Nothing Beats Price Action, Everything Else is Derivative

Discussion in 'Trading' started by MandelbrotSet, May 13, 2008.

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  1. Not long ago I (and several other ET regulars) got into a long drawn out discussion (ie, flame fest) regarding Indicators vs. Pure Price Action.

    Whereas I had been on the fence before now I have to jump off of it and say that nothing beats price action, everything else is derviative and there is an inverse relationship between the complexity of the indicator (if one is used at all) and it's usability as a reliable trading tool (iow, if you do use an indicator, keep it to one, and KISS).

    This one's for you, Stealth Trader. :)

    Hope this helps anyone who's searching.

    Good trading.
  2. M,

    You must be a masoquist starting this thread.
    Anyway, welcome to the price club.

  3. greddy


    I have been reading Joe Ross's books. He does not like

    He mentions price action is key. Couldn't agree more.

    Teaching price action is not good for vendors though. No
    fancy indicators/ software to sell. Maybe that is why
    so few preach price action.
  4. greddy,

    Bad for business really.
    Sadly for some there is no smoke and mirrors with price action.

  5. Indicators are 80% useless.

    Current price action and previous price levels are all you need.
  6. Price action always tells you the truth of what is happening in the market, and it is consistent across all markets and frames of refrence.

    I've been going at it for 12 hours a day now (partial overnight session and day session) and it always comes down to Price Action in the context of Technical Analysis.

    Not only that, but these are the trades that are going to have the greatest breadth and strength behind them, have the greatest probability of a successful conclusion and usually your stop just sits there and never comes into consideration.

    Indicators? :confused: ... they tell you what is happening long after price has signaled the move.
  7. Had to fess up. :D
  8. piezoe


    While i agree nothing beats price action. Those who trade, and i am specifically referring to intraday here, solely on price alone are using only part of the useful information. Volume should also be used, as it is independent of price. Also the market internals, such as market breadth, which is virtually independent of volume on any one issue, and advance/decline which is also independent should be used. Though Trin is a derivative, i find it is, usually, useful as well.

    Time is another factor that is independent of price that should not be ignored. Thus, I would not agree that one should ignore trendlines and support and resistance. Eventhough these are not completely independent of price, as they depend on price and time.

    I completely agree that one should keep things simple, but price alone is too simple, and anyone's trading will improve when they learn to properly interpret volume, use the market internals, and pay attention to trendlines and support and resistance.
    It is simply incorrect to state that price alone incorporates these other factors, it does not.
    (Note: What i have stated may not be true if one is scalping.)
  9. I agree with you in part and use volume and the internals when trading the e-mini Financials.

    However price action alone gets it done for the Notes during the day session, and the CME EuroFx and Curriencies on the overnight shift.

    While PA is simple, it never misleads, and is pretty straightforward when taken in context with TA ... :)
  10. es175


    I'd say indicators, volume, breadth and other non-price data can have their uses. It depends on the context and the job in hand.
    Others might say it's philosophically unsound to state an absolute case versus the rest of the world.

    But despite all that, I think price action is king :cool:
    #10     May 13, 2008
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