Book Review: Price Action Breakdown by Laurentiu Damir

When I started trading I was extremely excited about the possibilities that lay before me… The dream of changing your work ethic from “working for your money” to “putting your money to work for you” was intoxicating. I took every class, read every book, followed every “guru” I thought would help me get that ‘edge’, that secret sauce, to make me a great trader. Once I discovered what actually worked, and actually *did* the work of putting that knowledge into practice, I found that trading, like so many other things, follows an 80/20 rule, where 80% of your results come from 20% of your actions. I asked myself what was really important in trading, and I distilled it down to 2 points: Psychology, and Price Action.

Notice, I put Psychology first.

After reading about, backtesting, sim trading, and live trading so many techniques by so may experts I have distilled (culled?) the instruments in my trading toolbox to a select few. Like that scene in Gran Torino when Clint Eastwood is teaching his young asian friend how to “be a man” and learn to fix things, he gives him Duct Tape, WD-40, a pair of pliers, and said “This will help you fix half of your problems.”

www.youtube.com/watch?v=dLpsbp9J...

Similarly, I now only have 2 books that I read or listen to a LEAST once per quarter. This advice in them takes care of 90% of my trading needs. This also helps me stick to the basics. Repetition is the mother of skill and we need to constantly be reminded of (and practice) those basics.

Today I wanted to share with you one of those two books: Price Action Breakdown, by Laurentiu Damir.

This book is going to put you to work. Trading, like any other skill, is something you learn by DOING. You can’t learn carpentry by simply reading a book. You can’t learn painting by only reading a book… you have to take a chisel to wood or a brush to canvas to put that theory into PRACTICE. Likewise, Laurentiu puts you to work trading, lesson by lesson, concept by concept.

He simply and demonstrably shows the aspiring trader that all the information we need to decide to buy or sell is right there on the chart. No indicator, oscillator, or other doo-dads are needed. As he puts it,

"The best indicator you can have is your brain analyzing the raw price movements.”

He breaks down the specific patterns that we as traders need to look at to “see the opportunity” on the screen, notably value areas, excess price, control prices, and rejection areas. There is no mention of chart patterns (head and shoulders, triple bottom, cup and handle, ascending triangle, blah, blah, blah…) or candlestick patterns (bearish engulfing, dojo, shooting star, hammer…) - It’s all about price action. When you look at a chart and see who is buying what and where, you can make an educated decision on where to buy and sell right alongside the institutional market makers who are moving price.

Quote: "Throughout this book, whenever I will discuss about buyer and seller behavior, I am talking about the long term traders. <i.e. Institutions> They are the ones who move the markets, it makes all the sense in the world to study their behavior, observe how price moves as a result of their actions, and formulate concepts, rules and strategies to follow what they do, to be in the same boat as them. We have to discover their footsteps and follow them."

I’m a Kindle guy, and my trading partner bought the hardcopy on my recommendation. The hardcopy is a unique piece of work in terms of its layout, font choice, and stark coloring. I don’t know if it was intentional, but the fact that it is so physically *different* from other books almost makes you give what you are reading that extra bit of attention. My friend, too, owes much of his success to the techniques in this book so I never hesitate to recommend it.

I hope if you decide to get this book that you will put all the necessary WORK in that is required to put concepts into practice… to imbed it into your nervous system so you can “see the money” on the chart just like Neo could see The Matrix and easily defeat what was previously an undefeatable opponent.

youtu.be/Vy7RaQUmOzE?t=150

In a later article I will talk about backtesting - something that every trader needs to do to build up his skill, to test a trading methodology (such as price action!), and to help keep you “in the zone” (teaser for my next book review!) so as you develop and hone your trading skills, that you will keep that skill and sharpen your trading saw day by day and enjoy the benefits of being a professional financial trader.

I would say 'good luck', but luck has nothing to do with developing the skill of trading just as it wasn't 'luck' that made Michael Jordan the best basketball player or Tiger Woods the golfer in the world. It was perseverance, grit, and repetition.

Happy trading!

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