Price Action Trading
What is Price Action Trading?
Price action is the art of picking out winning trades (and filtering losing trades) based on observing price as it is plotted on a day trading chart. Day Trade to Win teaches traders how to use price action exclusively through its many courses and educational programs. The ability to read price is paramount for successful trading. Taking trades based on observed market conditions is a much more adaptive strategy as compared to strict indicator approach.
Day trading software platforms such as NinjaTrader, TradeStation, thinkorswim, MetaStock, etc. graphically represent market data using graphs. On standard charts, time is usually plotted along the horizontal (x) axis whereas price is vertical (y). Over the course of a trading session, price is plotted chronologically, from left to right, using a trader's symbolic choice. The most common representation used for price action trading is the candlestick.
Understanding candlestick formation can seem challenging at first. Generally, a Long candlestick body is a light color (such as green or whitet) and short bodies are usually a dark color (such as red or black). Each candle consists of other two parts besides the body: the upper shadow and the lower shadow. The upper shadow is the line that may appear above the candle's body (box). Likewise, the bottom shadow is the line below the body. On a long candle, the upper shadow indicates the high and close positions and the lower shadow indicates the open and low positions. Conversely, a Short candle's upper shadow shows the high / open positions and the low shadow shows the close / low positions. Many candlestick varieties exist that are used to describe formations such as Marubozu, Spinning Tops, Shooting Stars, Doji, etc. Being able to identify each candle type is not required for Day Trade to Win's price action day trading courses. Instead, the DTTW day trading courses emphasize the recognition of candle stick patterns; "setups" as they are called that indicate price will either climb or fall in the near future. Knowing in advance that price will soon change in direction is shared among the DTTW courses. Advanced knowledge lets traders place orders ahead of others; preventing slippage with a greater chance of getting filled.
When implemented correctly, price action trading may exceed the success rates of indicator based trading. Black box indicator systems are often hardcoded to perform a specific strategy and therefore require additional optimization. Even if the indicator is ultimately correct in advising a long or short trade, the signal may arrive too late to actually use. Additionally, the indicator may not advise profit targets or stop losses, thus disregarding fundamental safety nets that serve to minimize risk. Keep in mind, this is a best case scenario. Price action techniques taught by John Paul of Day Trade to Win are mostly cross compatible with the E-mini and other markets like the Euro (6E) and Crude Oil (CL). Indicators are usually designed with one market in mind, and in some cases, can only be traded upon during specific hours or other conditions. Finally, indicators can be costly. To provide the same level of compatibility across multiple markets, additional indicator purchases may be required. Price action is relatively universal, although some day trading programs at DTTW focus on the E-mini exclusively.
As mentioned earlier, a key concept in successful price action trading is adaptability. Markets go through periods of stagnation where nothing really happens. Contrarily, there are times when markets are too volatile to trade; for example, after a major news event or a rare market glitch. John Paul's day trading courses at DTTW take into account what the market can produce at any given time. For example, the Atlas Line® software is best accompanied by the ATR (average true range) which indicates how much the market can substantiate point-wise. If the Atlas Line says to go Short during a highly volatile period, the ATR may dictate a tighter exit strategy to avoid large potential loss. Furthermore, the angle of the plotted Atlas Line® can be used to take trades: short trades if price is below the line and long trades if price lands above. A second point for adaptability is time of day. Day trading courses like the ATO (At the Open) center around price conditions at market open. Price trades differently during the morning open outcry session than it does midday, in the afternoon near market close and then changes again afterhours. Since price action is geared around understanding real-time data, traders can engage the markets at any time of day with certainty.
Deciding on the best price action day trading course depends on your needs as a trader as well as preferred learning method. Day Trade to Win covers all the bases, whether trading a single contract in the E-mini as a beginner retail trader or trading 10 contracts in the Euro currency for a private firm. In addition to the ATO and Atlas Line® (which were already discussed), Day Trade to Win teaches trades how to scalp trade through two distinct courses: The Trade Scalper and the Price Action Scalping course. The Trade Scalper can be used on markets besides the E-Mini and can be traded 24 hours a day. The Price Action Scalping Course focuses on just the E-mini and has its own unique plan of attack using 250 tick charts. These two courses are not to be confused with the Power Price Action course, which teaches multiple methods of price action, with the crown jewel being the Blueprint Trade. This course contains four DVDs a training workbook and live instruction, a bit more than standard eBook courses. Day Trade to Win's most complete price action training is offered in the Private Mentorship course, a personal coaching program that lasts for eight weeks. Instruction is offered individually or one-on-one. All of the price action techniques known by John Paul are taught. In addition, each trader is provided a unique login to replay videos recorded during each live trading session. In short, Day Trade to Win covers the gamut on price action like no one else out there does. If you are going to learn one method of trading, make it price action.