What is price action (to you?)

[wasp]

Many on these boards and plenty of others profess trading is all in 'price action'.

What is price action?

Is it price and its relation to support and resistance levels?
Is it price reacting to patterns (triangles/head and shoulders)?
Is it just watching the way a candle/bar forms?

Does it have anything to do with...

Candlestick patterns (doji/flying dragonfly...)?
Fibs and its relation to these levels?
Pivots and its relation to these levels?
Ross hooks?
1-2-3 formations?

Or is it all athe above?

When I conjur up images of the wonderous ideas of price action I see blank charts with OHLC bars only and PA traders trying to gauge the future movement purely by how price is acting right now, this bar alone and how its moving... Is it that stripped down or do more of the above come into it?

Also, can you then really see further ahead than the end of the bar forming now, if going via price action alone?

I'll leave this open now and go back to my MA's crossing wildly!

:cheesy:

 

[dbphoenix]

I don't know about "many", but, for me, price action is the movement of price that results from changes in the relationship between buying pressure and selling pressure. It has nothing to do with Fib or Gann or Pivots or even charts. My focus is support and resistance.

As for gauging "future movement purely by how price is acting right now, this bar alone and how its moving", no. The character of any particular bar alone is so rarely significant that it's not worth including in the trading plan.

Db

 

[jimbo57]

I...As for gauging "future movement purely by how price is acting right now, this bar alone and how its moving", no. The character of any particular bar alone is so rarely significant that it's not worth including in the trading plan.

Db

I have to disagree with this portion at least. Of course markets are fractal, seems a popular buzzword at the moment, but any one bar within this anlysis, and dependent on your own favoured time frame can relaease as much info as any other, and they all tell something.

I agree that supply and demand is the key, more particularly an understanding of the origin of that supply and demand, but if you have a supply for example approaching a simple trendline support or major Fib retracement, the action of the bar around this level, likely has significant weight for at least a little while to come, if not longer.

 

[dbphoenix]

I have to disagree with this portion at least. Of course markets are fractal, seems a popular buzzword at the moment, but any one bar within this anlysis, and dependent on your own favoured time frame can relaease as much info as any other, and they all tell something.

I agree that supply and demand is the key, more particularly an understanding of the origin of that supply and demand, but if you have a supply for example approaching a simple trendline support or major Fib retracement, the action of the bar around this level, likely has significant weight for at least a little while to come, if not longer.

If all of this were true, however, one would require bar charts in order to trade.

Db

 

[jimbo57]

If all of this were true, however, one would require bar charts in order to trade.

Db

well unless you have a crystal ball that does the trick - I find them a good start.

 

[dbphoenix]

well unless you have a crystal ball that does the trick - I find them a good start.

A crystal ball would be helpful, but not essential. Some traders trade off LII, some off T&S, some by the tape alone. And traders have been around a lot longer than charts have.

Therefore, while the bar or the line or whatever may be essential to one's own strategy or even the strategies of many, it is not essential to all strategies, primarily because the market hasn't the slightest idea where the trader's lines are.

Db

 

[Splitlink]

As for gauging "future movement purely by how price is acting right now, this bar alone and how its moving", no. The character of any particular bar alone is so rarely significant that it's not worth including in the trading plan.

Db

But the bar could be broken up into smaller portions?

For instance, today's daily bar of RTR shows nothing, except a downtrend with all the others, but split it into 15 min ones and we get a breakout to the upside.

Split

 

[jimbo57]

I agree split- thats the point I think, markets are fractal!

 

[dbphoenix]

But the bar could be broken up into smaller portions?

For instance, today's daily bar of RTR shows nothing, except a downtrend with all the others, but split it into 15 min ones and we get a breakout to the upside.

Split

And if one is trading minute bars and this is a setup that he's defined and tested and found to have a high probability of resolving itself into whatever the trader is looking for, then it may have value to him.

In any case, he's "really" trading 1m bars, not 15m bars, and each of those 1m bars can be further split into ticks.

Db

 

[wasp]

So depending on the timeframe you use, different setups or action will appear. That aside, when your looking at a market using 'price action', what is it your looking at/for?


So often when the subject of 'indicators or fibs or pivots or gann, CCI, RSI, MACD or whatever comes up', so many reply that 'price action' is the answer, it tells you everything and it doesn't lag etc etc....

So what is it?

PS Cheers db for your answer.

 

[dbphoenix]

So depending on the timeframe you use, different setups or action will appear. That aside, when your looking at a market using 'price action', what is it your looking at/for?

If this is directed to me, I look for areas of support and resistance, but this is addressed in the PV and S/R threads below, and to repeat it here would be redundant at best.

Note, however, that in my first post I said "for me". There are many ways of looking at "price action". All that matters is whether or not the way that one has chosen makes money for him and isn't just something somebody told him or that he read somewhere.

Db

 

[wasp]

If this is directed to me, I look for areas of support and resistance, but this is addressed in the PV and S/R threads below, and to repeat it here would be redundant at best.

Note, however, that in my first post I said "for me". There are many ways of looking at "price action". All that matters is whether or not the way that one has chosen makes money for him and isn't just something somebody told him or that he read somewhere.

