Your fundamental question you want answered is going to take you into an never ending quest and a colossal waste of time. It seems, that you want to understand the theory of price movement. Then construct your own strategy. However, you will encounter many theories: Demand vs supply...buying pressure vs selling pressure...herd mentality...institutional forces on the markets...sellers backing off..buyers backing off...sellers stepping up..buyers stepping up..insider trading...manipulation...mathematical operations and constructs...HFT...Algorithms...CEOS buying and selling their own stock...mergers...bankrupties...good news...bad news...prices cycles.....ad nauseum... I will save you some time and effort. Every bar, (which is simply a graphical representation of price movement) on any time frame, forms BECAUSE there are bearish and bullish players on EACH and EVERY bar. The bears hope it goes south the bulls hope it goes north. The bears are trying to push it south the bulls are trying to push it north. Each are looking at fundamentals, or TA, or some sort of analysis, and some are just gambling. Some are quants and think math holds the secret to riches. Others are acting like idiots and just throwing money around. Some are just guessing. Others think they know. However, none of this matters and is a waste of time simply because you, nor anyone else, can EVER know all the variables that influence price movement at any given time. Think about it. Any news that comes out ...well...there is both a bullish and bearish interpretation of that news. Prices can go up on bad news and down on good news. Or down on bad news and up on good news. OR stay the same. So, what matters is not WHAT causes price to move but the fact that price DOES indeed move. This important fact is followed closely by HOW it moves (i.e. the dynamics). That in turn is followed next by the PATTERNS it tends to form AS it moves. Once these things are understood then some strategies and things of a tactical nature can be devised, constructed, or simply observed that can allow a trader or investor to assess the probabilities, and thus give him an edge. The markets are a sea of uncertainty and that uncertainty must be EMBRACED because that uncertainty is exactly WHAT gives the profitable opportunities to us. We try to make trading certain (by all our indicators...confirmation tactics..etc) but the market cares nothing about any of that. It is what it is. Period. No trade can EVER be 100% certain. Because the market IS an uncertain quagmire. However, it renders patterns that are tradeable. And those patterns are formed dynamically. Look at any chart. They are all the same. From 1929 to 2018. Ranges...channels...breakouts...spikes..gaps..trends..pullbacks..continuations...etc ad nauseum. It matters not that they were drawn by hand or by computer. Or dynamically formed by humans trading or formed by computers trading. If anything..they will be more precise when computer trading forms the patterns because emotion is a removed element, to some degree. It matters not “why” the patterns appear. What matters is that they appear and that they can be shown to be profitable by implementing the right strategies and tactics that render an edge. Every tick that price moves, it moves for a reason. There is no such thing as noise. It is impossible to know all the reasons why the ES, or any other instrument, went up or down 1 tick in price. But the fact it DID is what matters AND THAT IS VALUABLE information. Charts are formed by ticks. Bars are formed by ticks. Patterns are formed by bars. Patterns tend to repeat. No market trends up or down forever. No market stays in a range forever. Prices levels are constantly being probed. It doesn’t matter the reason. What matters is that they ARE being probed and whether or not that probing ends up leading to price patterns that can be profitable. If the probe is successful then price will move in the direction of the probe. If not, it will go back to the area it was in and meander around some more or it may try a probe on the other end of the spectrum. Or it may try a second or third probe in the direction of the original probe. The patterns tell the story of the pressures that were dynamically involved in forming them. The reason why is NOT important. Some say volume is the only leading indicator. Others say price is the best indicator of price. None of it matters. What matters is what price actually does, and the patterns it forms as it does whatever it does, because those patterns, in certain contexts, can render an edge. Remember, ranges (in different forms). Breakouts (in different forms). Channels (in different forms). Ranges again. Bo’s again. Channels again. Channels are nothing but slanted ranges. The market is ALWAYS in a range..a channel..and a breakout, AT ALL TIMES. What may appear to be a channel on a 5 min chart may be a range on a 15 min chart. Or a BO on a 60 minute chart. None of that matters. What matters is there are patterns that can be traded when seen in certain contexts. Good luck. IMHO Brooks deals with Price Action more comprehensively than anyone else. But that is my opinion. Others will disagree. If I were a novice..a beginner..a newbie..and wanted an education about PA I would spring for Brooks video course and his four books. The reason is that they are comprehensive, thorough, detailed, and serious. And very affordable for a Newbie. For around 650 dollars a trader can get all of them. Most gurus and pundits charge way more and many promise wealth and riches and surefire trading strategies. When you see or hear proven, surefire, easy road to riches, in a gurus ad...RUN AWAY as fast as you can.
