I didn't realize so many people around here were so dense... or perhaps they just don't bother to read anything other than the thread title. I wish I could edit the title of the post to read " 'Price action' is a meaningless phrase." OF COURSE the price changes, and you can term this change "price action" if you want, but all non-fundamental, non-news related indicators are "price action" indicators. Period. What I mean to say is that the categorization of some price indicators as "price action" indicators and others as "lagging indicators" or "technical indicators" is completely false. All price indicators are based on the same lagging data; therefore they are all equally "price action" indicators, therefore the label is worthless.
If you dont believe that there is a "price action" concept, that assists you in trade execution, then its a huge disadvantage that you have as a trader. "Seeing" the market , as I like to say, becomes more apparent through hours and hours of market observtion. I trade crude oil futures, and feel very comfortable in recognizing behavior changes in the market, minute by minute. I know I could not do that in the e-minis or Dax, or wheat, etc......, because I have not took the time and energy to get myself to that point. Not to say that I dont trade those, but I usually only work technical levels on longer term charts (60min, 240min) with stops at a comfortable distance away from my entry point. My disadvantage there, is that I cannot take advantage of the possible penetration of the technical level that would allow me to get better prices , and may even stop me out. Becoming a consistant trader takes a lot of time and energy, and to assume that you can skip steps on your way to consistency is nothing more than a joke. It all comes back to discipline. Oh, and this "price action" observation that im talking about is just one small, but important, piece of the puzzle. Good Luck to all Consistency,Consistency, Consistency !!!!!!!!!!!
There is a difference between price action and indicators. Price action is simply the raw unfiltered data. An indicator is price action that is filtered in some way (i.e. smoothed thru a moving average) I'll leave it to you to figure out if using pure price action or indicators (or both) are effective
IMHO, "Price Action" is simply the movement of price as it oscillates between minor and extreme support and resistance and the ability to see those minor and extreme oscilllations on individual charts . . . one chart at a time. Not sure high to highlight above, but that's an elegant definition of price action. There are others on ET. But the point of the debate on this thread is a good one. I am becoming a believer of PA as defined above and in other places, but in the back of my head, I always wonder if this too simplistic a way to trade in today's market. I've studied and used indicators as well as thoroughly educated myself about technical analysis and fundamental analysis and everything inbetween. So that's why sometimes I'm torn. I look at what small traders use, large traders use, what Goldman Sachs traders use and what I use and conclude that there are many ways to be profitable and many ways to lose money. But I'm always drawn to PA with those nagging doubts.
1. What raw data? You mean bars? Hate to break it to you, but bars are aggregated data--they are, in effect, a very basic form of indicator. 2. At some point, either a human or a machine has to translate that supposedly "raw, unfiltered" data into one of three courses of action: enter a position, exit a position, or do neither. That decision is based on an indicator. It might not be a straightforward, easy to understand indicator (compared to, say, an EMA) but it is still an indicator. It should be even more painfully obvious when you talk about very specific events, like a triple bottom. These things are trivially recognizable by algorithms, and they are fundamentally no different than any other indicator you might wish to construct. If you think that moving averages creates worthless lagging indicators then fine, so be it. Just recognize that moving averages uses the same data that everything else uses. Once you get over the false dichotomy of "price action" vs. "lagging indicators", you can get into the real meat of the issue here: creating indicators that work. From what I've seen, "price action" is just a euphemism for "indicators that work".
Yes it is all there to see. Most look at two time segments: The present (as you mention) and the near past (see the PA pseudo "elegant" impression ving.. has). I prefer to look at two time segments as well: the present and the near future. You raise the use of orders as a purposeful effort to attain an advantageous result. I am VERY focused on watching those who do this. There are four basic strategies that they use. For that I am thankful. I especially watch the image of smart money on the indexes as it relates to the cash market. Collectively I use 13 leading indicators of price. By stating this you can see the emphasis I place on the near term future and especially how it comes into the present. The market is multidimensional and as the futre comes closer and closer to the present, there is a period of certainty about what will happen in the Present next. I do not need to look at a price chart to trade it turns out. I was given a gift by a person a while back. I was in an inquisition of great depth and purpose. The gift was being able to, sensitively, look at myself in my mind. Before this I was instructed vis a vis all aspects of health to be able to examine my body and its goings on. Adding the mind in the way of the gift completed a lot for me in dealing with transference. It is extremely improtant that as many people as possible become wealthy so that they can use wealth to solve problems of others. I long ago had figured out the aspect of certainty occuring in the very near future. In any multidimensional system that is dynamic, and especially in human and human built control systems (in any combo or sequencing of their active presence), the "movement" is a consequence of a non intuitive effect. There are many possibilites of what can happen before it happens. as a person learns to steer and focus on the pertinent combinations, he also eliminates from view what is NOT a possibility. We operate at a 100 millisecond cycle rate. Doing the cycle as always, allows one to be effective and efficient. I trade with sports memory so it is all unconscious like reading or driving a car would be for others. It was vetoed to put me through the inquisition supported by the usual machinery used by Madison Avenue to evaluate TV ads through analysis of eye movement. (Used machines are about 25K so they are cheap). The limiting case for alternatives is one