If you are anything like me you've spent countless hours trolling forums for some kind of trading concept that would make money.  And inevitably at some point in the search some guru trader posted how he trades without indicators.  Apparently this rich fool trades a naked chart using nothing but this concept called "price action".  Most likely he went on to tell you to stop your search of indicators and start trading pure price action.  Score!!!  Wait, what actually is price action?  Price action is a term that is used a lot and sometimes incorrectly.  This has lead to massive confusion amongst learning traders who can't seem to find any good explanation of the ACTUAL concept, let alone a practical application of it that they could use to make money.  Lets end the confusion right here and now.

Price action in its purest form is the formation of individual candles in relation to one another.  But price action also takes into account the chart patterns and support and resistance zones in a market.  The simplest way to think about it is to compare it to candlestick analysis.  However, recognize that candlestick patterns and price action patterns are different approaches.  You won't find me looking for a Downside Tasuki Gap or a Marubozo candlestick pattern on any given day.  While many people consider price action patterns and candlestick patterns to be synonymous (and sometimes they can be) the primary difference in my opinion is this:  Candlestick patterns look to exploit areas where candles have told the truth - and price action looks to exploit areas where the candles have lied.

What's the benefit of chasing lies?  Because the mob follows the truth.  We all have heard 90-99% of traders lose money and if that is true then what does that tell us about the mob?  They are stupid, unprofitable, and on the wrong side of the market.  As price action traders we look to take the contrarian views of the mob.  In the markets 80% of the time the truth is the lie, and the lie is actually the truth.

Welcome to the best kept secret in trading.

The other advantage we have in price action is that we can trade real time information.  Every indicator known to man uses price as an INPUT to its calculations.  Thus, by definition, they all are lagging information.  Price is the only leading indicator and when you learn how to exploit it you can start trading in elegant and nimble ways previously unavailable to you.  This is how the pro's take your money time and time again.  It's not your fault you haven't been profitable - the entire game is stacked against you, you just didn't know it.

At Synergy4Trading we teach traders to catch the lie and pounce on the truth.