Price Action: Learn The Right Way To Trade
It appears to me that every time a new trader wants to learn about what it takes to trade the forex marker, they will usually spend all their time scouring the internet to and learn about using indicators like stochastics, MACD, moving averages as well as the other common ones.
After they find out about these indicators, they absolutely flood their charts with all these lagging tools. The sad thing is that it never dawns on traders that they should be learning about price action, when it comes to trading the forex market. I believe this has to do with the fact, that many traders think its impossible to tell which direction the market is headed without having to use these generic indicators. They truly dont know which way the market is going.
What most people dont realize is the fact that when you trade with indicators, you are essentially trading other peoples signals. All you are doing is hoping that they are giving you correct information, because YOU truly dont have any idea of why you are taking a trade. You are essentially going on blind faith.
But the whole idea of trading forex by just using price action is that you get to eliminate all the clutter that is on your screen. By doing this, you get a clean and unbiased look at how the market actually moves.
One of the biggest obstacles for traders who are using indicators is the fact that on many occasions indicators will give you two opposite signals. For example, moving averages can be telling you to buy, while MACD is telling you to sell. So you are really just sitting there and waiting for these indicators to align, in order for you to take a trade.
Since many traders dont really understand the concept of price action, what happens is that they are left just sitting there waiting for their indicators to line up in the same direction.
Im sure you have an idea of what a tough spot this is for a trader to be in. Think about it. Instead of being proactive in the market, you are left staring at a bunch of random lines hoping that they match in the same direction. The really sad thing is that most traders dont even understand what exactly these lines represent.
What I would like you to do is the next time this idea of trading without indicators pops in your head, I want you to think about all the floor traders on the New York Stock Exchange. Think about the fact that most of these traders do this for a living without having to even use charts, much less indicators.
Article Source: FxTradingStock.com
About the Author
To learn more about price action trading, make sure to check out forex millionaires
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by: John Templeton
Total views: 119
Word Count: 465
Date: Thu, 9 Jul 2009
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