Why Price Action Is So Underused In Trading?
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.
What eventually happens is that is all you see on their trading charts: indicators. It really never dawns on them that they are not trading correctly. Sadly, trading with price action never comes to their mind. Many traders get scared when they hear the concept, and think only smart people can trade it. They would prefer just using their indicators to tell them which way the market is headed. However, they really dont know which way the market is moving.
When you trade with indicators, its somewhat like trading with other peoples signals. All you are doing is hoping that they are right. You dont really understand the underlying reason why you are taking the trades that you are, you just hope that their opinion is correct, (or for an indicator, their formula.)
Thats what is so perfect about price action. Finally you get to eliminate all the needless clutter that is on your charts, and you can finally read and understand the market, the way it was intended: without having to use a single indicator.
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.
The next time you catch yourself doing this, I want you to think about the New York Stock Exhange Floor, and think about all the floor traders out there who make a lot of money trading by not even using trading charts, much less using indicators.
Article Source: FxTradingStock.com
About the Author
To learn more about price action forex trading, make sure to check out forex millionaires
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by: John Templeton
Total views: 110
Word Count: 447
Date: Tue, 7 Jul 2009
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