase in momentum will help build the strength of market direction, which in turn should load the dice more in your favour when entering a trade, providing that you're not trying to fight it.

Hope this helps and good luck.

Have a look at the potential setups thread, im sure most if not all the posts are suggesting setups using price action and support/res.

 

[glyder]

I hear everyone referring to "price action". I am a new trader and I am wondering does price action refer to the direction of a trend or how fast a price moves? Or is it volatility or something else that I am missing? This is probably an elementary question but I am teaching myself to trade and your incite is very welcome. Thanks to anyone who replies to my thread.

Bandit,
I'll copy this across from the other thread where I responded to you earlier...just for the sake of consolidation.. ....

"""I had the same problem...what on earth is this price action???

so far as I am now aware price action involves looking at the shapes and positions of current and recent price bars, and their relationship to past price movements, in particular support and resistance but also pivot zones (where support flips to resistance or vice versa). Some people add fib ratios/retracements and/or round numbers as areas of importance.
Although it feels weird to lose indicators at first, price action is not hugely complicated in itself, but putting it all together successfully is the difficult part, as is staying with your convictions on the trades and having the patience not to over trade.

check out this most excellent of threads.....
http://www.trade2win.com/boards/firs...y-trading.html""

 

[Bloodhound]

Have a look at the potential setups thread, im sure most if not all the posts are suggesting setups using price action and support/res.

Further to what Rossini has said also have a read of this thread:

http://www.trade2win.com/boards/first-steps/26947-making-money-trading.html

Rob

 

[86834H]

Have a look at the potential setups thread, im sure most if not all the posts are suggesting setups using price action and support/res.

I don't think you read my post properly..... i basically said the tick by tick movement of price is what price action is, then gave an example of price action being used. You just said what i said but with different words...

 

[Rossini]

I don't think you read my post properly..... i basically said the tick by tick movement of price is what price action is, then gave an example of price action being used. You just said what i said but with different words...

I did read your post properly. Tick movement can be irrelevant when trading price action. Just look at a daily chart, you may chose to take a trade based upon the support/res, using price action as your trigger. Are you concerned or even looking at tick movement? No.

 

[luckyd1976]

Good point Ross (Owe you a Rep)

 

[86834H]

Have a look at the potential setups thread, im sure most if not all the posts are suggesting setups using price action and support/res.

I did read your post properly. Tick movement can be irrelevant when trading price action. Just look at a daily chart, you may chose to take a trade based upon the support/res, using price action as your trigger. Are you concerned or even looking at tick movement? No.

Ok first of all, no need to be rude... So in your example of using a daily chart... say on the emini sp500 on the daily chart there's resistance at 800, the market trades up to this level, say at as we get close there is abnormal size on the offer at 800, say 4000 on the book and between 2500 and 3000 on the 3 prices above it... you're saying that this doesn't concern you...?

It concerns me, so i'm not just gonna jump into the market trying to lean on them offers. I'd watch how prices reacts to them offers. If we tick up to the large offer at 800 and it stays there then i'd be thinking that maybe this level will hold, i'll watch if price gets offered straight away and how many times we tick back up to that large block of offers, if each time we tick up to it we tick off a point or so and the large offers stands, then i'll be looking to short. If we tick up to the large offers a couple of times and the 4000 at 800 lifts, then i know it's a fake and the other large offers in the block are likely to lift, so as them offers do lift, i'll wait for the level to break through to the upside and go with momentum with a bid.

So am i concerned or even looking at tick movement? Yes i am, a lot of people are. Tick by tick refers to how prices is moving, it doesn't mean messing around with a tick chart incase that's what you're thinking.

 

[Rossini]

Ok first of all, no need to be rude... So in your example of using a daily chart... say on the emini sp500 on the daily chart there's resistance at 800, the market trades up to this level, say at as we get close there is abnormal size on the offer at 800, say 4000 on the book and between 2500 and 3000 on the 3 prices above it... you're saying that this doesn't concern you...?

