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Trying to learn to Trade Price Action

 
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dschutzen

Trying to learn to Trade Price Action

I have been trying to get comfortable using price action as a trading strategy, but have been having difficulties. For me it seems that price action is for the more experienced traders. I have incorporated price action as part of my strategy for my Silver 3 Trading Plan, but I will be doing it sparingly.

The problem that I have with price action is that there is some intuition involved and for a less experienced trader as myself this can be dangerous. I have misread the price action all too often.

For now, I plan on using a strategy called “Sneak Thief” that I learned from one of the classes. Using a strategy that relies on signals takes the guess work (and sometimes gambling) out of your trading. As I become more experienced, I can hopefully trade price action without gambling.



Thu, 09/07/2017 - 8:35pm
 
gigreen1

Price Action is a very interesting method of reading the market. Myself, I can choose the wrong direction 80 times in a row. My wife, for example, can look at the charts and can be correct 14 out of 16 trades in just a few minutes and several of them run 50 pips and beyond. I am the trader and she is just learning. I think I have too many biases in my brain and I probably look for too many change of directions.

 
azxdana

Maybe you need a break.
Close the platform and do something else for few days without looking at the market at all.
When you will resume trading you will see the market without any bias.

 
ror4psu

Azx, that's a good idea, but I'm afraid a few days won't eliminate the bias gig refers to. A lot of us have been so brainwashed into using and therefore relying on indicators to give us signals that it is deeply ingrained into our trading. I am also trying to get away from indicators and am having some success but not completely weaned from them. I, too, am still struggling to be better with my price action interpretations. One thing I have noticed with price is how the next bar forms relative to the last bar. If you're in a long position and the next bar trades above the high of the last bar, the up move seems more likely to continue. (Same with short trades with exceeding the last bar low.) When the current bar doesn't exceed the high(long) or low(short) of the last bar, investors are asking themselves, "Is there any more to this move?". This is where we can't and won't be right all the time. (Even gig's wife misses a couple now and then.) I'm jealous of anybody coming into Apiary without any trading experience because they are a clean slate and can look at price action with unfiltered eyes. Good luck to all of us trying to get confident enough to trade solely using price action.

 
ddyjak77

May I ask what resources you've found to learn price action?

I also trade price action, but I've found that candlestick formations are only reliable when formed at key levels or zones of support and resistance. Primarily you should be paying attention to obvious pivot points on the weekly and daily chart, and how price reacts when it hits these levels. Ideally you want confluence of several different price action elements, such as the support/resistance, a Fibonacci retracement, trendline, even a moving average all telling you the area is important. Then look for your candlestick formation to tell you which way price is going and see if you have a favorable risk:reward ratio to enter the trade. If there's another major support only 50 pips away and your stop must be 80 pips away, then it's no good.

Slow down by trading this way on the daily chart only, and when you're comfortable with that you can consider moving to H4 and then to H1 if you wish, but I think you'll be making so much money you won't go to H1.

By the way, I follow Justin Bennet at dailypriceaction.com and Nial Fuller at learntotradethemarket.com for price action trading techniques. Other good resources are Trading with Rayner and Navin Prithyani/Urban Forex on YouTube.

 
ror4psu

dd,

So far the school of hard knocks, looking at past price swing points and the odd price action video here and there. I agree with you that support/resistance or supply/demand levels coupled with candlestick patterns can help to be successful trading price action.

 
wheat40

If you are not familiar with it, I highly recommend Robert Miner's 'High Probability Trading Strategies.'

 
hakchinoy

Pure PA has been around far longer than digital trading platforms and indicators. So beginning traders used to have no choice but to learn to read pure PA. Fortunately, learning to read it is relatively easy.

 
BruceWayneTrades

I trade mostly on price action strategies that I have observed. The key to also understanding price action is also to know where the price will bounce off of (i.e. historical neutral and significant daily, weekly and monthly support/resistance as well as the same time frame trends). Look for shaved candles either on the upside or on the downside, this means that the buyers are buying and holding instead of selling right away and vice versa if it's on the downside. Then look for the next candle to see if it's an inside or outside candle which can indicate continuation.

Draw intraday trend lines, I do this on my 1 minute chart and locate any triangles lined up amongst other intraday trends or my historical levels, and then I observe the price action leading into the decision point of the triangle (whether it's ascending/decending wedge/triangle). If you're going to trade the set up, make sure you're on a bullish or bearish trend, in my case within the 1 minute time frame but I reference the daily chart to know where the price action will take the price to fill the body of the candle downward or a probability of surging higher.

I have been testing out a more refined process where I can rinse and repeat and I have 20 straight trades won on it so far. My previous setups allowed me with high wins as well but in Gold 2, the game has changed with very little wiggle room for any kind of situation where you have a draw down. Always make sure you're trading on trend, at the beginning of the trend is best as you can take profit and let 50% run or let an escort trade continue with a trailing stop loss or manual exit.

 
anil.baptist

Price action by itself is not enough. You need to use it in conjunction with support/resistance or trend lines. This will help you get a better understanding of which direction price will go next. Trading is about the trend and each person has to find out how to identify the trend in order to catch the moves.Try various strategies to find what woks for you.

 
dcolby

Thanks for sharing ideas, still looking for a good way to do it.

 
billrata

I just came back from a month of Price Action education and experience. It's really very interesting, as it started out to get through the 25-5-24. I think the best way to get going is just watch the flow with no indicators, and practice calling the next bar until it feels like a reflex, not a mission that your fate hangs from.

 
hakchinoy

Horizontal and trend-line R/S are a part of pure PA--not indicators. The whole point of trading with pure PA is to focus on the candles, and read what they're telling us. Please keep in mind that those lines are simply a convenience; the candles alone tell us everything that we need to know.

