FORUMS BROKERS SOFTWARE
Home
 
    Forums > Technically Speaking > Strategy (System) Design > "Price Action Only" traders - More likely to be successful?


Reply
 
Thread Tools
Old Apr 30th, 2011, 04:11 PM   #1
logic_man
 
 
Join Date: Oct 2010
Posts: 1,489
I read a lot of posts that say the only real way to succeed in trading is by "graduating" beyond FA and TA and using "price action" (PA) only (although, to be clear, price action is defined differently by different traders, but then so are FA and TA). But what kind of evidence is there that traders using PA are actually more likely to succeed than other traders? Maybe there is some evidence, but I seen it stated more as a truism than as something which has been empirically validated.

Now, I say this as someone whose sole approach to the market is through PA (no indicators or fundamentals) and I'll take any trade my strategy dictates even if it goes against my bias because my research shows that I can't outguess the strategy, so no use in trying anymore. So, I'm in no way a fan of FA or TA, but I'm still curious about the performance claims made for PA, since if it was so much more likely to lead to success, why isn't everyone doing it? The way those who use it describe it, it's not as if it is more (or that much more) intellectually-challenging than either FA or TA.
    Quote
Old Apr 30th, 2011, 04:41 PM   #2
bigsnack
 
 
Join Date: Mar 2010
Posts: 1,647
In my opinion, price action is actually a lot simpler than trying to decipher FA or TA. I think people make trading a lot more complicated than it has to be. I remember reading a post from someone on a different forum, where they had been trying to squeeze advice out of a "pro" that they knew. Finally the pro told this person to "buy when the market is going up and "sell when it is going down". I feel that trading can be that simple in basic approach.

I think the reason that people mention "graduating" to just price action is that over time, one can begin to see the markets patterns without the use of other indicators. My assumption is that traders strive to simplify as they go along, and using price action only is one of the simplest ways to trade, next to simply trading the DOM action itself.
    Quote
Old Apr 30th, 2011, 05:00 PM   #3
logic_man
 
 
Join Date: Oct 2010
Posts: 1,489
Quote:
Quote from bigsnack:

In my opinion, price action is actually a lot simpler than trying to decipher FA or TA. I think people make trading a lot more complicated than it has to be. I remember reading a post from someone on a different forum, where they had been trying to squeeze advice out of a "pro" that they knew. Finally the pro told this person to "buy when the market is going up and "sell when it is going down". I feel that trading can be that simple in basic approach.

I think the reason that people mention "graduating" to just price action is that over time, one can begin to see the markets patterns without the use of other indicators. My assumption is that traders strive to simplify as they go along, and using price action only is one of the simplest ways to trade, next to simply trading the DOM action itself.
While I'm not necessarily disagreeing with you, doesn't the hypothesis that price action is easier to trade, yet fewer people use it than use FA or TA, go against human nature to be lazy?

BTW, I agree with the pro in your anecdote , with the stipulation that "going up" and "going down" are very strictly defined.
    Quote
Old Apr 30th, 2011, 05:08 PM   #4
bigsnack
 
 
Join Date: Mar 2010
Posts: 1,647
Quote:
Quote from logic_man:

While I'm not necessarily disagreeing with you, doesn't the hypothesis that price action is easier to trade, yet fewer people use it than use FA or TA, go against human nature to be lazy?

BTW, I agree with the pro in your anecdote , with the stipulation that "going up" and "going down" are very strictly defined.
Agreed. It's a lot easier to say that if you've been watching the same futures contract for 12 years straight

Some of the best money I ever made trading was when I first started out. I had "found" a terrific two candle pattern on the daily chart, which gave me an expected break of the previous days high / low based on whether the pattern was bearish or bullish. I cleaned up for weeks on this very simple "price action" based pattern. Of course I had to go and complicate things because at the time I wasn't ready to accept that 30% of my trades were going to be losers. I had to find that something that was going to get my win rate as close 100% as possible. That's when the holy grail quest started, along with my 18 months of pain and frustration. I would have been so much better off if I had just tried to learn how to spot a loser early and close it out.
    Quote
Old Apr 30th, 2011, 05:12 PM   #5
bigsnack
 
 
Join Date: Mar 2010
Posts: 1,647
Quote:
Quote from logic_man:

While I'm not necessarily disagreeing with you, doesn't the hypothesis that price action is easier to trade, yet fewer people use it than use FA or TA, go against human nature to be lazy?
Well I guess I would have to say that price action is easier, after you've acquired enough face time to see the same things hundreds of times over and over and over. I think people search for the holy grail because they don't want to have to think about the trade, they want to be on autopilot and have system where green means buy and red means sell. The lesson that I learned was that if I had just spent all of that time watching price instead of grail searching, I would have gotten to CP a heck of a lot faster.
    Quote
Old Apr 30th, 2011, 05:29 PM   #6
crazyAtrader
 
 
Join Date: Apr 2011
Posts: 203
Not every price action only trader is successful. Don't make the assumption that understanding price action in the now is an easy task; it's far from easy, in fact, it's incredibly hard and time consuming.

To understand price action you must first understand what makes the market technically turn in all the various market conditions so you can determine the surprising events when it's not turning when it should have turned and many other potential probabilities, before that stage is mastered any analysis is completely futile, you are just analyzing randomness. No sense in studying the action of price around "key" areas, when you don't even know what a key area is. You think you know though so you keep wasting your time, until you finally know.

Now, once you finally understand what makes the market technically turn, on average it takes a trader appproximately 3-5 years of watching price alone without the usage of distracting indicators, only then, are you ready to listen and learn to how to react to the different price action events around these key areas and from there you are now finally ready to determine direction beyond random probability.

Anyone can post a chart and do Monday morning quarterbacking and give a detailed explanation of what happened, many forms of technical analysis are great for explaining the past (this is why there are so many successful snake oil salesmen out there), however, it has very little predictive value for the future (and why there are so many failed traders taking such "courses') but sadly there's not a whole lot of people out there teaching what price action truly is because a large part of "getting it" is dependent on you and not a book, a teacher or a mentor; and of course, that and the fact that very few traders ever reach the point of "getting it", and even less probable to attempt to teach it.

Crazy A
    Quote
 
Reply
Thread Tools

Forum Jump



   Conduct Rules   Privacy Policy   Sitemap Copyright © 2014, Elite Trader. All rights reserved.   

WHILE YOU'RE HERE, TAKE A MINUTE TO VISIT SOME OF OUR SPONSORS:
Advantage Futures
Futures Trading & Clearing
AMP Global Clearing
Futures and FX Trading
Collective2
Automated Trading Services
CTS
Futures Trading Software
dom993trading.com
NinjaTrader Consulting
eSignal
Trading Software Provider
FXCM
Forex Trading Services
Global Futures
Futures, Options & FX Trading
Interactive Brokers
Pro Gateway to World Markets
JC Trading Group
Direct Access Trading
MB Trading
Direct Access Trading
NinjaTrader
Trading Software Provider
optionshouse
Option Trading & Education
Rithmic
Futures Trade Execution Platform
SpeedTrader
Direct Access Trading
SpreadProfessor
Spread Trading Instruction
thenut-trader.com
FX, Gold, & Stock Signals
TradersStudio
System Building & Backtesting
Tradier
Equity and Options Trading
Trading Technologies
Trading Software Provider