If It Looks and Acts like a Chicken, It's Probably a Chicken
A foundational concept in "pure" price action trading that underlies all trading decisions is that price will never "exactly" repeat itself. What I mean by exactly is that
current and future price will never be 100% identical to past price. At first glance it may seem the same, but when boiled down to the lower time frames, you'll notice
that current price is ever so slightly, different from past price. This makes more sense from a philisophical point of view.
If the markets are a living breathing entity just like you and I, it makes sense that past price will never repeat itself to the perfect degree. Similiar to the way you
and I, as humans, will never be identical in terms of actions, thoughts and biological makeup when compared to past versions of ourselves. Now, if the price action
trader views the markets in this way, it can make a non-price action trader confused as to how a price action trader can profit from a chaotic entity such as the
market. Afterall, a price action trader solely uses price to analyze the future direction of price. Let me explain to you how.
We all know the phrase, "If it looks and acts like a Chicken, it's probably a Chicken". Meaning that if the characteristics of a chicken are there, well.... it's probably
a chicken. Infering that 100% confirmation that a chicken is in fact, a chicken, is not nessecary for a chicken to qualify as a chicken. It's the same in price action
trading. If your price analysis dictates that price will go up, even though there are some pieces of the puzzle missing in your analysis, your analysis qualifies as
legitimate analysis. Now don't get me wrong. Just because your analysis qualifies as legitimate analysis doesn't mean price will follow in suit. That's an entirely
different subject. The point I'm trying to get across in this post is simple.
Price Action analysis cannot be so rigorous that you must wait for a 100% replication of past price. Simply for the reason that past price will "never" identically
repeat itself. This pitfall of waiting for perfect replications of past price leads to the trader becoming overly conservative. Causing you to miss out on trades
that had sufficient analysis, but was missed out on due to the "misunderstanding" that past price repeats itself. So the next time your analysis states that price
should go up; don't let the inevitable nature of markets to never repeat itself stop you from entering that trade. Remember! If it looks and acts like a chicken,
it's probably a chicken.
I hope this helps!
Have a great day!
Ken
current and future price will never be 100% identical to past price. At first glance it may seem the same, but when boiled down to the lower time frames, you'll notice
that current price is ever so slightly, different from past price. This makes more sense from a philisophical point of view.
If the markets are a living breathing entity just like you and I, it makes sense that past price will never repeat itself to the perfect degree. Similiar to the way you
and I, as humans, will never be identical in terms of actions, thoughts and biological makeup when compared to past versions of ourselves. Now, if the price action
trader views the markets in this way, it can make a non-price action trader confused as to how a price action trader can profit from a chaotic entity such as the
market. Afterall, a price action trader solely uses price to analyze the future direction of price. Let me explain to you how.
We all know the phrase, "If it looks and acts like a Chicken, it's probably a Chicken". Meaning that if the characteristics of a chicken are there, well.... it's probably
a chicken. Infering that 100% confirmation that a chicken is in fact, a chicken, is not nessecary for a chicken to qualify as a chicken. It's the same in price action
trading. If your price analysis dictates that price will go up, even though there are some pieces of the puzzle missing in your analysis, your analysis qualifies as
legitimate analysis. Now don't get me wrong. Just because your analysis qualifies as legitimate analysis doesn't mean price will follow in suit. That's an entirely
different subject. The point I'm trying to get across in this post is simple.
Price Action analysis cannot be so rigorous that you must wait for a 100% replication of past price. Simply for the reason that past price will "never" identically
repeat itself. This pitfall of waiting for perfect replications of past price leads to the trader becoming overly conservative. Causing you to miss out on trades
that had sufficient analysis, but was missed out on due to the "misunderstanding" that past price repeats itself. So the next time your analysis states that price
should go up; don't let the inevitable nature of markets to never repeat itself stop you from entering that trade. Remember! If it looks and acts like a chicken,
it's probably a chicken.
I hope this helps!
Have a great day!
Ken
Forex Trader/Forex Trading Education/Weekly Forex Forecasts and Midweek Forex Analysis
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