Price Action Trading versus Indicator Strategy
* Both Price Action traders and indicator traders will make all of their trading decisions using a price chart and they will both determine which direction the market is likely to move in using just the market price. The big difference between the two, is in the way they both analyze the price to make predictions about the future.
* The Price Action traders always say Price Action Trading is better because it doesn’t lag behind the markets action, whereas the indicator traders state that trading with indicators is simpler than trading with Price Action, because you only have to lean what the indicator is showing you in order to use it, you don’t have to learn about lots of additional things like candlestick patterns, support and resistance levels, trend lines etc.
* Price Action traders will typically tend to analyze the current market price in relation to the past market price to figure out which direction the market is likely to move in, whereas indicator traders will only analyze the past market price to try to find out where the market is going to move. All indicators are derived from past market prices, which essentially means the indicator traders are trying to predict the future using only the past. Price Action traders do this too but with one very important difference, they are trying to predict the future by combining what happened in the past with what’s happening in the present.
* A typical Price Action Trading Strategy will be one where the Price Action trader will determine a level in the market that’s formed based on the past price history, and then watch the price to see what happens when the market returns to the old level. If the market comes back to the level and produces a Price Action Pattern the trader has knowledge of, he could see that as being a sign the market wants to reverse and move away from the level, in which case he may enter a trade to try to make some profit from the reversal.
* Now the main difference with indicator traders is they make all of their decisions on things which have happened in the past, they don’t combine the past with the present like Price Action traders do, they just use the past. This is how most Price Action traders trade, they either use the past combined with the present to make their trading decisions or they just base their decisions solely on what’s happening in the present.
* Price Action is highly accurate trading strategy as compared to Indicator. Both are suitable for Intraday & Positional time frame. It is mainly depended on traders choice.
* Price Action is mainly based on automatic trend line pattern, support - resistance triangular breakout, candlesticks pattern, volume analysis and many other technical logic while indicators work only based on their parameter, average price value of previously plotted data and mathematical formulas.
* Price Action trading setup is based on only manual process, while indicator strategy is based on fully automated mechanical functions by predefined mathematical formulas.
* Price Action supports any time frame to get the optimize result but trading indicator considers only few suitable time frame for the best output.
* Price Action trading follows different types of break-out pattern like Descending Triangle chart pattern, Ascending Triangle chart pattern, Symmetrical Triangle chart pattern, Open-Range Break-Out pattern and Trend lines extension etc but Trading indicator has nothing any pattern like these.
* In presenting Price Action method, the amazing features of volume pressures that define entry and exit at the reverse swing point, In another way indicator depends on Average price movement of specific time period.
* Price Action trading gives you a clear view to analyze the market sentiment, as compared to trading indicators.
* Price Action method has a core level filtration which avoids any false break-out by volume analysis techniques in contrast to Trading indicator doesn't have this filter process.
* Some traders can see indicators as making charts messy and cluttered versus just price action. The truth is you can use too many indicators and confuse yourself with conflicting signals.
* Both Price Action and Technical Indicators can be quantified and back-tested and used as trading signals. So whichever one you can use, both trading Price Action or technical indicators are usually much better strategies than trading based off your own or other’s opinions or predictions. Nowadays Price Action Trading is trendier than only Indicators.