What is Price Action????

[ektrader]

hi ektrader,

you metioned there that you are a scalper. i understand what a scalper is but i've always been interested in how people deal with sitting at a screen all day waiting for set ups to occur. obviously if your making money its an added incentive!! what i'm really asking is could you describe the attributes needed to be a scalper using a strategy like yours and maybe gimme an idea of a typical days trading for you. thanks ek!

Well, my day is different everyday. Firstly, I want to say that I have a nerd-like love for trading the markets. I love to do it. So I have no problem sitting at my computer waiting for set-ups to occur. Most of the time I'm either watching television or playing a video game while I wait.

That being said, I'ts rare that I sit in front of my computer all day waiting for set-ups. I usually trade for about 3 or 4 hours but I may enter alot of trades in that time. One of my favorite moves happens at the beginning of everyday and then I'm usually done for the day unless I just feel like trading. Also, my goals are pretty moderate and simple. "Catch 3 or 4 full points per contract and lose 0!!" I'm aiming for $300 to $600 daily, that's it! (I don't always reach these goals, but that's my target) I enjoy the challenges of the market and trying to beat it. It doesn't matter to me if I trade 1 hour or all 7 hours, I enjoy what I'm doing. (especially if I'm winning).

I don't like over exposure to the market. I've tried the swing trading thing and position trading. I wasn't very good at it and it just didn't fit my personality or goals. Taking those types of trades require wider stops and more patience. I just don't have these attributes.


Ektrader

 

[ton22]

Well, my day is different everyday. Firstly, I want to say that I have a nerd-like love for trading the markets. I love to do it. So I have no problem sitting at my computer waiting for set-ups to occur. Most of the time I'm either watching television or playing a video game while I wait.

That being said, I'ts rare that I sit in front of my computer all day waiting for set-ups. I usually trade for about 3 or 4 hours but I may enter alot of trades in that time. One of my favorite moves happens at the beginning of everyday and then I'm usually done for the day unless I just feel like trading. Also, my goals are pretty moderate and simple. "Catch 3 or 4 full points per contract and lose 0!!" I'm aiming for $300 to $600 daily, that's it! (I don't always reach these goals, but that's my target) I enjoy the challenges of the market and trying to beat it. It doesn't matter to me if I trade 1 hour or all 7 hours, I enjoy what I'm doing. (especially if I'm winning).

I don't like over exposure to the market. I've tried the swing trading thing and position trading. I wasn't very good at it and it just didn't fit my personality or goals. Taking those types of trades require wider stops and more patience. I just don't have these attributes.


Ektrader

I really appreciate all your help so far ek. However, I was also wondering if you could give a typical example of an entry signal that you would take, perhaps even a screenshot maybe useful. Do you use price action candlestick patterns like the hammer or do you just draw your S/R lines and wait for price to reverse at them or breakout from them???

Sorry for all the questions, but to be honest you just seem to have your head well screwed on and your style of trading is exactly what i'm trying to master someday so i'm anxious to get as much info from you as possible!!! I understand how your exits work with the tight stops and scalping a few points here and there but I just need a liitle more help on what makes you decide to enter a trade?

 

[ektrader]

you wrote

"I really appreciate all your help so far ek. However, I was also wondering if you could give a typical example of an entry signal that you would take, perhaps even a screenshot maybe useful. Do you use price action candlestick patterns like the hammer or do you just draw your S/R lines and wait for price to reverse at them or breakout from them???:clap:


This is what I did today.The first horizontal line on the left is where I first went long because the market tends to chase the gap at the open. I felt exaustion with the tick chart so i put in a stop below the bottom of the last candle and just went for it. +20 ticks.

The second line to the right of the chart was my second play of the day. I looked to the left and saw that's where the market turned the last time. So my strategy just assumes that's where it will turn again. Simple. I take the trade short right on the resistance line with a stop 10 ticks above the line. Once the trade becomes profitable I start aggresively moving my stop forward. This trade was another +30 ticks. I tried a couple more later, and I got chopped up and spit out. I lost about -15 ticks. (market moved fast on me a few times befor I could move my stop).

I reverse right at the line (S/R). I think I give an explanation on one of my earlier posts. The key to making this work is getting in at the right price and drawing proper trendlines. It's not fool proof but it's good for loss control, and makin a few bucks

Ektrader

 

[Gogol]

you wrote

"I really appreciate all your help so far ek. However, I was also wondering if you could give a typical example of an entry signal that you would take, perhaps even a screenshot maybe useful. Do you use price action candlestick patterns like the hammer or do you just draw your S/R lines and wait for price to reverse at them or breakout from them???:clap:


This is what I did today.The first horizontal line on the left is where I first went long because the market tends to chase the gap at the open. I felt exaustion with the tick chart so i put in a stop below the bottom of the last candle and just went for it. +20 ticks.

The second line to the right of the chart was my second play of the day. I looked to the left and saw that's where the market turned the last time. So my strategy just assumes that's where it will turn again. Simple. I take the trade short right on the resistance line with a stop 10 ticks above the line. Once the trade becomes profitable I start aggresively moving my stop forward. This trade was another +30 ticks. I tried a couple more later, and I got chopped up and spit out. I lost about -15 ticks. (market moved fast on me a few times befor I could move my stop).