We know that a market is trending if continues to print candles with decent size bodies (especially off higher TFs).

"Trading is about the trend . . ."

Although traders who use a trend-following approach might agree with that line of thinking, it falls flat with other traders who trade ranges (myself included) or trade off sentiment.

 
JD

Context is an important part of trading PA (applies to any trading frankly). Knowing whether we're in a trading range or trend, and if trend, being on the right side of it. I find this makes it easier for me to determine whether to stay in the trade, or bail (i.e. becomes more objective and a little less emotional (just a touch :-)).

The other thing I find key to PA is watching the wicks. For example, a couple of back-to-back candles with long wicks near a support line or resistance is often a good sign to enter long or short (you need to enter close to the wicks though). If support/resistance breaks, you can often bail with a reasonably small loss, then re-enter when ever the direction becomes a little more clear.

 
hakchinoy

"I find this makes it easier for me to determine whether to stay in the trade, or bail (i.e. becomes more objective and a little less emotional"

The objectivity of pure PA is what sold me on its merits too. :) The shape of candle can indicate the amount of conviction or the lack thereof in the market (which is crucial in sentiment analysis).

 
marlis

Hello, i want share this idea from price action with you. I hope we can discus about this to get better.
I hope it can help us all

uptrend price action.png downtrend price action.png
 
Erik

You can also find very intersting you-tube films of Michael Storm for example: His "introduction to candlesticks and a whole lot more." He also use two EMA's and call it the river for price action.

 
Washingtonw

Some interesting links in this thread. Thanks for sharing

 
jtworkman

Some very good thoughts to explore in this threads
Thanks to all that contributed

 
andrewdonnellyjr

Nov 28, Wed 2018
Andrew's strategy is that he trades SR levels. That is buy support and sell resistance.
He likes to trade the higher time frames Daily and Weekly and execute on the any
of the lower time frames. Usually M1, M5.

 
tommybrandon_1

Here is a video that I put out a while ago about the principles for reading candlesticks and price action. You'll find that it's actually pretty simple once you learn the foundation of it.

But that is hard to do, since there are so many clowns on the internet pushing there "Bibles To Candlestick Formations." Or some other nonsense.

Enjoy the video:
https://youtu.be/Knbaw-POKGk

 
heparin68

you will find this to be a great site for pa. Lots of free vids and articles www.learntotradethemarket.com

 
jeremy.dancer

I struggle with price action as well. I am starting to think moving averages is better for me. At any time breaking news can change everything.

 
garylisrealtor

Hi all, I am newly Gold 2 and was working on my trades. Got my last entry "rejected" due to "max position limit" Gold 2 has only a $1,000.00 trading balance to begin with and I was placing .20 lot size trades. this resulted in hitting the "max position limit". Just a word to the wise for when you get to Gold 2 have in mind the small balance you are working with.

 
hampton11271

When using PA you first have to determine what type of entry your using. For example are you getting in as a position trader, Swing trader, or scalper. Once you decide the type of trader you use the time cycle and price cycle together along with using the support and resistance for perfect entry and take profits and stop losses. After entering into the trade you pay close attention to the wicks...because it's important that the previous candle closes beyond the wick in your direction that's letting you know it's still in that trend.

 
Rookie

@hampton11271, good post and
great clue, "it's important that the previous candle closes beyond the wick in your direction that's letting you know it's still in that trend."

 
triguylm1

Price action can mean five different scenarios! Yet only 2 directions?

I: meaning what is currently happening. . . so, more ups and downs as some times sellers are in control until a point when price reaches a support level and sellers begin to take profit, this helps the buyers take back control to a resistance level when buyers take profit and that helps sellers take control. Thus, a range bound market condition.

2. A news event occurs sending price bullish or bearish, this can last a few hours or many days.

3. Trending bullish: Market sentiment from continued bullish pressure relating to improving economy, for numerator currency, or bearish pressure if currency is the denominator. ie. US economy strengthening, is bullish for USD/JPY or bearish for EUR/USD

4. Trending bearish: Market sentiment from continued bearish pressure relating to economy recession, for numerator currency, or bullish pressure if currency is the denominator. ie. British crisis, is bearish GBP/USD or bullish EUR/GBP

5. Price cycle: Amount of price change from Pivot High to Pivot Low, ie. continued pattern provides accurate measurements.

Time Cycle: Depends on Time Frame! Basically; Amount of time required for the Price cycle to repeat. measured on any TF.

a. May include horizontal lines to indicate pivot highs and pivot lows = measurement for range trading on H4 charts
b. May include vertical lines to indicate time intervals between high volume and low volume measurements. 24 hour cycle
c. May include trend lines to indicate bearish runs or bullish runs. M15 chart

Also, reversal signals provide high probability entries. I prefer using the H4 chart when looking for swing trade reversals, since, price will generally trade within a 30 day price range more often than not. The reversal signal can come from using the 50 sma crossover strategy, or a simple Doji candle, or the 3 bar reversal. etc.