alternative. The circumstance, situation and condition of one alternative occurs in the very near future just before the present if you have the ability to display what is in the picture. I do. There are two display locations: the screens and the mind. So creating an ATS is just a labor process with coders after the schematics are drawn out. The drilling down into the opportunity, comes down to, as you say, to dealing with orders. As the Marines at EOP used to say to me about fixes being put in: "it is unf*ckingbelievable". What is at hand is a time in the very near future where the next movement is certain and HAS NOT OCCURRED. This is the definition of control and opportunity. So there are about 70 degrees of freedom and the focus gradually comes down to a subset (5 to 7 binary elements) within the power of the observer to do 100 milliscond sweeps (a computer operating at a rep rate of ten times that is "sufficient" to prove "certainty"). By trading in certainty habitually or by ATS, a lot of other issues fade away. Now the caveats. They are green today. I slipped in a few already. vingxx misdefines PA. Watch what is important in the caveats and see his definition disappear. To have a way of seeing anything, a person must look in a binary way only so must an ATS. It is like saying only breath through your nose to maintain C0-2 proper balance. People think it is optional and use their mouths (collectively speaking). WTF. The binary must also be stated in a vector manner as that affords the opportunity to bring time into the picture. there is some marginal stuff about S and R in PA and the left and right boundaries are omitted. Using a binary vector brings four boundaries into view. You may only view markets as dynamic and in a binary vector to be able to operate in the two required time zones: the Present and the near term future. The boundaries of the near term future are set by Present market multivarient operating point. A person can only code according to non probabilitistic information theory. No exceptions. Lets look at making money using orders very pragmatically. Look at the obvious stuff coming down the pike from the future into the present. Look from the right side of the screen into the middle like you are rafting into the present with your future like minded buddies. Most orders are not filled. Dummies put in orders to be hit. People actually do this kind of thinking. Insane (look up the humorous definition). At some point, just before the Present it is obvious that one or the other BBid or BAsk is going to be eaten by a MARKET order and price moves to the next group value on the DOM list. Can anyone see which side of the sum of five limit orders sets is smaller? No they can't they are looking at history and what they call humorously PA. Can anyone see within that list of five on each side where there is a "wall" that can't be gotten past? No they can't they are looking at history. The DOM has four games being played on it. the most frequently done thing is pulling orders. The next most frequently done thing is adding orders that are not near the BBid or BAsk. There are four sizes of orders on the DOM. units, tens hundreds and thousands. The important ones you brought up. The big orders. BUT what size orders are used to play the four games? Who isn't playing the games? The guys who show on the T&S as taders or guys who are getting blown out. Lets say you want to make a killing on a VERY BAD DAY. A day where 40 contracts makes you 100,000 dollars. WELL STEP IN FRONT OF THE CASCADE AND TRADE 5 TIMES THE CAPACITY USING AN ODD HARMONIC EXIT. You are using more than 40 contracts to hlep move the market. Going up to 5 times the T&S hits is done with 5 orders at twice the hits. Twice the hits is in the same placeholder range usually. So to move markets with orders you play the four games and you trade at market to leave PA traders holding the bag. You always are riding in the boat in the direction of the minority, meaning to are parasitic and you frontrun the smart money. I like to monitor the drift of Premium since the bots are mostly controlled by the regression of the drift ONCE IT GETS TO BE STATISTICALLY SIGNIFICANT. SO I COUNT DRIFT IN POINTS and be sure to front run the expected bot entries on the round numbers. I don't know why but the bots are very crude in their use of small whole numbers and not scaling on the next lower sig fig. Looks like we have interrupted the usual palaver. here's a sketch of how crudely to look at doing a reversal that would nail the current channel or range expansion on a day to pick up the ATR of the day in one trade. we showed a print in the past that nailed $40,000 with 40 contracts in one action; it was 20 or 30 minutes long.
Bingo. You broke the code. The funny thing is, at least here, is those who claim using PA (as opposed to "indicators") have this huge sense of superiority over their trading brothers who use conventional indicators. What a sense of arrogance they display. In fact, one of the regulars here, whose name escapes me, went as far to say that the indicator traders were lower on the food chain to those who use PA. And now Hershey chimes in and claims PA traders are dead on arrival in the trading world until they discover whatever he's touting. Human beings have an incredible ability to deceive themselves and traders are at the top of the heap in that regard.
Now you've defined the terms better than before and you are 100% on target. One of the best traders I know got in a big argument with another successful trader over the use of price bars, with the former saying he didn't need them and the latter saying he couldn't trade without them. Both argued, ad nauseum, they use PA, not indicators, but the truth is, the former was correct and the latter wrong. Imagine this: Two traders are discussing PA. One uses charts and the other doesn't. The chart trader points to his screen (ES) and says, "see those 2 consecutive, one hour bars with a high of 1495.00? Well, I'm going to short that price on the next bar. That's how I use price action," to which the other trader says, "I could have figured that out in a second if someone told me that was the top for the last 3 hours.
I knew this was going to be exciting - I could just feel it all over. Now ya have it guys, it doesn't matter if PA exists if you get Jack's gift. Silva guiding spirits anyone? Feel free to chime in here before I do exorcism.
The OP brought up an interesting question. Others posted interesting thoughts and I brought up some questions and thoughts that I was looking forward to comments on. I get the notice that the thread has been updated and I check it out to see that this thread has been hijacked. Can the moderators help lead it back to the OPs original debate or does it just end like this?