The Value of Trading Price Action

What is price action trading?

A core principle of day trading should be the ability to analyze market conditions and make sense of price dynamics that occur on a “naked” chart in centralex real-time. Price-based trading is the manner in which professional on the floor trade today; without the use of indicators or other technical tools. Many online traders have grown accustomed to relying on indicators instead of focusing on price alone. Far too often, these indicators need constant optimization to ensure relevancy for the market being traded. Additionally, indicators lag behind price. Price action is the truest connection that a trader can have to the market, and therefore, should be the sole factor in determining how to day trade.

Price-based trading is timeless. Once a trader is equipped with the knowledge to take on the markets, he or she can instantly recognize setups that will lead to consistent profits. Adversely, indicators may have a shelf life – a time when the indicator was most effective may have passed. Price trading is always relevant, as it trades on the overall behavior of price, not a single strategy used by oscillators, Bollinger Bands, or other highly mechanical approaches. Additionally, price action works for a broad spectrum of market types. The method has been known to be an effective day trading strategy for nearly all futures, currencies, indices, Forex and even stocks.

Price action trading is adaptable

Blackbox strategies, indicators and detailed technical analysis all have one fatal flaw. The flaw is that these approaches are far too specific to work on a day to day basis. Markets are inherently unpredictable. A greater reliance on a mathematical formula equates to a stricter the approach. Strict approaches may produce very few trades on a daily basis. Some days may have zero trades. When a trader cannot make profit on a day to day basis, he or she is likely to switch markets. Such overly acute approaches require the reconfiguration of indicators or the entire method. For example, if an E-Mini trader’s indicator cannot identify any profitable setups, the trader is likely to move to another market, say the Euro. This trader may not be aware that the indicator is not meant to work for the Euro, or if he or she is, if the indicator requires optimization to work for this new market. Blackbox strategies are a hassle and may have catastrophic results if the trader decides to experiment.

On the contrary, price action trading is pure market observation and interaction. Using objective, black and white rules, a trader may place trades by understanding the market. Since such strategies are based on an underlying understanding of how markets work, price traders are better suited for anticipating future market activity. Day Trade to Win is a day trading education company that focuses exclusively on teaching traders how to day trade using objective rules.

Price action simplifies trading

Traders who rely on software to dictate the direction of price often share a “more is better” mentality. Traders who use indicators share this misconception by filling charts with indicators, thus cluttering up price display. Most indicators do not work harmoniously with one another. More than likely, they will produce conflicting signals, thereby confusing the trader.

Price is the defining ingredient that all traders are required to observe, regardless of preferred trading method. Day Trade to Win uses a razor-like approach, cutting through unnecessary chart data and getting to the point. Each day trading course is meant to work in conjunction with the others; providing an overall strategy to filter trades and take profit consistently.

Price action applies time of day concepts

When trading, recognizing time of day and how price is moving is highly important. The E-Mini for example, traders differently during from 9:30 a.m. – noon then it does in the afternoon and evening sessions. Day trading strategies that recognize these differences are leaps and bounds ahead of indicators and automated strategy. The open outcry session often defines the overall trend for the day, as major financial institutions push and pull the market during these hours. Taking this behavior into account allows price traders to get a better idea of how price will plot during the rest of the day. Day Trade to Win shows traders how to split up the day into recognizable patterns and how to best take advantage of these sessions.

Price action builds confidence

Learning to trade the market with price action strategies allows traders to place traders based on their own knowledge and understanding instead of relying on a third-party to call the shots. Confidence is an important part of a trader’s psychology, as too much can create overspending and too little can cause traders to miss out on profits. Price action trading demystifies the markets, proving gut instincts do not work. Trading on what is seen rather than what a source is advising is refreshing.

Price action works for all day trading platforms

This form of trading requires a fast, real-time data feed, an effective strategy and software that can allow a trader to apply that strategy. Traders who learn how to trade price properly from Day Trade to Win are armed with strategies that work for any day trading platform. While John Paul’s day trading courses usually depict NinjaTrader, price action can be used with any software: eSignal, thinkorswim, TradeStation, MetaStock, MetaTrader, and others. A requirement for any price action trader is a fast, live data feed. Within the last five years, the price of connecting to data feeds like Kinetick, Zen-Fire, etc. is dropped, making fast connections much more accessible. Software platforms like NinjaTrader allow traders to use a variety of data feeds, based entirely on the user’s preference