I reverse right at the line (S/R). I think I give an explanation on one of my earlier posts. The key to making this work is getting in at the right price and drawing proper trendlines. It's not fool proof but it's good for loss control, and makin a few bucks

Ektrader

Hi Ek!
Looks good...
Maybe you can give me some advice if you don't mind, with this: how do you manage trend-days, somethink like happened on Mar 12.
On such of days I just can't be successfull. Each second time price break thru S or R line and just keeps going...

 

[ektrader]

Hi Ek!
Looks good...
Maybe you can give me some advice if you don't mind, with this: how do you manage trend-days, somethink like happened on Mar 12.
On such of days I just can't be successfull. Each second time price break thru S or R line and just keeps going...

In post #33 of this thread, I explain what I do. I have a pullback play I use when the market breaks S/R levels. It's the same one everyone preaches. If resistance gets breached, I buy the pullback and go long 1 or 2 ticks above that same level and place a stop 5 to 10 ticks back. Then I aggressively start moving my stop forward. I expect immediate results or I get out.

Today was a good example. The market started trending up heavy and fast. I had Already made money today so I just jumped in, pushed my stop loss slightly passed break even, and treated it like a free trade. I went to the store to buy some juice, came home and it was stil moving up.:clover::clap::clover: (Today it worked in my favor). Sometimes I do it, just to find out, it went all the way up and then came all the way back down to my breakeven point If I'm watching the screen while it's running, I push up my stop about every $100 subjectively (10 ticks russel2k, 1 contract).

If I'm down for the day or If I haven't made any money. I'm very stingy and it's harder for me to catch full trends because I shake myself out at the first sign of weakness. This may be foolish to some but It's aways about controlling losses first for me.

Happy Trading

Ektrader

 

[ton22]

In post #33 of this thread, I explain what I do. I have a pullback play I use when the market breaks S/R levels. It's the same one everyone preaches. If resistance gets breached, I buy the pullback and go long 1 or 2 ticks above that same level and place a stop 5 to 10 ticks back. Then I aggressively start moving my stop forward. I expect immediate results or I get out.

Today was a good example. The market started trending up heavy and fast. I had Already made money today so I just jumped in, pushed my stop loss slightly passed break even, and treated it like a free trade. I went to the store to buy some juice, came home and it was stil moving up.:clover::clap::clover: (Today it worked in my favor). Sometimes I do it, just to find out, it went all the way up and then came all the way back down to my breakeven point If I'm watching the screen while it's running, I push up my stop about every $100 subjectively (10 ticks russel2k, 1 contract).

If I'm down for the day or If I haven't made any money. I'm very stingy and it's harder for me to catch full trends because I shake myself out at the first sign of weakness. This may be foolish to some but It's aways about controlling losses first for me.

Happy Trading

Ektrader

Can i ask if when drawing your S/R lines that you only draw them in the chart you are looking at, i mean would you use S/R lines from a longer timeframe influence your entries/exits on a shorter time frame???

 

[ektrader]

Can i ask if when drawing your S/R lines that you only draw them in the chart you are looking at, i mean would you use S/R lines from a longer timeframe influence your entries/exits on a shorter time frame???

Remember, I'm an intra-day scalper. I start with the previous days high and low and work my way in. I don't go further back than that. I've learned that the larger the price range, the more likely the turn at that price point. Then (if I have time 'cause i'm kinda lazy, although I should do it more often), I'll look for areas of confluence.

Example: My trendlines matching up with, Fib lines, pivot points, persons pivots, 3600 tick bars where volume was extreme and the price in that bar, etc......(These are the areas the fight is happening. BULLS vs. BEARS)

I'm a price action trader so I make a note of any price that may be significant. Seeing how the market reacted at those prices in the past. Then I follow until it makes me money:cheesy:

Happy Trading

Ektrader

 

[dbrawner]

Welcome to the trading community Ton,

If I might chime in regarding your observations. It's not that we abandon indicators, it's more that we come to recognize the pros and cons of them and learn when they might be useful and when they might be a siren's song.

Most indicators are driven by some algorithm or calculation of past prices. As such it is very easy to get sucked into believing that prices on the chart are reacting to the indicator (i.e. prices bouncing off a moving average) when in reality the indicator is reacting to prices (i.e. moving away from the current price).

Pay particular caution to systems that signal trades on indicators. It is very common for a system to look good after the fact (even with "back testing") but the reality of trading is that the signal can not be confirmed until the current bar closes. If you doubt this watch something like a MACD on a fast real time chart like the 1 minute. You will see the tip of the thing jump all over the place until the bar closes and then it will begin flagging away during the next bar. Just when you think the stochastics are going to cross, pow!, the price moves away and you're on the wrong side of the trade (or they do in fact cross but the next bar gaps open or runs away before you can enter an order). And don't get caught thinking that a $49 robot is going to solve this for you.

I've examined too many systems that report to generate fantastic signals but alas, they are not trade-able in the real world. Since an indicator is not valid until the current bar closes, and we are forced to trade from the far right edge of the chart, prices have often times moved out of profitability (or into higher risk) by the time the indicator is confirmed and the next bar has already opened and moved on.

For this reason, many old traders rely on price activity and use indicators cautiously and sparingly. I for one use a moving average to get a sense of overall direction, average true range to get a sense of volatility (or activity), and an occasional candlestick pattern to sense the emotion within the current bar.

But my decision to enter a trade is ALWAYS based on the current price relative to recent past prices.

I know that probably sounded pretty thick, but in time you will remember some of the tips you read on the forum here and the lights will start to go on...

Dave