Study of Price

Discussion in 'Trading' started by tyler19, Feb 3, 2007.

  1. tyler19


    What is the best indicator?

    I do not understand this.

    I often hear people say price. How do you study price? Support and Resistance is that what price studies are about?

    Someone please explain

  2. My belief is that, when it comes to equities, the best course is to always trust the chart and rely on trends. Of course, these charts do not always prove to be correct. The chart is simply an instrument of statistical analysis. As we have seen in such events like the Bush v. Gore Presidential race, the statistical analysis of the exit polls did not accurately predict the race. So when we are making these statistical guesses, we have to utilize risk management in our trades. In layman's terms charting and price studies are educated guesses.

    As for finding support and resistance, this is just a matter of finding a pattern on the chart. Sometimes an equity will bounce off of a moving average. Other times it will stop at a point on a chart that it has visited before...

    Print up a chart of any equity and look for patterns. Any conclusion that you can come up with on a chart should be regarded as an educated guess. Therefore, as stated above, you should always utilize risk management with everything you do.

    Dr. Michael Roberts
  3. Price is irrefutable. Indicators are subjective. Ultimately, you have to develop your own guidelines for getting in and out of trades that'll somehow be preceded by some type of price behavior that elicits a response from you.
  4. tyler19


    okay I understand all of that. But people who trade with no indicators such as MACD or MA's and use just price. How do you trade using just price action?
  5. tyler19


    how do you trade on price alone? what are they looking at to determine entry and exits using price?
  6. hausse


    Do you mean with the help of charts?

    An example would be to buy when price rises above a level where it has stopped to rise before or where it has twice stopped to rise before, a breakout of a double top or base.

    People have identified many chart patterns. They are explained in books and on websites. You may find useful information here:

    If you mean without charts then tape reading comes to mind, but I don't know much about it.
  7. This approaches the equivalent of asking "How does one make a good painting?" or "How do you write a good song?". There are so many angles to approach it, what works now might not necessarily work tomorrow -- the best advice imo is just to spend a few thousand hours looking at the market you want to trade and just pay attention.
  8. If you watch price action long enough and pay close attention to the way it ebbs and flows, you will learn to identify areas of support/resistance naturally. You'll learn to "feel" the push and pull of buyers and sellers. It just takes a lot of screen time and a sharp eye.
  9. tyler19


    thanks guys.... and mabye girls.
    #10     Feb 3, 2007