price action Forex trading can be defined as the trading decision based on price chart patterns, the patterns made by traders simultaneous reactions, news and world events. Price Action Trading, is a study of human emotion depicted in the forex price charts and presented to the trader in the form of price patterns that repeat over and over again on all time frames and all currency pairs.
Before I discuss in detail why the trade using the price is the way you need to discuss the Forex market, I would like technical indicators. The Forex trader must understand that technical indicators are derived from the price itself, and as such, the price action. This means that if you are a technical trader who only indicator-based strategies, then unfortunately you’re more than likely to fail in your pursuit of trade in the markets for profit. In particular, you are too late and close entering the market of your trades too late if you trade with indicators.
When a technical indicator of the price you usually smooth some of the valleys and peaks of the price itself distract, but more importantly you build inherent delays in the indicator compared to the price, this is important to understand and relate to the point I made above -. technical indicators lag and this will cost you money
If you look on the internet search engines, you will find an abundance of indicator-based systems, for sale or rent, along with content articles, trading robots and other sure fire systems that inform you about how to make money using an indicator based system. This is all well and good, however, these methods and systems really make money?
If we accept that more than 90% of traders ultimately lose money trading or wipe their accounts clean trading Forex trading and if we accept that the vast majority of those people indicator-based methods to market trade, I think that says something about the indicator-based systems themselves.
indicator at best systems will also help you to break into the market, while the price action methods will help you to get good profit.
study the price is, the perception of traders activity in the market, this can be seen and portrayed in the market through the price action pattern. The print cartridges traders emotions.
In my next article I will discuss some depth with regard to price and launch the discussion and explanation of the various types of price action trading method that I look at on a daily basis. Methods that work well in the Forex markets and easy to see on the charts during live trading.