The Power of Trading Forex Using Price Action

It seems that most forex traders now are looking for the short cut, instead of using the oldest form of technical analysis: trading just using price action. Most traders though don’t seem to be interested.

All you have to do is look in any forex forum to know that’s true. Think about what you normally see in these forums. It’s always about some incredible system that’s covered with indicators or they are talking about a magical forex expert advisor that’s basically automating the process for them.

Do you see what’s wrong with this picture?

For one thing, traders must understand that all these kinds of indicators, like RSI or stochastics, are only good for letting you know what has already occured. If you want the ability forecast future movements in prices, then i strongly recommend nor using these indicators.

The other thing that these traders need to understand is that 95% of all forex traders lose money. If that’s the case why would you want to be doing the same exact thing that every other struggling trader is doing?

Think about this from a logical perspective. Chances are traders that are on a forum are struggling with their trading. If that wasn’t the case why would they even be there? Most truly successful forex traders don’t have the time nor the inclination to hang out in a forex forum.

What’s really increased in popularity are the Forex Expert Advisors. For those that don’t know, these are basically automated trading machines or robots. Developers program them using lagging indicators so the market trades automatically while you’re away.

I could see why this would attract most newbies traders. I mean, who wouldn’t want to have all that free time to yourself. You can go to the beach, the ballgame, dinner and a movie and all the meanwhile you’re becoming rich, right? Well, not exactly. That’s not the way it works.

People are asking way too much from these expert advisors. Think about what people asking from them. They are asking them to acccomplish something that most forex traders in the world can’t do: Make money trading forex.

If you want to take the time to really understand the market I suggest that you clean out all your charts of indicators and just watch the price action for a day. Pull up a 30 minute chart and just focus on market movement. One thing will start to become real evident: There are patterns in the market that happen every single day. These are the patterns that can be used to predict future price.

Jim Buhs finally just learned (http://www.squidoo.com/forex-success) successful at trading forex after he learned how to trade just using price action. If you wan to see what he used to learn to (http://www.squidoo.com/forex-success) trade with no indicators, make sure to check out his website.

This entry was posted on Wednesday, July 30th, 2008 at 10:07 am and is filed under Forex, Forex Currency Trading. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.