Excellent post. May I just add that not everyone is equally equipped to read the tape (as they used to call trading off price action) just as not everyone is equally equipped to trade based on fundamentals or technicals. Blessed is the trader who sooner rather then later abandons approaches they are not equipped for.
While I've seen some posts where someone says they are a PA trader and they are watching for certain price patterns, that doesn't encompass everything that falls under the term "price action" as I've seen it used. If someone is using T&S to make trading decisions, they don't care about breakouts over resistance or under support or whether or not price just went above the high of the last bar to confirm an entry or an MA cross, they are watching to see how the bids and offers are shifting as price moves and they'll enter even though a chartist would still be waiting for some visual confirmation of the move. Maybe that's even a somewhat useful distinction to make, i.e. that a PA only trader will enter and exit at places a chartist would consider random. I'm not sure that I see the role of a chart for that kind of PA trading, although, as I said, in price pattern trading, I definitely see the overlap with chartists.
So even if someone has a strategy which can provide pretty consistent results, provided every trade is taken, there are still only 5% who can actually execute the strategy? I can see anyone being skeptical of a strategy once they first start using it and go through that first losing stretch, but I would think that if they can overcome that obstacle and stick with the strategy back to new equity curve highs, they ought to lose any of the psychological issues they initial faced in trusting to the strategy's intrinsic long-term profitability. When I first developed my strategy, I figured that I would try to "outguess" it by not taking certain trades. Turns out that I was not able to "outguess" it at all, so now I just take every trade. It sounds like you are saying that is actually something rare (not to pat myself on the back or anything, just trying to confirm my understanding). But if it is rare, that means that most traders are not rational, because it is not rational to not faithfully execute a strategy with positive expectancy. The only rational thing is to ride that strategy for as long as expectancy remains positive and not deviate from it one bit until that happens.
While it is very easy to distinguish between FA on one side, and TA and PA on the other, it is really difficult, if not impossible to distinguish between the latter 2. For the sake of clarity let's assume that both pure TA and PA traders do not care for fundamentals at all. If they, do, they are not pure TA/PA traders. Both make trading decisions based on what the price is doing at the moment, giving them probabilistic expectations on what is going to happen next. So how we define what "at the moment" and what "next" means? Is "at the moment" the current second, minute, hour, or day, or candlestic/bar? Is the "next" the next second, minute, etc? This is an important question, because PA and "naked" PA traders often pride saying that they exclusively care for what the price is doing "at the moment", and do not care for what price did historically. Many allege that both TA and indicators are about historical (therefore for them "irrelevant") price movements, and PA concerns only about "current" movements. But even if we define "current" as buying when price is going up, and selling when price is going down, it is obvious that an element of comparison must be there: compared to what is it going up or down? Compared to historical price movement and levels, whatever that means: the last second(s), minute(s), hour(s), day(s) etc. Momentary price alone is completely meaningless. It gains its meaning, its possible interpretation useful for probabilistic expectations only through its relation to previous levels/movements, to its own historical context. So the difference between TA and PA is neither in the timeframe (do you care for the "current" ticks/bars/seconds/minutes/years) nor in the relevance of historical data. Nor can it lie within the use of charts, DOM etc. because all of these are merely visual representations of price data series. Many cite the indicatorlessnes/nakedness/pureness of PA as opposed to the use of indicators by TA followers. All indicators are merely representations of historical price movements/events/levels pertaining often to a higher timeframe, on the currently visualized timeframe. Being that, ideally they can help to reduce the amount of charts etc. one has to observe at the same moment. They are also parts of PA, or at least of its context. The problem with indicators is not their existence or use, but their abuse. They can easily lead to an information overload, and distraction. So the problem seems to me much more a problem of distraction and focus. Obviously, how much information an individual is capable to process at the same time and amalgamate into a meaningful, useful information leading to reasonable probabilistic expectations, and how much information leads to overload and loss of focus, depends on the capacity of the individual. It is obvious, that the optimum amount of information, that still does not cause an overload and loss of focus may lead to better trading decisions. May, but does not have necessarily to. A lot still depends on the trader's psychological preparedness. So I would suggest to rather distinguish between processable amount of information opposed to information overload, than between TA and PA.
Not at all, some strategies are easier than others to adopt and execute. However, the real deal is not. Crazy A
One thing seems to me is there is different info in watching the chart (I suppose this is PA) vs coding indicators and developing a strategy for backtesting (I suppose this is TA). Watching the chart, I hear the beeps of the ticks as price approaches the S/R line, giving me an idea of speed. I don't get this info in my indicators that look at a 5- or 15- minute chart. Or looking at the chart I can review as much or as little of the previous bars to look for a pattern, and judge it with a value somewhere between 0 and 1, which could be inconsistent. With indicators, everything is 0 or 1, higher or lower, and consistent and replicable. Before people point this out, I'll agree in advance, I guess I could get the tick info and find some way to code in this "speed" factor I'm guessing about. And I suppose for the last point, indicators could be programmed as "relative" or "fuzzy", to get them to judge between 0 and 1. But doing so, to get the computer to replicate the brain, would increase the coding and data to very expensive time and effort amounts.
Trading is not rigorous science and people can claim their own definitions and standards as long as they define them properly and are consistent with their use. I like the definition Michael Harris has offered for price action trading: "Price action trading is a methodology that bases trading decisions only on realized price levels, current and historical." http://www.priceactionlab.com/Blog/2010/11/price-action-trading/ This definition automatically excludes indicators and any other derivatives of price but retains chart, candlestick patterns and other micropatterns as well as any algorithmic trading that is based on traded price levels.
His full position is 6 contracts, enter 3-2-1 approach. These videos are of a guy in this brokers assisted trading room, the broker calls everything out and the ones in the room just follow. The guy on youtube posting the videos started with 50k and is now well into 6 figures. you can bash it all you want .....I was just posting a link illistrating how someone succesfully uses PA. I'm not here to force you into believing anything you don't want to. If you take the time to watch every single video you will change your tune. Or should I just tell you what you want to hear, nobody can be profitable trading that way.