Date:Fri Nov 15 2024Tokyo:23:22Sydney:1:22New York:9:22London:14:22CET:15:22
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Learn Price Action - How to Start!
Okane
Posts: 1,282 admin
Posts: 1,282 admin
Price Action is different for everyone! How can you Start Learning?
Since Price Action is reading the data on the charts, everyone has their own way of interpreting details in every situation.
As Dr Thomas K. Carr, the author of Trend Trading for a Living puts it: “Reading charts is a hermeneutical problem”. He means that finding details on the charts is a question of interpretation.
What looks like an uptrend for me, might look bearish to someone else.
Furthermore, our tools, strategies, methods, expiries, assets, indicators and much more can vary from person to person. Nevertheless, we have to start somewhere. You can’t just ditch all your indicators and say “well, from now on I will do Price Action”. That’s not really how it works. You have to understand what to look for and plenty of experience is required! In these series about Price Action I will try to explain what PA is for ME.
Requires Experience – Trial and Error!
You can’t expect to learn Price Action in one day. Unlike a simple strategy, PA requires lots of experience. You must’ve had your share of losses, wins, frustrations, hopeless moments and you know the rest…
Best way to skill up quickly is trial and error. The more time you spend on reading charts, back testing, looking for patterns etc. the faster you learn. I strongly recommend that you only trade/study one asset. I know that for newbies this does not make any sense. They have their strategy that they think will give them an 80% win rate and are too greedy to trade less than 20 pairs at the same time. Been there, done that!
What they don’t understand is that some details on the charts can only be seen when they are familiar with an asset very well. Most successful traders I know restrict their trading on 1-3 assets and that’s it.
Price Action is Many Things
Price Action is many things but in the end it is all about identifying possible market incidents!
For me, it is about answering the following questions to begin with:
- Which price level are the candlesticks most likely to move towards next?
- Will there be a stop and a possible retracement there?
- Which is the overall trend, short trend and long term trend?
- Which obvious or reoccurring patterns can be observed?
In addition we also have our own rules that works well with our own unique strategy and hence, we have some other questions we have to answer before we are able to take action!
Of course, these rules vary from trader to trader but Thomas K. Carr suggest at least 3 rules and I totally agree with him.
Can I Use Indicators?
This question can sometimes lead to endless fights about what Price Action is or isn’t.
In my opinion, just because you are using price action, it does not mean you can’t have an indicator or two. However, I don’t recommend using more than 2 or at most 3. You want to base most of your analysis off of the charts and the subjects I brought up above. Spending time on interpreting 4-6 or 10 indicators will just not work out for you. It will leave you less time for analyzing charts and that’s why you can’t call it price action anymore if you spend it all on reading indicators. Furthermore, I believe that anything on the chart that gives you any hints about the market is actually an indicator. Candlesticks, support and resistance lines, the price, the time, the trend and you name it. So we already have plenty of indicators right there on the charts!
Video Walkthroughs
I will share what I know through videos because it is easier than writing.
I can’t just make a video and say this is Price Action. The best way to approach this subject
is to break it down to smaller subjects. At the end we can put it altogether but the last part, the experience, is something I can’t provide you with. That’s where the trial and error part comes in. Please do share your personal diary so you can learn from your mistakes and help others in the process.
Remember these will be explanations of how I use PA/analyze my charts. I don’t care nor am I interested in how others do PA because this is already working well for me, I’m not here to compete with anyone. I just want to share my experiences.
1. Trends – What do I look for?
Trend Video:
https://www.youtube.com/watch?v=vsHJi5Zepgs
2. Support & Resistance – How do I draw them?
https://www.youtube.com/watch?v=fPXATvU4Ti8
3. Patterns – Time and Retracements
https://www.youtube.com/watch?v=7WL85KvLXCY&feature=youtu.be
4. Putting it together in action
You can ask questions here!
Stay tuned for the first video
Latest article on Price Action:
http://www.binaryoptions.net/blog/okanes-trend-targeting-price-action-technique/
Since Price Action is reading the data on the charts, everyone has their own way of interpreting details in every situation.