I did not intend to be rude and I don't think I was, sorry for any offence caused. It wouldn't concern me in the slightest. If i'm placing a trade on the daily TF I am only concerned with the daily action not the tick action or the order book (not that I use an order book or could do as I trade FX)

It concerns me, so i'm not just gonna jump into the market trying to lean on them offers. I'd watch how prices reacts to them offers. If we tick up to the large offer at 800 and it stays there then i'd be thinking that maybe this level will hold, i'll watch if price gets offered straight away and how many times we tick back up to that large block of offers, if each time we tick up to it we tick off a point or so and the large offers stands, then i'll be looking to short. If we tick up to the large offers a couple of times and the 4000 at 800 lifts, then i know it's a fake and the other large offers in the block are likely to lift, so as them offers do lift, i'll wait for the level to break through to the upside and go with momentum with a bid.

Again what the market is going to do in the next 5 minuets is irrelevant to me if i'm entering the trade on a daily TF. Obviously trading on a smaller TF this can matter hugely.

So am i concerned or even looking at tick movement? Yes i am, a lot of people are. Tick by tick refers to how prices is moving, it doesn't mean messing around with a tick chart in case that's what you're thinking.

I don't disagree with the principle of fine tuning the entry or exit to squeeze a few extra ticks out of the trade. However I think having some perspective and realising that one or 2 ticks on a daily TF is not going to make a difference.

 

[86834H]

You really are completely missing the point of what i said. It has nothing to do with squeezing a couple of extra ticks out of a trade.

 

[86834H]

I don't disagree with the principle of fine tuning the entry or exit to squeeze a few extra ticks out of the trade. However I think having some perspective and realising that one or 2 ticks on a daily TF is not going to make a difference.

Sorry i just want to clarify what you're trying to say here... you're basically saying that price action on a daily time frame produces support and resistance (which it does) and then when the market reaches this level, say resistance, you just sell it?

The market produces many levels, regardless of what methods you use to get the levels, the point i was making about the large offers and bids is that once the market reaches whatever level you're using, on whatever time frame, then you gauge the price action around these levels to determine if the level is going to hold or not. Like i said, what i posted has nothing to do with 'a couple of ticks'

 

[EmotionIsTheBigEvel]

Sorry to interrupt, but "Price action" doesn't say anything about timeframes. What 86834H and Rossini are discussing is their particular strategy, so saying tick belong or doesn't to price action isn't a point to argue about, because it doesn't have to do anything with "price action" in general, it has to do with your strategy based on price action. And within your strategy you select the time frames you are using.

And yes, I know most people prefer using tick charts to watch price action, because they say you are losing information by using bigger timeframe charts, but al what they are talking about is their OWN strategy, so that can't be a point of discussion.

The point of reading charts is filtering out noice and information not important to your strategy, and being left with the information that makes sence to you, and react on that information. It is the same thing an indicatior is doing for you.

I hope it clarifies the discussion above a little bit for the TS.

 

[Rossini]

Sorry i just want to clarify what you're trying to say here... you're basically saying that price action on a daily time frame produces support and resistance (which it does) and then when the market reaches this level, say resistance, you just sell it?

Lol, no. I'm saying once you have identified the S/R and then the price action has ''given you the green light'' or reacted to the S/R in a way which you can interpret, take the trade. If you are considering getting into the trade in the first place the PA must have already reacted to the S/R (and because we are on a daily TF it is likely that it could be more than a day ago that the initial reaction took place because each candle/bar takes a day to form). Hence looking at the order book for big orders is not relevant.


The market produces many levels, regardless of what methods you use to get the levels, the point i was making about the large offers and bids is that once the market reaches whatever level you're using, on whatever time frame, then you gauge the price action around these levels to determine if the level is going to hold or not. Like i said, what i posted has nothing to do with 'a couple of ticks'

As you said, I don't think we are a million miles apart in our thinking, we are just coming from slightly different angles. If I were to take a trade on a daily TF then I would be looking at the broad PA and not focus on one level specifically, but I would still use the PA around any S/R as my entry trigger regardless of how long it took to form.