O'Reilly logo

Trading Tools and Tactics: Reading the Mind of the Market by Greg Capra

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 16

There Is Only One Truth in the Markets

Price action is the only truth in the markets. It is that simple and it seems too obvious to be true. Most traders spend a good deal of their career looking for other answers that do not exist. The constant pursuit of the Holy Grail has been a quest of traders since the beginning of trading, of any kind, centuries ago. Yet, by definition, any other method will always be secondary to price.

PRICE IS KING

Here is a simple analogy: You are going to travel to Spain on a business trip and, not knowing the native language, a friend suggests that you study Italian because it is somewhat similar to Spanish. Another friend suggests you study French because it is the native language of the bordering country. Another friend suggests you study Latin because it is the base language of Spanish. But while all of these may help a little, the obvious question becomes, why not simply study Spanish?

While this may seem like a ridiculous analogy, it is exactly what most traders do every day. The quest for finding technical indicators or special formulas to predict price action all use price in the computation, so why not just focus on the actual price action to understand its direction? Learning the language of price action is the only answer to understanding the markets.

If you have ever been to a trading expo or a money show, you may have noticed that there are frequently large crowds around the company that is selling the newest fangled indicator ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required