hey all, when you say 'price action' do you mean price behaviour in terms of an overall picture that price is telling us, or do you mean individual bars like pinbars & engulfing bars?
Ask 10 different traders and get 12 different answers here. For me, it is how the current price acts at previous support or resistance. That s and r may be horizontal or inclined.
"Price action trading is the art and skill of making all of your trading decisions off of a stripped down or ânakedâ price chart. This means no lagging indicators outside of maybe a couple moving averages to help identify dynamic support and resistance areas. All financial markets generate data about the movement of a security over varying periods of time in the form of price charts. Price charts reflect the beliefs of all participants trading the given market during the specified period of time. All economic data that leads to price movement within a market is first turned into a belief in the human mind about how this data will affect the market and this belief is then turned into an action from a trader which reflects itself via price action on a price chart. In this way price action trading reflects all variables of any market for any given period of time. This is also the reason why using lagging price indictors like stochastics, MACD, RSI, and others is just a flat waste of time. Price movement provides all the signals you will ever need to develop a profitable and high-probability trading system. These signals collectively are called price action setups and they provide a way to make sense of market movement and predict its future movement with a high enough degree of accuracy to consistently profit over time."
To clarify a few things (and by clarify I mean distort with my own opinion)...Lagging price indicators are not a flat waste of time. Think of "price action" as a series of buys and sells from a participant. The succession of these actions may show as chart patterns (which is why people associate accumulation with a bull flag). Indicators themselves may tend to react a certain way based upon "certain" price action. I don't mean trade an "indicator crossover". I more closely mean if an indicator is behaving in a certain way (maybe contracting/expanding) at a certain pace (velocity), it could indicate nearly as much as a price chart would for some people. A lot of it comes down to the imaginary concept of "feel". Put simply, trading based on price action is analyzing the current market behavior, interpreting it, and extrapolating the behavior.
Speaking of price action....the chart I was looking at before on EURUSD daily indicated a bull flag. Perhaps the accumulation chart pattern was due in part to the austerity measures? Price action is key, but be weary of what transpires this morning. Impulse reactions are often emotional reactions which are often brash and erroneous. So far though....the projection expected has happened exactly as thought on the move to 1.44-1.45. The question now is do we see profit taking from this major level or continuation. The austerity is sure to fuel the direction a good deal. Interesting times indeed!
learn a forex setup here. www.elitetrader.com/vb/showthread.php?threadid=223293 a full time market trader since 1975. cheers, s
" This is also the reason why using lagging price indictors like stochastics, MACD, RSI, and others is just a flat waste of time...." a zero lag macd and a smooth t3 ssto is used for cross over and divergence on price action trading. s