Can someone define and explain "price action"?

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monolisa
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Postby monolisa » Sat Aug 15, 2009 4:37 am

Price action is simply the result of the imbalance between demand and supply.

If there's no or equal supply/demand price won't move a bit.

Lis
"Know your enemy and know yourself, find naught in fear for 100 battles. Know yourself but not your enemy, find level of loss and victory. Know neither your enemy or yourself, wallow in defeat every time." - Sun Tzu

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jhtumblin
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Postby jhtumblin » Sat Aug 15, 2009 8:35 pm

It's strange there can be so much debate about PA, like it's a unicorn or santa clause or something.

Price action is simply playing probabilities based off of the formations of the bars that represent price. Pinnochio bars, engulfing bars, all sorts of bars that signify reversals or continuations.

The downside is that PA patterns are completely unreliable on TF's less than H1, and even that is risky because perfectly good PA on a 4H, daily, or weekly chart will often pay at least 1:1(though usually more), but PA on H1 and below has an equal chance of failure as it does success.



This is just not true. Yes, I know that some traders take positions based on patterns, but that is not trading based on price action, that is trading based on patterns, which is a shot in the dark IMO.

As far as being unreliable, maybe patterns become more unreliable on shorter time frames (I don't study them so don't know), but price action itself does not. Price action is not identical on all time frames, but the same principals apply to any chart I am looking at, and profit is available on any time frame using those principals, the only difference is the amount of patience you must have and the adjustments you must make to risk/reward.


Most of the things I've read suggest PA is simply not applicable to scalping.



Most of the things I've read suggest that the author knows how to trade, yet he for some reason must waste his time writing books so he can profit from them instead. You get my drift?

leveragedopinion
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Postby leveragedopinion » Sun Aug 16, 2009 4:40 am

jhtumblin,

I was just trying to answer the question, and giving references to people who trade what they call price action.

Maybe you could provide a better definition of PA and how to trade it.

My bad for sharing.

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es/pip
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Postby es/pip » Sun Aug 16, 2009 4:50 am

leveragedopinion wrote:jhtumblin,

I was just trying to answer the question, and giving references to people who trade what they call price action.

Maybe you could provide a better definition of PA and how to trade it.

My bad for sharing.


PA= a road map of traders emotions. It shows their fear and greed.

how to trade it-------- you take advantage of their fear and their greed.

I would take the time and read the NLA thread and pay very close attention to all of MightyOne's posts. i know that after coming to understand what MightyOne has shown I will never look at the market the same way as i did.
Bend over and assume the position for another 4 years of hope and change.

jhtumblin
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Postby jhtumblin » Sun Aug 16, 2009 3:38 pm

Leveragedopinion, I have already defined price action previously in this thread as well as insight into what creates it. I did not mean for my post to sound like an attack on you or your statement, more of a correctional response. There is a lot of new traders on this site, and I like to think kreslik provides them with the best starting point possible.

Price action is one of the only tried and true, when interpreted properly, indicators of the markets that is guaranteed to make profits. It has been this way since the first modern markets were created in the 16th century and will continue until the end of trade as we know it (I have charts dating back to 1792, reproductions of course, but very interesting history nevertheless). This just happens to be a very important subject in the study of trading so it is imperative that the definition maintain it's integrity.

Continue to share all your thoughts though. We can all learn from each other.

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Humble
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Postby Humble » Mon Aug 17, 2009 1:34 am

jhtumblin wrote:~I have charts dating back to 1792, reproductions of course,

:lol:
Is price closing higher or lower than something? Simple yet powerful question. ..MO

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marypipins
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Postby marypipins » Mon Aug 17, 2009 3:38 am

jhtumblin...

I agree...chart patterns are not reliable sources for price action.. of the 120+ candlestick patterns about a dozen or so give a 50 - 60% accuracey rate.. that means most candlestick or bar patterns give a 50% or worse prediction rate..that really isn't any better than flipping a coin.. I'm only saying this because of all the chart pattern courses being sold out there.. everyone wants the silver bullet..but the only true answer is hard work and study..
lisa

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marypipins
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Postby marypipins » Mon Aug 17, 2009 4:08 am

As i read this thread I see everyone giving their opinion as to what price action is or is not. Does anyone have any concrete advise as to how they trade price action? From my limited experience on this subject it seems if you trade price action you are pretty much indicator free and just kinda goin au natural as they say...lol
lisa

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noone22
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Postby noone22 » Mon Aug 17, 2009 10:49 am

marypipins wrote:indicator free

Indicator free - that's an illision or just trying to pretend,
how great you are - "you're able to see price action and trade it".
What this experience means by the end of the day -
that one knows, what happens after 3 red candles
happenned in the row and he's able to trade accordingly
(for exmple). It could be any other chart pattern, candlestick
formation, BuyZone cross, or other visible event.
For blinds like me, who cannot see squigles and price charts
and make a decision, based on their movement -
indicators are a great help and visible tool,
and I especially do like indicators, which are giving green arrow
(when buy signal occurs) and I'm trading accordingly,
doesn't matter what others will say or pretend.

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Postby leveragedopinion » Tue Aug 18, 2009 4:36 am

There can be more explanation on how to play these bars, and increase their reliability and probability if anyone's interested, but here's some very basic PA I trade all the time.

Image

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