Online day traders can be separated into two categories:
1.) Those who live and die by third-party chart data, as it is presented by applications called “indicators”.
2.) Those who make trading decisions based price only (similar to real-world floor traders).
John Paul from DayTradeToWin has finally put the dispute to rest in the first round of his article. See which method of trading is better: price action or indicator-based trading.
A trading indicator needs price to first to make a move up or down. Once this move is made the Indicator takes what just occurred and plots a point – line – bar – graph on the chart. The indicator by definition is already late in providing information to a trader about a move up or down in the market which has already occurred.
One may assume that using price alone as an indicator would be foolish; as analysis performed on-the-fly by number crunching advice spewers would be far superior to the observation and analysis of the human mind. We have to remember that the large players in the markets are not robotic traders. They know precisely when they want to enter and exit and how much to invest. The market can be manipulated to their interests, thus removing the predictability indicators have come to rely on. How many times has an indicator advised you incorrectly when price indicated otherwise?
Defintely, without a doubt, Price Action is the way to go!! I heard John Paul’s interview with Tim Bourqoin about this topic and it’s quite insightful. Everyone should check out the interview and John Paul’s website which I recommend.
-Chris
thanks John Paul for sharing with us the Price Action trading!
I am following John Paul and day trade to win for almost 2 years now already and he always stay in front of the game by 2 steps. John also has a few price action day trading interviews on the day trade to win website, worth checking out.