As Dr Thomas K. Carr, the author of Trend Trading for a Living puts it: “Reading charts is a hermeneutical problem”. He means that finding details on the charts is a question of interpretation.
What looks like an uptrend for me, might look bearish to someone else.
Furthermore, our tools, strategies, methods, expiries, assets, indicators and much more can vary from person to person. Nevertheless, we have to start somewhere. You can’t just ditch all your indicators and say “well, from now on I will do Price Action”. That’s not really how it works. You have to understand what to look for and plenty of experience is required! In these series about Price Action I will try to explain what PA is for ME.
Requires Experience – Trial and Error!
You can’t expect to learn Price Action in one day. Unlike a simple strategy, PA requires lots of experience. You must’ve had your share of losses, wins, frustrations, hopeless moments and you know the rest…
Best way to skill up quickly is trial and error. The more time you spend on reading charts, back testing, looking for patterns etc. the faster you learn. I strongly recommend that you only trade/study one asset. I know that for newbies this does not make any sense. They have their strategy that they think will give them an 80% win rate and are too greedy to trade less than 20 pairs at the same time. Been there, done that!
What they don’t understand is that some details on the charts can only be seen when they are familiar with an asset very well. Most successful traders I know restrict their trading on 1-3 assets and that’s it.
Price Action is Many Things
Price Action is many things but in the end it is all about identifying possible market incidents!
For me, it is about answering the following questions to begin with:
- Which price level are the candlesticks most likely to move towards next?
- Will there be a stop and a possible retracement there?
- Which is the overall trend, short trend and long term trend?
- Which obvious or reoccurring patterns can be observed?
In addition we also have our own rules that works well with our own unique strategy and hence, we have some other questions we have to answer before we are able to take action!
Of course, these rules vary from trader to trader but Thomas K. Carr suggest at least 3 rules and I totally agree with him.
Can I Use Indicators?
This question can sometimes lead to endless fights about what Price Action is or isn’t.
In my opinion, just because you are using price action, it does not mean you can’t have an indicator or two. However, I don’t recommend using more than 2 or at most 3. You want to base most of your analysis off of the charts and the subjects I brought up above. Spending time on interpreting 4-6 or 10 indicators will just not work out for you. It will leave you less time for analyzing charts and that’s why you can’t call it price action anymore if you spend it all on reading indicators. Furthermore, I believe that anything on the chart that gives you any hints about the market is actually an indicator. Candlesticks, support and resistance lines, the price, the time, the trend and you name it. So we already have plenty of indicators right there on the charts!
Video Walkthroughs
I will share what I know through videos because it is easier than writing.
I can’t just make a video and say this is Price Action. The best way to approach this subject
is to break it down to smaller subjects. At the end we can put it altogether but the last part, the experience, is something I can’t provide you with. That’s where the trial and error part comes in. Please do share your personal diary so you can learn from your mistakes and help others in the process.
Remember these will be explanations of how I use PA/analyze my charts. I don’t care nor am I interested in how others do PA because this is already working well for me, I’m not here to compete with anyone. I just want to share my experiences.
1. Trends – What do I look for?
Trend Video:
https://www.youtube.com/watch?v=vsHJi5Zepgs2. Support & Resistance – How do I draw them?
https://www.youtube.com/watch?v=fPXATvU4Ti83. Patterns – Time and Retracements
https://www.youtube.com/watch?v=7WL85KvLXCY&feature=youtu.be4. Putting it together in action
You can ask questions here!
Stay tuned for the first video
Latest article on Price Action:
http://www.binaryoptions.net/blog/okanes-trend-targeting-price-action-technique/
Comments
looking forward to see the video.
As you saw, I rather drew my lines on a higher time frame not on M5 like in your picture.
Please watch the video at least a couple more times because there are many details to digest!
I will make another one about S/R shortly so you will understand more.
What if S/R lines of different time frames meet at a point. Does that make it a very strong point?
Thanks alot.
resistance was on the daily chart. Please watch the video a few times because there are so many details that might go over your head
if you are new to trading. Anything else not clear let me know!
Also, keep in mind that this is only step one in the analysis. You have to do more before you execute a trade, that's why there are a few more
videos coming up! So bare with me
Please watch the video at least a few times before asking questions.