Db

sorry db, not pointed at you but anyone else reading. I did edit and add my thanks in that post to thank you for your input.

I appreciate your second point but as it always seems to be the answer, I just wanted to get varying opinions on just what price action is?

 

[dc2000]

I will post my thoughts on price action later, for now if I use the Dow there is likely to be a slowing at 11124 due to profit taking

 

[ymonly]

... too much information and crutches.......price goes up and down......db once told me i had what i thought was knowledge but it was not beneficial for the most part......it was information overload, or something to that effect...2 years ago........was slightly offended.........but ..100% correct.......the simplest method of understanding what price is currently doing and telegraphing the price movement for next time frame...

 

[Splitlink]

So depending on the timeframe you use, different setups or action will appear. That aside, when your looking at a market using 'price action', what is it your looking at/for?


So often when the subject of 'indicators or fibs or pivots or gann, CCI, RSI, MACD or whatever comes up', so many reply that 'price action' is the answer, it tells you everything and it doesn't lag etc etc....

So what is it?

PS Cheers db for your answer.

Patterns, I guess, like the breakout on my RTR chart. This is a very popular pattern. They crop up, like so many other patterns, all the time. The last bar is the decider, whereas indicators based on a certain number of bars, have to lag, although they seem to be great for many people.

Split

 

[wasp]

Cheers for the insight split.

I'm not really trying to decipher what is better than anything else, just trying to get opinions on 'price action'...

 

[Charlton]

Price action and traders' intentions

sorry db, not pointed at you but anyone else reading. I did edit and add my thanks in that post to thank you for your input.

I appreciate your second point but as it always seems to be the answer, I just wanted to get varying opinions on just what price action is?

Wasp

For me I would endorse DBs definition - the relationship between buying pressure and selling pressure.

I would add that, if price alone, is considered that this is not sufficient. Consideration of the rate at which price changes i.e. its relationship to time - its velocity and acceleation/decceleration are important too. Also volume or level II as indications of trading activity.

Price action is the manifestation of traders' intentions - past, present and future. It is also a measure of the success of their strategies to fulfil their intentions.

The various items you quoted such as patterns, candlebars, fibs etc are the footprints, the evidence that is left behind by the price action. They provide clues to the price action and traders' intentions, but are not the action itself.

Charlton

 

[fxmarkets]

A Silent Immagined Nod.

PA = Pro Action.

My heads firmly stuck in a constant mindset of Speculation Practice. If over time ( piece of string on that ) you can tune in to read what the pros are doing ie the sole purpose of speculation "Take other peoples money" then you will anticipate /read the price moves way ahead. Is then ,"after reading the Intent" the price action displaying/unfolding into a typical speculative packs play? well here it comes "click" . No lag youve been anticipating it, they are workin it and your waitin and if you aint the patient one you might already be in.




Fx.

 

[dbphoenix]

Wasp

For me I would endorse DBs definition - the relationship between buying pressure and selling pressure.

I would add that, if price alone, is considered that this is not sufficient. Consideration of the rate at which price changes i.e. its relationship to time - its velocity and acceleation/decceleration are important too. Also volume or level II as indications of trading activity.

Price action is the manifestation of traders' intentions - past, present and future. It is also a measure of the success of their strategies to fulfil their intentions.

The various items you quoted such as patterns, candlebars, fibs etc are the footprints, the evidence that is left behind by the price action. They provide clues to the price action and traders' intentions, but are not the action itself.

Charlton

Price action alone is not sufficient for developing a trading plan, which is why I limited my definition to price action alone. However, when moving on from that, there are many ways of translating price action into a strategy. Mine is S/R.

If one gets into "better", which you don't but which wasp mentions, then one gets into value, though many will argue for absolutes.

For example, today in the NQ, I reached the ADR at the peak of the move and got out. And was happy to do so. I didn't ride the wave down, mostly because I got no reversal signal but also because I don't like to trade past noon (or past eleven, if I can help it). Does "missing" the downmove bother me? No. But someone who uses MA XOs may have made money with it. If so, good for him. I've learned that how much of the range or what multiple of the range one gets means less than the size one is doing. So I'm happy to be in and out and off doing something else. All of which is what I mean by "value".

Db

 

[rols]

PA = Pro Action.

My heads firmly stuck in a constant mindset of Speculation Practice. If over time ( piece of string on that ) you can tune in to read what the pros are doing ie the sole prurpose of speculation "Take other peoples money" then you will anticipate /read the price moves way ahead. Is then ,"after reading the Intent" the price action displaying/unfolding into a typical speculative packs play? well here it comes "click" . No lag youve been anticipating it, they are workin it and your waitin and if you aint the patient one you might already be in.




Fx.

Absolutely FX. No need for thee to take the Intuition Meister course. Be like eggs and sucking grannies.

On the subject of suckers and Price Action you can almost sense them being hoovered up, caught on a wave of greed and expectancy, only to have their hopes dashed on the rocks below. A price that's gonna plummet after a quick rise has a very different character to one that will sustain it's momentum. I don't think it's possible to judge this if one is staring at MA's and elasticated candlesticks. Take a look at today's price action on the YM for ex. I have however recently become over attached to a 3 minute candle chart - seems about the right amount of time to wait IMO. On the open I never look at charts just see price and target...