price action trading
TECHNICAL ANALYSIS SIMPLIFIED
01.INTRODUCTION TO PRICE ACTION TRADING .
THE TERM PRICE ACTION refers to the price movement which happens any security in a given period of time .
Jesse Livermore was one of the most significant practitioners of price action analysis . he was the one who invented price action trading in the 20th century .
the fundamental belief of price action is that price never lies , so price action methodology removes all the technical indicators and only basic price movement data is used to generate entry and exit signals for trade .
Jesse Livermore
life history:
born : 26 July 1877, Shrewsbury , Massachusetts , united states
died : 28 November 1940 (age 62 years ), Manhattan , new York , united states
children : Paul Livermore , Jesse Livermore jr.
spouse : Harriet Metz noble (m . 1933 -19440) ,Dorothea Wendt (m 1918-1932), Nettie Jordan
Jesse Lauriston Livermore (July 26, 1877- November 28, 1940 ) was an American stock trader. he is considered a pioneer of day trading and was the basis for the main character of reminiscences of a stock operator, a best - selling book by Edwin Lefevre . at one time , Livermore , at the time of his suicide, he had liabilities greater than his assets .
in a time when accurate financial statements were rarely published , getting current stock quotes required a large operation, and market manipulation was rampant, Livermore used what is now known as technical analysis as the basis for his trades . his principles , including the effects of emotion on trading continue to be studied.
some of Livermore's trades , such as taking short positions before the 1906 San Francisco earthquake and just before the wall street crash of 1929, are legendary within investing circles. some observers have regarded Livermore as the greatest trader who ever lived, but other have regarded his legacy as a cautionary tale about the risks of leverage to seek large gains rather than a strategy focused an smaller yet more consistent returns.
price action :
price action trading is also known as clean chart trading . price action trading takes place when you base your trading decision 9buying and selling) on the price behavior of any security .
in Gujarati, there is a famous saying related to the stock market which is the essence of price action trading -Bhav Bhagwan Che which means price is supreme . price action trader focus an what has happened and what is happing in the market as opposed to why it is happening.
basic principals of price action Trading :
before proceeding further , let me list out the main concept or principles an which price action trading is based .
01. support and resistance
02. candlesticks and chart patterns
03. Trends
04. markets reaction (price rejection , price acceptance )
05. structure of the market .
all these concepts will be discussed in detail in the chapters ahead in this page .
Now let us look at some advantages and disadvantages of price action trading .
Advantages of price action trading :
01. it helps you trade in real time - price action gives you the edge in real time frame as it does not include technical indicators most of which are lagging in nature as they are derived using past price and volume data .
02.easy to understand - as explained earlier, understanding price action is an easy task because you are only looking at just data pointes , which makes it easy to identify .
03.it is very simple to trade - if you can understand where to plot support and resistance then price action trading will become very easy for you . I have seen many people using a cluster of indicators and then identifying where to put buy and sell order which becomes a hurdle especially for newcomers because you have messed up with your trading setup and that is the reason i always believe in keeping the trading setup very simple and to my mind , it is a must thing to do in trading parlance.
* PRICE ACTION TRADING
No comments:
Post a Comment