Trading with PA "No Indicators"

[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

[CandleWhisperer]

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.

[torero]

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.

[brownsfan019]

	Quote:	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!

[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

[brownsfan019]

	Quote:	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!

[CandleWhisperer]

	Quote:	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.

[brownsfan019]

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.

[drsushi]

I agree with the point that drawing the s/r lines can be a challenge. I believe the folks in the group do as you stated ant drawing them in advance such as the night before. Some S/R levels can be intraday levels as well. I like the concept of using floor pivots and the MP levels and I think that YH and YL are valid as well. One doesn't have to have every line on a chart. Actually, what I do in TS is have multiple workspaces. One workspace may be my Market profile workspace with POC;s and VAH and VAL. I then have a seperate workspace for pivots. It's farly easy to switch tabs. If price starts to approach a level one can go to a lower time frame chart with no lines, or draw in one horizontal line where price is approaching and see how it starts to react. I use pivots and MP by Suri Dudella and his stuff can be broadcast to as many charts as you want. So if I have a daily chart as a source chart of pivots, for example, I can braodcast the pivots to any chart of any other timeframe. I don't have to draw anything. This is not a pitch for his stuff it just works for me.

David

	Quote:	CandleWhisperer
	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.

[torero]

	Quote:	drsushi
	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

This won't fly. The market does what it does and won't move to your rhythm at 4 or 6 ticks and expecting it not hit your breakeven. This is what price action is all about: reading what the price tells you where the nearest low is and nearest high and respect these level. You should be putting your stops above or below and not a fixed tick number then use S/R as your target and/or stop loss levels. The 2 go hand in hand S/R and price action.