Some of the things you wonder might already be seen in the video.
I have spent time and made an effort to make these educational videos so the least I expect is that you
also make an effort and take a look at them thoroughly and carefully. Much appreciated!
Of course, if you still have questions feel free to ask but see if anyone else has already asked the same question before you or not? Enjoy!
Video 2 is done and will soon be uploaded
Please re-watch lesson 1 and also watch the new video at least a couple of times
and give it some time to sink in. If there are things that are unclear let me know!
There will be at least one more video coming up, so the series is not finished yet as
there are many subjects to talk about.
Please watch them several times because there are so many details.
Let me know if you have questions and stay tuned for video 3.
"Okanes Price Action - Lesson 3, Time Patterns"
I Have three questions:
1. About S/R lines, the more it touches candles, the more powerful is it? sometimes, it touches about 3 different points, does that make it more stronger? isn't it dangerous that when it touches over 3 points, that it will surely break it on the next point?
2. Is it better to draw the lines on the opening/closing of candles or the wicks? - however, in your last part of the video, we can see that it didn't touch the candle or the wick, but it was near it. which is really confusing sometimes regarding entering the trade.
3. My final question, It really happens that 4H, 1H or Daily,4H meets at the same S/R levels, does this make it more powerful?
Thank you very much, and sorry for this mass of questions
Let me try and explain, those are difficult questions to answer.
1. You have to view this in two different ways. Firstly, yes more touches means stronger S/R line/area.
But, for example sometimes like last Friday you could see on the M5 how price kept consolidating in a short range
until it broke the support. In those cases you would have more luck taking the touches on the resistance instead of the support
because you knew the overall trend was bearish so once it broke you would be safe. On the other hand, many touches on an hourly or daily chart
is slightly different. They are still strong, stronger than lower TF but 10 touches on a daily chart means 10 days! Whilst the EUR/USD touches on the M5 was just during one day, an interval of few hours only so yes you would expect it to finally break soon. In the video you saw that price did break the resistance I mentioned it would reach but I still managed to pull off a put option without losing. Why? Because that resistance was HUGE, was on a daily chart and despite the many touches we knew there will be enough sellers in the market to allow for a small window for you to take a put option. So in that case, I was aware that, just like you said, due to too many touches it could break above R, which it did but that wasn't problem for me. IF the same R was drawn based on just candle touches during a few hours I would probably have lost that trade. Hope is not that confusing?
2. The thought process here is to identify where price closed. In the video I had placed my line above where candles closed because if you look to the left you see a big bearish candle that I also mention in the video that is of great importance. Because of its size we would know there are huge sellers in that area. Also, my line was at 1.10420 because, from experience me and many other EUR/USD traders have experiences that level "42" (42 pips) is a price where "things happen" so if my line is near a level 42 I try to adapt it and put it as close as possible to that price. Furthermore, price might not close at your line but might just reach up and touch it and for me that's when I want to enter. Also, you can get help from EMA's when you adjust your lines but watch candles closely, scroll back in time and find more valid touches and big falls or rises.
3. Did you mean it "rarely" happens? I'm not sure what you mean but if you draw a line on H1 on MT4 it will be shown on all other timeframes, from there I will scroll down to M1 and wait for price to touch or get as near as possible to my line before entering.
By the way, remember other things must be valid before you enter a trade, like trend, S/R lines, time that I spoke about, highs and lows, Stochastic etc.
on 1) i can understand, that daily or longer Time frames, are really stronger than 5m, or 15 mins. so, in that case (on your 2nd video) you took 30 mins trade in case it would break the price for sometime.
yes for 2
on 3) thats right, if you draw for example H4 S/R, and draw another s/r for 30 mins, it could happen that both of these timeframes meet at the same level. As you know, with higher timeframes, price might break, and we can draw multiple other S/R lines on lowertime frames. But from my humble experience i would say, when highertime frames and lower time frames s/r points meet at the same level, it makes it stronger to enter a trade..This is what you do, when the price touches your daily s/r and you get to 1M time frame to go for the best trade (with other indicators, like Stochastic..)
So you have to bear that into consideration. Also, the same S/R level might be touched by both wicks and candle closes.