I have had that book for many years. Not my style of trading but certainly a viable way to trade. And genuine.
Pretty much any book that presents you a "methodology" is worthless, at least that part of the book. Brooks' 3 part book is excellent as long as you read the paragraphs that are not related to his methodology. Unfortunately these are scattered throughout entire 3 books. Volman's "Understanding...5min..." is a disgraceful remake of his prior book (very simplistic but that's what the trading should be in the end!) that is geared towards all those that complained they don't have access to tick charts (most forex traders). My recommendations: 1. Look online very basics of technical analysis. Don't read entire book about it, simple online material will do. The point is not to "learn it", just get a simple grasp of it and understanding what many others are doing, why price sometimes moves the way it does. I'm not advocating TA by any means. 2. You need to understand Money Management principles and their importance. You just need to see that there is a lot of "noise" because everyone is doing "something" on their own timeframe etc. You need to understand basic "mathematics of trading". You need to understand the concept of the "single trading day" and types of market participants (DT and OTF). 3. Read "Reminiscence of a stock operator" 4. Read "Zen in the markets" Now you should be ready, not for trading, but to search for something in the markets on your own and to work on your self to try to align yourself with the markets. Please understand, there is no "manual" on what to trade and how to trade it. You have to write your "own" manual that will only work for you and nobody else.
ROFLMAO First there is no such thing as noise. Every tick happens for a reason. Noise is a myth. Second institutions aren’t generally sitting around looking at 1m, 5m, 15m, 30m charts. They have orders to fill and they go about doing it. Nevertheless, the buying selling pressures they create shows up on multiple TF’s. Third psychology goes hand in hand with money management and is the achilles heel of most traders. A trader can have risk management understanding down to the “t” but cannot follow it. Fourth, the idea that anothers person’s methodolgy is worthless is ludicrous. I do agree that in the end ones methodolgy has to be compatible with ones makeup..strenghts...weakness..flaws that have to be overcome (flaws) or at least mitigated.
I happened to trade on the "noise". I'm not interested what you believe in. I didn't said that someone's methodology is worthless. Read carefully then think. I said any book with methodology is worthless (at least that part of the book). If you agree that books are meant for the readers, then that clearly means that someone else's methodology is worthless for others. But wait, you just admitted that in your last statement. How the hell do you know what other person's personal make up is? Exactly my freaking points! But feel free to count every bar like Brooks does, copy others, what do I care what you do.
Ok but your noise is a myth but if you label it as noise and can freaking trade it with success then freaking do so. Good luck. PS your worthless methodolgy point is worthless as a box of matches in a fire. Lol
when someone contradicts you by ultimately using the same point you made earlier then call it whatever you want just to be clear, (you) as someone that is fond of Volman or Brooks and recommends these authors left and right, I don't expect you to agree with me
Thank you and yes I will trade my own thing. There are many professional traders (to be clear: I don't call myself one) that trade exactly that, the noise. I have been in the markets long enough to see that "noise". Perhaps you call it something else, but it is what it is. Perhaps you have the crystal ball and know what will happen beyond next few ticks. Perhaps that crystal ball tells you upfront how many institutional buyers/sellers are there, how many orders they have to fill and if they target specific levels or not. And what the next news is going to be. I don't have such crystal ball. I don't see why it is so important for you to contradict the existence of "noise" in the markets? Just because you haven't seen something, it doesn't mean it doesn't exist. And how can you even argue that unless we first agreed on the definition of what the noise is to begin with? Do your own thing, I will do mine. Meanwhile, OP asked for books, I gave him my recommendations with a note not to pursue someone else's methodologies. OP will do as he/she pleases.