I wouldn't refer to price action as something that you can look back at after the market has closed but rather, the behavior of the price when the market is open. To give you an example, if the market is falling and it gets near a price area where I want to buy I will wait until it comes to a complete standstill before pulling the trigger. This tells me selling pressure has temporarily run out. Naturally, this doesn't guarantee the price won't move back in the same direction but it increases the odds I'll get in near the bottom. You have to take the time of day into consideration as well. In the first 1/2 hour the market is likely to reverse in spring board fashion so I won't wait until the market stops because it may reverse without giving me a chance. In that situation I'll take the trigger on blind faith. Fast foward another 1/2 hour and I'm waiting for the price to stop. Price action to me isn't the simple fact that the price got to where it is but "how" it arrives there. It's all about the speed of the market. Gimme a fast market anyday!
Time and Sales is a great tool for interpreting price action. Think about going to the casino and pulling the lever on a slot machine....the little fruit things go around and around and around and then slow, slooooow, sloooooooow, stop -- Bingo! That's when the price reverses, or is most likely to reverse.
I wish I could make this work for me. I find time and sales to be so random it drives me insane. Ended up taking it off my trading workspace and just following price.
Book This is a decent little book by Geoff Bysshe www.marketgauge.com/TradingThe10OclockBulls.pdf Quote from page 21, "Good technical traders trade charts that make sense. They don't try to make sense out of every chart." Good Trading to all
re. Market Profile, 2 books by Dalton Master the Markets, Tom Williams Secret Science of Price & Volume, Timothy Ord Anything by Richard D. Wyckoff The Nature of Trends, Ray Barros
Free Wyckoff: http://books.google.com/books?id=VmENAAAAYAAJ&pg=PA21&dq=richard+wyckoff&as_brr=1#PPP5,M1
To add to the thought of my original recommendation (which I'm glad has resonated with others), don't be afraid of works written long ago. It's no wonder the greatest price action discoveries, ideas, observations, and analysis occured before computers, charting packages, etc. Price (and volume) is all these guys had, so they spent their time learning to understand it. Stick to the original thoughts from the greats (which I'd put Wyckoff at or near the top), and you will not go wrong. After you've grown in your understanding of price action, exploitation becomes much more simple (and will come after ample screen time).
I have read Dalton and Williams. Agreed, good books. Would you mind offering a little opinion/insight into Barros' book? Seems he is into Market Profile concepts from what I have read on his blog, etc so far. Would be interested in your take on the book. Thanks.
Talking about price action, my firsts would be "Mind Over Markets" and "Trading and Exchanges: Market Microstructure for Practitioners". The latter one particularly helped me understanding tape reading.