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Old 02-20-2008, 01:24 AM   #1

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Trading with PA "No Indicators"

I joined a google group of traders that trades with price action alone. They use support and resistance areas from higher time frames and use multiple time frames down to 5, 8 or 16 tic charts for entry. The theory is based on six possible scenarios. A double top or lower high, these are both high failures, a double bottom or higher low, these are both low failures and higher highs and lower lows. If the low or high failure takes place at significant enough support or resistance there may be a trade to be had. I've attached (hopfully) 3 charts of 777 tic, 110 tic and 16 tic that is annotated. This is not something I put together. One of the traders in the group did to describe the method they trade by. I posted it for the interest of others and I'm also curious of the opinons of the followers of TL. I for one have struggled a great deal with the right indicator, TS add-on, timeframe blah blah blah and to tell you the truth this makes very good sense to me and If I use it with pivots and VAL POC and VAH for S/R I'm hoping it will have some merit. I'm fairly new to trading, so I'm hoping others with more experience will give thier thoughts.

David
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Old 02-20-2008, 02:44 AM   #2

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Re: Trading with PA "No Indicators"

Sounds very interesting. I think this method, or price action trading, in general is the way to go.

PP has shown a similar idea with 2 timeframes. 1 has various important "pivot" or "Key" levels and the other is used to make trades off of based on price/volume action at these levels.
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Old 02-20-2008, 05:56 AM   #3

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Re: Trading with PA "No Indicators"

I use mainly price action with S/R areas and chart patterns, sometimes with volume and Fibonacci to trade. It's the right way to learn to trade without too many indicators. Price action tells alot more than indicators since they are derived from price. You're on the right track but that's just me. I'm sure others have their own opinions on this.
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Old 02-20-2008, 08:29 AM   #4

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Re: Trading with PA "No Indicators"

Quote:
Originally Posted by drsushi »
I joined a google group of traders that trades with price action alone. They use support and resistance areas from higher time frames and use multiple time frames down to 5, 8 or 16 tic charts for entry. The theory is based on six possible scenarios. A double top or lower high, these are both high failures, a double bottom or higher low, these are both low failures and higher highs and lower lows. If the low or high failure takes place at significant enough support or resistance there may be a trade to be had. I've attached (hopfully) 3 charts of 777 tic, 110 tic and 16 tic that is annotated. This is not something I put together. One of the traders in the group did to describe the method they trade by. I posted it for the interest of others and I'm also curious of the opinons of the followers of TL. I for one have struggled a great deal with the right indicator, TS add-on, timeframe blah blah blah and to tell you the truth this makes very good sense to me and If I use it with pivots and VAL POC and VAH for S/R I'm hoping it will have some merit. I'm fairly new to trading, so I'm hoping others with more experience will give thier thoughts.

David
David,
Nice examples, thanks for sharing.

My 2 cents on this type of trading:

1) It can work and be very profitable.
2) It takes TIME to get it down however.
3) Drawing those S/R lines in REAL TIME can be challenging.
4) Exits are key to whether you have profitable or failing trades.

The biggest issue is where to exit on these type of trades. Do you simply wait for a reversal or MIT an order at/near the next level or take a fixed profit? Depending on what you choose, that can be the difference between a profitable trade and a loser.

You also posted this in the candlestick corner, so I would mention that using your S/R lines in conjunction with candlestick patterns that confirm an area is being defended is a great combination!

Good luck and keep the thread going!
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Old 02-20-2008, 12:31 PM   #5

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Re: Trading with PA "No Indicators"

Brownsfan,

I agree with everything you said. My thought is to use floor pivots (daily, weely, monthy, yearly) and MP value areas and POC's as support and resistance levels and see how pirce action behaves around those areas. Also, my assumption is that if I stay with the trend on a higher time frame that will reduce risk. I hope that is an accurate statement. Also, my intension would be to use specifc targets for profit such as 4 tics, 6 tics and then moving my stop to B/E or B/E +1tic and letting my other 1/3 of the position run, but manage the trade and take profit at s/r. The last 1/3 should be a free trade at that point based on profit of the first 2/3 and moving the stop. This would be on the ES. I'm not looking to make a fortune in a day. If I can do what I just described on a consistent basis I would be very satisfied. Am I out of my mind or is it reasonable?

David
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Old 02-20-2008, 01:53 PM   #6

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Re: Trading with PA "No Indicators"

Quote:
Originally Posted by drsushi »
Brownsfan,

I agree with everything you said. My thought is to use floor pivots (daily, weely, monthy, yearly) and MP value areas and POC's as support and resistance levels and see how pirce action behaves around those areas. Also, my assumption is that if I stay with the trend on a higher time frame that will reduce risk. I hope that is an accurate statement. Also, my intension would be to use specifc targets for profit such as 4 tics, 6 tics and then moving my stop to B/E or B/E +1tic and letting my other 1/3 of the position run, but manage the trade and take profit at s/r. The last 1/3 should be a free trade at that point based on profit of the first 2/3 and moving the stop. This would be on the ES. I'm not looking to make a fortune in a day. If I can do what I just described on a consistent basis I would be very satisfied. Am I out of my mind or is it reasonable?

David
Can it be done? Of course!

Will it be easy? Of course NOT.

The premise sounds good now it's a matter of testing in real-time and see how it goes. Feel free to start a new thread or continue in this one about what/how you are using your ideas.

Good luck!
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Old 02-20-2008, 02:49 PM   #7

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Re: Trading with PA "No Indicators"

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Originally Posted by brownsfan019 »
David,
.......
3) Drawing those S/R lines in REAL TIME can be challenging.
............
That is why it might make more sense to use static levels that are plotted before the day starts.

I have not read the book so I can't recommend it, but there is a book specifically about this type of method called "Price Action Trading".

Some levels to think about could be:

1. MP levels (POC, VAH,VAL)
2. Yesterday's High (YH)
3. Yesterday's Low (YL)
4. Day Before Yesterday's High (DBYH)
5. Day Before Yesterday's Low (DBYL)
6. Key numbers (aka Floor pivots)
7. Actual pivot levels-places where the market did react/retrace/stall.
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Old 02-20-2008, 03:13 PM   #8

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Re: Trading with PA "No Indicators"

And of course the next question is - what levels do you use and why? Use them all and your chart will look like a mess of horizontal lines everywhere. If you put enough lines on your chart, some will look like they nailed the HOD or LOD. Some will just get in your way.

And the follow up question: are static, fixed lines that are based on YESTERDAY'S price action good for determining TODAY'S price action? Food for thought.
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