What Is Price Action?

Traders often want to learn about trading concepts like Price Action trading. But often new traders have no idea what the terminology is, nor how to even learn more about futures trading concepts like price action trading. “Are you actually able to follow the numbers in ES or NQ? Or even in Treasuries? I don’t see how that’s possible.”

That’s a question I’ve heard several times over the years. It usually comes from traders trying to understand how decisions can be made by watching order flow and price action, rather than relying on indicators.

take profit trader review promo coupon discount payout rules

It is possible, at times, to follow the numbers in Treasury futures. These products are typically very liquid and move much slower than most equity index futures. That’s one of the main reasons I’ve always considered Treasury futures to be among the best markets for newer traders who are trying to learn how markets actually function. They allow traders to refine entries and exits in ways that simply aren’t possible in faster, more erratic markets.

That said, even when you can follow the numbers, those numbers are meaningless unless they’re interpreted within the context of price action.

Numbers Alone Don’t Tell the Story. A good example is iceberg orders. A common comment I hear is something like this:

“Sometimes I see an iceberg and the market reverses. Other times price trades straight through it. And sometimes nothing happens at all. How am I supposed to know which outcome it’ll be?”

Earn2Trade discount promo futures prop firm review payout scam owner best prop firms

The short answer is you can’t—unless you understand the bigger picture.

If the 30-year, 10-year, and 5-year Treasury contracts are all selling off aggressively and you spot a single iceberg bid, that alone is not a reason to step in front of the move and try to buy. In that situation, you’re far more likely to get run over as the selling continues.

On the other hand, if a trend is clearly slowing and the market appears to be losing momentum, an iceberg might be meaningful. In that context, it can serve as a clue that a reversal is possible.

Now consider a different scenario. If the market has been stuck in a 12-tick range for two hours and an iceberg prints in the middle of that range, it’s usually irrelevant. There’s no directional pressure, so the order itself doesn’t carry much information.

This is why context and price action matter far more than individual bid/ask changes or raw contract volume.

Reading Behavior, Not Data Points

Yesterday morning provided a good example in the ES.

There were two separate moments where it looked like the market might break lower. I was short both times, and both times it didn’t happen. But I didn’t lose money—and that’s the key.

Each time price approached the lows, instead of snapping through, it stalled. It paused. A few contracts traded. Then it paused again, ticked slightly higher, and stalled once more.

tradeday discount promo futures prop evaluation live firm

That is not the behavior you want to see when you’re short.

This has nothing to do with indicators, market profile, or some specific number on the DOM. It’s about understanding how markets behave when they’re about to move with momentum. If price was going to break lower in a meaningful way, it probably should have already done so.

Because it didn’t, I exited the short. I didn’t wait around hoping I was right. I also didn’t convince myself the market had to go lower. I simply recognized that the expected behavior wasn’t showing up.

In that situation, I exit and prepare for the possibility of a reversal. If the bounce accelerates, I’m ready to flip long. If it doesn’t, I stay flat. I’m reacting to what the market is doing, not what I want it to do.

Let the Trade Come to You

This is one of the hardest lessons for most traders to learn.

You have to let the trade present itself. If you understand how markets work, the opportunity will eventually become obvious. When it does, you react. Until then, you wait.

Most traders struggle with this. They turn on their screens, and if they haven’t taken a trade in the first five minutes, they start forcing things. The urge to do something becomes stronger than the desire to be profitable.

apex trader funding discount promo coupon review payout rules code best prop firm canada

Profit requires patience.

What usually happens is predictable: five trades in the first hour with no real read on the market. A hole gets dug. Then, when the best setups finally appear in the second hour, the trader either doesn’t take them—or takes them just to get back to breakeven instead of having a solid day.

Yes, sometimes the best trades appear right at the open. When they do, that’s when you want to be involved. But if they aren’t there, don’t talk yourself into seeing something that doesn’t exist.

The best trades are often the most obvious ones.

Price Action Is the Common Thread

No one is watching every single transaction in the NQ with the naked eye. That’s not realistic. But you can get a sense of its rhythm by watching the DOM and understanding the ebb and flow of price. I use that information to make decisions in stocks and ETFs that track the Nasdaq 100.

With Treasury futures, I’m often watching many of the actual number changes because the pace allows for it. But in both cases, the conclusion is the same:

Current price action is the most important input in the decision-making process.

The numbers support the story—but price action tells it.

day traders daytraders.com promo coupon discount review scam payout rules

Here are some additional articles about futures traders and order flow and price action you will enjoy:

The Best Futures Funding Programs (more details below):

Apex Trader Funding – #1 recommended firm. Have up to 20 accounts low cost
Take Profit Trader – Great dashboard, fast payouts (treasuries allowed)
My Funded Futures – Fastest payouts of any firm available, large selection of account types
DayTraders – Straight to Funded, Static and Trailing DD available
TradeDay – Move to full live account quickly (treasuries allowed)

Be Notified Of New Trader Evaluation Promotions

Submit your email if you want to be notified of new trader evaluation promotions. I never spam nor sell anything. Usually 2-3 emails a month are sent with the latest deals.

Risk Disclosure:

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure:

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight.

In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

You can read more here: Risk Disclosure

Affiliate Disclosure:

The external links on my site and in my video descriptions to trader evaluation companies and software companies are primarily affiliate links. I earn a commission from these companies on any sale made from people visiting these links. That said, I only recommend companies and software I personally use and actually do recommend. Believe me, I turn down a lot of companies who approach me. You can read my full Affiliate Disclosure here.

Additional Disclosure:

The content provided is for informational purposes only. I do my best to keep the content current and accurate by updating it frequently. Sometimes the actual data, rules, requirements and other can differ from what’s stated on our website. CanadianFuturesTrader.ca is an independent website. You should always consult the rules, faqs, knowledge base and support of any of the websites and companies we link to or talk about on our site. The information on their site will always be what ultimately dictates the current rules of their program, software or other. While we are independent, we may be compensated for advertisements, sponsored products, or when you click on a link on our website. The contributors and authors are not registered or certified financial advisors. You should consult a financial professional before making any financial decisions.